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EU budget hawks succeed in €960-billion cap

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Published 08 February 2013, updated 11 February 2013
19 comments
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Angela Merkel, David Cameron, EU budget 2014-2020, Multi-Annual Financial Framework (MFF)

Budget hawks appeared to gain the upper hand in the latest budget draft presented by European Council President Herman Van Rompuy, cutting back still further a version of the 2014-2020 budget presented two months ago. 

The latest draft showed the budget had been capped at €960 billion, down from the €972 billion proposed by Van Rompuy in November. The latest figure amounts to 1.00% of EU’s gross national income.

Adjusted for inflation, the payments (actual spending) calculation would fall from €935 billion to €908.4 billion.

The slimmed-down proposal appears to be a victory for British Prime Minister David Cameron, who has held out for sharp reductions in spending at time when most national governments are producing austerity fiscal plans.

Sub-heading 1a (“Competitiveness for growth and jobs”) appears to be one of the biggest victims of the changes. The total level of commitments is now put at €125.7 billion, down from €152.5 billion in the earlier proposal.

The ‘Connecting Europe Facility’ (CFE) is slashed from €41.2 billion to €29.3 billion.

Sectors that have been affected include transport (from €26.9 billion to €23.2 billion) and energy (from €7.1 billion to €5.1 billion).

Three large infrastructure programmes variably changed include:

  • Galileo, from €6.6 billion to €6.3 billion;
  • GMES from € 4.9 billion to €3.8 billion.
  • ITER stays unchanged at €2.7 billion.

The sums allocated for nuclear decommissioning for the three nuclear plants in Lithuania, Slovakia and Bulgaria - which had to shut down reactors as part of their accession treaties - remain unchanged:

  • Lithuania is to get €400 million for Ignalina;
  • Slovakia will get €200 million for Bohunice;
  • Bulgaria will get €260 million.

Cohesion goes up

On Cohesion, the level of commitments receives a marginal increase, from €320.1 billion in the old proposal, to €324.7 billion.

Resources for “Investment for growth and Jobs” remain relatively unchanged at €312.8 billion.

In this figure, the subdivision is as follows:

  • A total of €163.094 billion for less developed regions, up from €161.43 billion;
  • €31.6 billion for transitional regions, up from €31.39 billion;
  • €50.34 billion for more developed regions, marginally dropped from €50.87 billion;
  • €66.36 billion for member countries supported by the Cohesion Fund, very slightly risen from €66.34 billion.
  • €1.39 billion for the outermost regions remains intact.

Figures for “European territorial cooperation” rise marginally to €8.948 billion, from €8.728 billion before.

The capping figure of cohesion funding to the least developed regions and member countries remains at 2.35%.

Special provisions

New paragraphs have appeared, favouring various regions in some member countries.

  • The more developed regions of Greece shall be allocated an additional envelope of €1.375 billion under the Structural funds, a rise from €1 billion;
  • The more developed regions of Portugal receive the same allocated €1 billion extra, of which €100 million for Madeira;
  • Spain’s allocation falls marginally from an additional €2.75 billion to €1.824 billion. Spanish territories across the Mediterranean Ceuta and Melilla will continue to receive €50 million extra;
  • The French outermost region of Mayotte continues to receive €200 million;
  • Hungarian less developed regions receive an allotment of €1.4 billion, replacing and increasing the Hungarian region Kozep-Magyaroszag’s allocated €1.2 billion;
  • The less developed regions of Italy receive €1.5 billion, up from €1 billion;
  • Malta and Cyprus continue to receive €200 million and €150 million respectively.

Additional new provisions are inserted to reflect “recent developments in their economy”

  • Belgium receives €100 million divided equally between Limburg and Liege
  • Germany receives €710 million; of which €510 million go to the “ex-convergence regions’, and the remaining €200 million to Leipzig;
  • The less developed regions of the Czech Republic receive an additional envelope of €400 million under structural funds;
  • The less developed regions of Slovenia receive an additional envelope of €75 million under structural funds.

The Youth Employment Initiative

Van Rompuy’s much touted Youth Employment Initiative receives €6 billion for the seven-year period, half from the European Social Fund, and half from a dedicated Youth Employment Budget.

Agriculture

Commitment appropriations for the heading “Sustainable growth: Natural resources”, which covers agriculture, rural development, fisheries and a financial instrument for the environment and climate action, remain substantially unchanged at €373.479 billion from €372.229 billion. Of this amount, €277.852 remains allocated to market related expenditure and direct payments.

The differences between the level of direct payments to agricultural producers between older and newer members remains unchanged. “All member states should attain at least the level of €196 per hectare in current prices by the end of 2020," the new version reads.

The rural development budget is €85.086 billion.

A new reserve is provided for crises in the agricultural sector of €2.8 billion.

And the victims…

Heading 3 – “Security and citizenship” is cut to €15.7 billion, compared to €16.7 billion in the former proposal.

Heading 4 “Global Europe” suffers a cut, from €60.667 billion to €58.767 billion. The figure for the Heading 5 “Administration” is cut from €62.629 billion down to €61.629 billions.

In addition all EU institutions undertake to reduce their staff by 5% over five years.

Significant pension changes for the administration are to be introduced, including a solidarity levy at a level of 6%.

The text concerning the rebates has changed. The UK retains its rebate unchanged. Denmark meanwhile receives a new annual rebate of €130 million, whilst the Netherlands’ €1.15 billion rebate is halved to €650 million and Sweden’s to €325 million is slashed to €160 million.

Positions: 

Reacting to the draft conclusions of the European Council on the EU long-term budget, which are disproportionately targeting EU development and humanitarian aid, Natalia Alonso, Head of Oxfam's EU Office, said:

"Cutting EU aid to save money is like cutting your hair to lose weight. It's not doing the job but worse, in the case of EU aid, it's put millions of people on the line.

“The disproportionate downsizing of the EU’s aid budget is a breach of faith. The proposed cuts to EU aid will leave a critical shortfall that could unravel the progress made so far and could have potentially disastrous consequences on the ability to achieve the MDGs, especially in Africa. It would undoubtedly also impact negatively on the role of Europe as a global player.

“EU leaders, like all other countries, should be held accountable for their commitments. It’s unacceptable for them to wriggle out of their promise to give 0.7 per cent of national income by 2015 to the poorest because there is an economic crisis."

Responding to the draft conclusions, Eloise Todd, Brussels Director of ONE, a global advocacy and campaigning organisation founded by Bono said:

“EU leaders have repeatedly promised to spend 0.7 percent of Europe’s income on smart aid, but they are far from reaching that goal.  The European Commission’s proposed budget for aid to the world’s poorest could see millions more children given access to vaccinations, primary education and clean drinking water, in other words, the chance of a better start in life.  In these last critical hours of summit negotiations leaders must have the courage to stand up for the world’s poorest.”

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COMMENTS

  • Please can you clarify the €billions and €millions denominations especially in the cohesion section there seems to be some error. thank you.

    By :
    Audaye Elesedy
    - Posted on :
    08/02/2013

  • This way of allocating funds is unacceptable.

    National contributions, rebates, vetoes..

    Is this the Europe we want? Isn't it time for a Europe with its own resources?

    Let's work on it!

    European Federalist Party

    Website: www.federalistparty.eu
    Facebook: www.facebook.com/EuropeanFederalistParty

    By :
    European Federalist Party
    - Posted on :
    08/02/2013

  • Really a very poor Budget !less than 1% Crazy !

    Either do it right or we don't need the European Union!

    Parliament should VETO VETO VETO!

    I hope that Martin Schulz or the European Kommission would reject it !

    That's not serious for an United Europe comparing to others federal Budget !

    By :
    an european
    - Posted on :
    08/02/2013

  • If this is the final outcome then "good night Europe"...
    This generation of polticians assigned itself to the scrap heap of history.

    By :
    Wolfgang Entmayr
    - Posted on :
    08/02/2013

  • @Wolfgang Entmayr - Posted on :08/02/2013

    Indeed !
    But i even understand this !Most politicians are proud for an United Europe with a powerfully stable Budget !!
    Where are the 27 Heads living !?
    Even MR.Barroso talks for a federation !
    Believe me one ! Ten times moore the inicial Budget shoud Be!or is just the beginning of ab backwards of the European Union!

    By :
    an european
    - Posted on :
    08/02/2013

  • Mr Schultz : VETO !

    By :
    an european
    - Posted on :
    08/02/2013

  • "Sub-heading 1a (“Competitiveness for growth and jobs”) appears to be one of the biggest victims of the changes. The total level of commitments is now put at €125.7 billion, down from €152.5 billion in the earlier proposal.

    The ‘Connecting Europe Facility’ (CFE) is slashed from €41.2 billion to €29.3 billion.

    Sectors that have been affected include transport (from €26.9 billion to €23.2 billion) and energy (from €7.1 billion to €5.1 billion) and telecoms infrastructure, which suffers a deep cut".

    This is indeed progress...We are across Europe prepared to see a lack of help in measures to help restart the economy, through growth and jobs as a "victory"?

    To me this sounds crazy at this critical stage, considering that national governments are still tinkering with their austerity programmes to reduce public debt and myopically navel gazing rather than looking at the overall situation, helping research, infrastructure and building competitiveness vis a vis the the rest of the world. Ironically they all pay lip service to these aspects...but are not prepared to increase the fees to the Pied Piper.

    of

    By :
    Roberto
    - Posted on :
    08/02/2013

  • The European People's Party is staffed with key Merkel obligés and will unfortunately not veto this shameful budget.

    By :
    Charles
    - Posted on :
    08/02/2013

  • A number of EU countries are bankrupt-Greece and Spain for example- and are reducing their budgets, austerity measures are the rule of the day. Yet still people want the EU to ignore what is going on in the real world. I suport the EU but come on, there comes a time when like the countries which form the EU, they have to tighten their belts. I see French farmers will still get their money, and the parliament will still move from Brussels to Strasbourg several times a yearat great expense. Now someone justify that waste of our money?

    By :
    Ian
    - Posted on :
    08/02/2013

  • Mathematically it would be possible to totally finance an EU budget with the costs that alcohol harm swallows up in the same budget period...
    So, the key issue is that governments' lack of political will to address societal problems costs money and is lacking - and once in a while, we can see. Like during these summit negotiations. Check out my thoughts on the topic: http://www.iogt.org/policyofficerupdate/91/eu-budget-talks-and-the-need-for-keeping-figures-in-perspective/

    By :
    Maik Dünnbier
    - Posted on :
    08/02/2013

  • Hello Charles !
    We the European Citizen should be the key and Not Merkel but she is not alone to say and replaceable too !
    Or at least the Parliament has right!Europe deserves more!

    Even the Mini-ESM of 500 billions € for bailout which doesn't help in worst case! It should be min 2 at best 4 Trillions € instead!!
    Where has the Union such a Reserve?
    And Now this pigmy budget !?
    The 27 Primes are acting like Kids and have nothing learned in comparing to the U.S.
    Shame !!
    The economy will not carry this heavy load much longer!
    Let's waiting for example a Goldman Sachs collapse.
    Even Mario Draghi couldn't help as he did the last summer who finally is he alone who saved the Euro and appease the market. Maybe U.S. stands up in time and E.U. lies down and will heavily recover..

    Maybe i am one of those of 500 million people thinking where has the European Idea gone the last 10 Years?

    The Time is to BUILD UP and not to BUILD DOWN !

    By :
    an european
    - Posted on :
    09/02/2013

  • And Time to rebuild The commission by an of us Citizens Elected REAL European President OVER the Council to eject or cut the unelected Van Schlumpfboy !
    Somebody who knows to take initiative but not this heads of crap destroying what has began 80 Years ago !

    This is pretty shitty disgusting and the beginning of an disinterestedness Union ....

    By :
    an european
    - Posted on :
    09/02/2013

  • Europa O-1 Cameron.

    EP ?

    By :
    Rhenus
    - Posted on :
    09/02/2013

  • Well most people in the UK seem to think this was absolutely the right thing to happen; indeed the only regrets seem to be that the cuts were not even more realistic.

    It is informative to see how the MEPs are now talking about voting in secret. The only question is why? Is it because they lack the courage to be seen to agree with the new budget after all their posturing, or because they lack the courage to disagree with their national parties and veto it ? Either way by even considering such a move these ‘leaders’ have been shown to be seriously wanting. In a democracy they should have no choice but to take a position and then vote and let the electors know quite clearly which way they went so we can take it into account at the next election.

    By :
    I want out
    - Posted on :
    09/02/2013

  • boring, indecent, irrational, un-European, let us suppress these negotiations and look forward to a real interinstitutional game... with a sprinkle of true European democracy if the Parliament finds the guts

    By :
    Catherine v
    - Posted on :
    09/02/2013

  • :-(

    That's it !
    The European election doesn't interests me anymore..
    Paper will be untouched

    By :
    an european
    - Posted on :
    09/02/2013

  • What are we waiting for? Have any of us contated our MEPs? Their job is to represent us and if you do not tell them what you think they should do on your behalf ,do not be surprised if they vote the way they will.

    This is democracy in action: the citizen is sovereign!

    Moreover if you don't know who the MEPs are ; now is your chance to find out.

    The UK representatives are not there to do their Westminster stooge bit - unless you let them.

    The Socialist, Peoples Party and ELD are very active in the Parliament and are generally very supportive of the EU ideals; I am not so sure of splinter groups such as Cameron has confined "his Tory MEPs". I cannot comment on the others like UKIP who hardly ever have anything constructive and judging by Mr Farrago's performance on occasion which trades on well publicised insults in the Chamber, perhaps have little to offer us at all.

    By :
    Roberto
    - Posted on :
    09/02/2013

  • I sincerely hope the EP will ditch this MFF, with its outrageous cutbacks in several headings, one of which being administration. By no means do I want to be the scapegoat of the Council dimwits, whose sole and only interested was to show their respective national audiences that they did their best to punish the "Brussels villains".

    By :
    AngryCivilServant
    - Posted on :
    14/02/2013

  • There is clearly a job to do at European level. If to do this resources are needed, then what are the heads of state/governments in Council doing cutting national contributions when they should ensure the Commission gets the money to do its job for us?

    In UK terms it's like a County Council (together with all the other like bodies) deciding that 'highway maintenance' is too expensive to carry out - and requesting Whitehall to let that money earmarked for essential remedial work (to avoid future massive catch up spendings) be spent on paying back the National debt instead.

    Let's face it, whether it is Germany, the UK, France Italy, all our governments have short term political aspirations.
    more strategic and longer term business. Pity that match funding on most projects involving E contributions are totally dependent on the willingness of national governments to spend! Some examples are shown in the progress of some of the key projects agreed in the Trans European high speed rail network plans. Had all this infrastructure and institutional enterprise been sole responsiility of the UK we would still not have had the Channel Tunnel (pace Mrs Thatcher), HS1 or, dare I mention it, HS2!

    Posturing and avoidance of adequate contributions to maintain mutual responsibility and commitment , for EU wide Research, jobs, environment, transport (TENs) and other essential growth promoters long term is a matter for the EP to challenge on behalf of us, the citizens, who do take a constructive interest in our joint future and prosperity.

    By :
    Roberto
    - Posted on :
    14/02/2013

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Background: 

EU leaders were meeting in Brussels on 7-8 February to forge a deal on the Union's 2014-2020 budget.

Diplomats have pointed out that it was “now or never” for heads of state and government to agree ahead of multiple elections in 2013.

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