The Union’s Financial Framework for 2007-2013

This report sums up the priorities which the EU should be setting itself under its financial prospects for the period 2007-2013.

The Commission has just published its report to the Council and the European Parliament on the Union’s financial prospects for the period 2007-2013. Entitled “Building our common future: policy challenges and budget resources of the Enlarged Union 2007-2013”, this report describes at length the priorities which the EU should be setting itself, before giving a brief presentation of the new financial framework (2007-2013). It also raises the questions of the structure of the Union’s own resources (should a “European tax” be created?) and the British correction (should a generalised correction mechanism be introduced?), but without giving a precise answer to them.

The Commission presented its budget proposals within the context of the Union’s 4 priority policies:

• Competitiveness and cohesion for sustainable growth, with two sub-headings: a) competitiveness for growth and employment (achievement of the Lisbon objectives). Here are to be found, inter alia, spending on research and innovation, European action for growth, space, education and training, etc… b) cohesion for growth and employment: Under this heading are described the structural and the cohesion funds intended both for the current members as well as the new members*.
• Sustainable development and protection of natural resources. The CAP is mainly dealt with under this heading. Following the decision of the European Council of Brussels in October 2002, CAP expenditure should not increase by more than 1% per annum, which is less than the estimated level of inflation. Consequently, this expenditure will drop from € 43.7 bn in 2006 in commitment appropriations to € 42.2 bn in 2013 (2004 constant prices).
• Citizenship, freedom, security and justice: “Giving full meaning to European citizenship”, which covers security-related spending within the EU, policing of external borders, immigration, maintenance of the EU’s cultural diversity, etc…
• The European Union as a global partner, which includes the Union’s foreign policy, development aid, the “new neighbours” initiative, European trade policy, humanitarian aid, etc… European Development Funds would be integrated into the Union’s budget under this heading.

This new presentation makes comparison with the previous budget difficult. The main points are:

• Annual commitment appropriations will rise from € 120.6 bn in 2006 to € 158.4 bn in 2013, an increase of 31% (for purposes of comparison, the French State budget will stand at € 280 bn in 2004). It will rise at the end of the period to 1.27% of the GNI of the 27 member state Union (including Bulgaria and Romania).
• Annual payment appropriations rise from 114.7 billion Euros in 2006 to 143.1 billion, an increase of 24.7%. On average per annum the payment appropriations will account for 1.14% of GNI. Let us recall that the ceiling of the Union’s own resources was set at 1.24% of GNI and that the Heads of State or of Governments of the six main net contributors, including France, proposed limiting the Union’s expenditure to 1% of GNI.

This report is only the first stage of a budget process which will not be finalised before 2005 at the earliest.

For more analyses of the EU’s enlargement process, see the

enlargement website of DREE.