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29/07/2016

Member states slash EU budget for growth and jobs, innovation

Social Europe & Jobs

Member states slash EU budget for growth and jobs, innovation

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Member states are pushing for cuts to the Commission’s draft budget for 2015, apparently in contradiction with the Union’s main priorities. For the budget heading covering growth and jobs, including youth unemployment, €1.3 billion in payments are cut.

Another example is that for Research, a 10% reduction would impact 600 projects involving more than 7000 participants, of which around 1400 are SMEs. The figures were presented by Budget Commissioner Jacek Dominik to the European Parliament on 17 September.

European Commission officials who asked not to be named said that there was enough money in the EU coffers to fund all EU budget headings, but the absence of flexibility resulted in cuts that were often “stupid”. Not only priority policies suffered, but the countries mostly pushing for cuts to the EU budget, such as UK, the Netherlands or Germany, absorbed the most for them. These countries are in fact among the biggest beneficiaries of research programs, which suffer from those cuts.

Money is there… and is not

Every year, the Commission negotiates with member states and the European parliament an amending budget, due to the fact that unpaid bills for previous years keep arriving from the member states. Only on cohesion policy, the unpaid bills for 2011 onto 2012 were €11 billion, for 2012 into 2013, they were €16 billion, and for 2013 to 2014, grew to €23.4 billion. At present, the commission is still paying bills from the 2007-2013 period projects.

According to the Council changes of the Commission’s proposal seen by EurActiv, the largest cuts requested by the member states are in the budget heading “Competitiveness for growth and jobs”: 1.9% in commitments and 8.6% in payments. Another major cut affects the heading Global Europe, with 5.2% cuts requested by member states, compared to the Commission’s figures.

Dominik told MEPs that in spite of EU’s engagement in crises, in particular, in neighbouring countries, member states request a €384 million reduction from the Commission’s draft budget.

In fact, the EU has money, and there is no need for amending budgets. However, the current procedures cannot avoid this heavy annual exercise. Already last May, the Commission requested a Draft Amending Budget and the activation of a “contingency margin” mechanism for an amount of €4 billion.

But strange as it may seem, the EU budget for 2014 also has extra revenues, mostly from fines, amounting to €4.7 billion. Most of the fines are from the banking sector. If flexibility was adopted as a principle as the European Parliament insisted over the adoption of the financial framework 2014-2020, there would be no need to seek an amended budget, at least not for 2015, EurActiv was told.

MEPs see flexibility as the possibility to move unpaid funds (payment appropriations) between years, and broad flexibility to move commitment appropriations, both between years and between categories of expenditure.

When the EU budget for 2014-2020 was adopted last November (see background), on the initiative of the European Parliament an “Inter-Institutional agreement” was adopted as well. It says that the Commission shall make a proposal for a Flexibility Instrument, after it would have examined all possibilities for re-allocating appropriations under headings requiring additional expenditure

This flexibility is needed to ensure that every EU budget euro is used where it is most needed, deemed especially important during the economic crisis.

Mission letter

In his “Mission letter” to Vice President and commissioner-designate for budget Kristalina Georgieva, Commission President-elect Jean-Claude Juncker says that he expects her during his mandate to address the scarcity of payment appropriations by proposing, under her first weeks of office, with a plan for prioritising payments. The need to deliver on the commitment to put in place a Flexibility instrument is, however, not mentioned.

Background

At a summit on 8 February, EU leaders reached agreement on a €960 billion long-term budget for 2014-2020, representing the first net reduction to the EU budget in history.

After months of complex negotiations, the European Parliament finally approved the EU’s budget for 2014-2020 on 19 November 2013 (click here, for pages 1 to 31).  The budget regulation was approved by 537 votes to 126, with 19 abstentions.  The accompanying Inter-Institutional Agreement was approved by 557 votes to 118, with 11 abstentions.

Further Reading