A potential British exit from the European Union should not influence the ongoing negotiations on the EU budget for 2014-2020, according to Janusz Lewandowski, the EU's budget commissioner.
British Prime Minister David Cameron promised a referendum on Britain's EU membership if he is re-elected in 2015, saying he will provide voters with a clear in/out choice.
But the outcome is far from certain and should not derail ongoing talks on the EU's budget for 2014-2020, Lewandowski said on Friday (25 January).
“We need long-term commitment from the UK as a precondition for the budget until 2020. Even with a referendum in 2017, I think we cannot expect an immediate exit, it should be somehow on the horizon 2020,” Lewandowski said, speaking at the European Policy Centre, a Brussels think tank.
London wants to go further and freeze the EU budget at its 2011 level, allowing only an inflationary adjustment that would effectively trim the Commission's budget proposal by €200 billion over the next seven years (2014-2020).
EU national leaders are meeting on 7-8 February in another attempt to reach agreement on the Union’s long-term budget after a first summit failed in November.
Asked about the summit's chances of success, Lewandowski said he expected EU leaders to be “creative” in finding an agreement that Cameron can sell to his Parliament.
“I cannot say precisely how this is feasible, but I do believe Mr Cameron would proclaim the UK has had a big big dominant influence,” Lewandowski said. But he added that there were risks involved and a need for “creativity of how to make it and not destroy [the budget] completely.”
An area where British demands are strongest is the ‘Administration’ chapter, which covers the pay for employees of EU institutions. Lewandowski said London had imposed “sine qua non” conditions for further cuts in that chapter, although administrative costs constitute only 6% of overall EU spending.
The challenge, he said, is not only to finance Europe with less money, but to run it with fewer civil servants, marking "a turning point" for the Brussels-based European institutions.
“For the first time in EU history, we expect the number of posts to decline in 2013,” he said.
The possible outcome
Lewandowski said some countries had insisted heavily on cutting €30 billion more from the last proposal tabled by European Council President Herman Van Rompuy (€973 billion).
“I think this is too much,” the Commissioner said, arguing that more cuts would “destroy the capacity of the EU budget.”
Making his point, Lewandowski stressed that headline budget figures were referring to ceilings of expenditure and that actual spending levels were always lower. In the previous 2007-2013 period, actual spending for each year was around €70 billion lower than provisions, he remarked.
“The multi-annual financial framework is like the limits of your credit card. The actual bill is actually much lower,” he said.
Lewandowski also touched on the issue of national rebates that were granted to a number of countries, including Britain.
Germany, the Netherlands and Sweden all appear on a list drawn up by Van Rompuy as countries that would receive annual refunds of €2.8 billion, €1.15 billion and €325 million respectively. The Commissioner also mentioned Denmark and Austria as other countries asking for rebates, adding that it was not the end of the list.
What will the parliament do?
Lewandowski spoke of the “hypocrisy” of some member countries, which were on the one hand delegating more powers to the EU, and on the other insisting on further cuts to the budget. For the first time, the EU budget will decrease instead of growing, he stressed, despite the fact that the Union had extended its action to new policy areas.
“This is of course not the position of the Commission. There are limits to cuts. And we need the consent of the European Parliament,” he said.
The Parliament has gained influence, Lewandowski noted, and it will be difficult to obtain the minimum of 371 votes to pass the budget with qualified majority. With every billion cut, seven votes are lost in the European Parliament, he said, without elaborating.
Moreover, MEPs will not vote on the budget without passing some additional regulations in related areas, he said. For example, the Parliament will insist that the EU’s unspent money be rolled back into the EU budget, instead of being returned to the member countries according to their share of the total contribution.
Passing the budget through Parliament will therefore take a lot of time even if leaders reach agreement soon, Lewandowski said.
Speaking at the same time in the European Parliament, its President Martin Schulz said MEPs would not hesitate to use recently acquired powers to block spending plans for the next seven years. He also said that in the absence of an agreement of the long-term budget, an annual budget at the level of 2013 spending wouldn't be a bad solution.
Will there be investment-type money?
The Commissioner insisted that until now, the EU had provided the “investment-type of money” that Europe needs in times of crisis for creating growth and jobs.
Taking Hungary as an example, he said that 97% of public investments in 2009-2011 were co-financed by Europe. In Slovakia the percentage was 76%, and for his native Poland 52%, he said.
But Lewandowski insisted that many other regions were dependent on EU financing for more than 50% of their public investments, citing the German region of Schleswig-Holstein as an example.
Perhaps with the exception of Sweden, which can afford fiscal stimulus out of its national budget, the situation is very much the same across the EU, the commissioner said.
The European Commission proposed a draft budget for 2014-2020 which represents a freeze in spending in spite of the Union having gained new competences under the Lisbon Treaty.
The Cypriot presidency tabled a proposal, flatly rejected by the Commission and the Parliament. Then followed another proposal by Council President Herman Van Rompuy.
The 22-23 November 2012 summit ended without an agreement, as some leaders reportedly tried to slash further Van Rompuy’s latest budget proposal (of €973 billion) by an additional €30 billion.
EU leaders are expected to have another summit on 7-8 February with the objective of agreeing the 2014-2020 EU budget.
- 7-8 Feb.: EU summit expected to reach compromise on the EU budget for 2014-2020.
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