EU 2014-2020 budget agreed. This time for real?

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A communication breakdown led to the premature announcement of an agreement of the three European institutions on the EU budget for 2014-2020 one week ago. Today (27 June), hours before the beginning of the EU summit, the three institutional top officials announced what appears to be a final compromise. 

 



The deal relieved leaders of having to grapple with the budget so they could focus on other issues during their two-day summit.

Commission President José Manuel Barroso took the initiative late Wednesday to convene a meeting of Irish presidency and European Parliament officials in a last-minute attempt to negotiate a solution.

Following three hours of talks, leaders appeared at a news conference and a smiling Barroso said he was “delighted” to announce a political agreement on the EU’s long-term budget, calling it a good deal for Europe and the economy.

The leaders, he said, had walked “the extra mile” that separated them from an agreement last week that momentarily through the budget process into turmoil. That happened when major political groups in the European Parliament rejected a statement announcing that Irish Foreign Minister Eamon Gilmore had “reached an agreement [on the EU budget for 2014-2020] with the European Parliament’s chief negotiator.”

On Thursday, both Gilmore and chief Parliament rapporteur Alain Lamassoure (EPP, France) were standing alongside Barroso, Parliament President Martin Schulz and Irish Prime Minister Enda Kenny at the news conference.

Barroso revealed a sketchy outline of the agreement. He said the deal included “more flexibility on both payments and commitments,” as the Parliament had required.

The deal also included “front-loading of expenditure,” the Commission leader said, which means early payments for youth employment, research, education and small business programmes.

Barroso also said that the deal includes the possibility for countries to boost assistance to Europe’s most deprived people.

Money will be spent

Schulz said the leaner, €960-billion fiscal plan for the next seven years would be spent, which was not the case with the seven-year budget period that ends this year. Some €50 billion of unspent money was reimbursed to member over the 2009-2013 period.

“I think there were people who thought this could be repeated even in the current period,” he said, noting that under the agreement reached today, this would not happen.

Schulz also expressed satisfaction at the binding revision clause, which will allow the Parliament to review spending midway through the budget. He also stressed that in the future the EU long-term budget would span over five years, rather than seven, to mirror the EU legislative cycle.

“This is not what I thought would be the best solution. But it is what I could, what we could negotiate here,” he said, thanking the Parliament’s co-rapporteurs Reimer Böge (EPP, Germany) and Ivailo Kalfin (S&D, Bulgaria).

Schulz said he now needed to “sell” the agreement to MEPs and win a majority for a vote expected at next week's session in Strasbourg.

2013 budget in limbo

Asked about the still-outstanding issue of the EU’s amending budget for 2013, Barroso said EU ministers would decide on the first tranche of the draft amending budget no later than the ECOFIN Council on 9 July. Reading from a text, he said the Council also commits to take all necessary steps to ensure that “EU’s obligations for 2013 are fully honoured.”

Schulz said that this was a matter of trust, as the Parliament is expected to vote on the long-term budget before the Council's decision. But he added that if the Council fails to deliver, the Parliament would freeze the 70 or so legislative acts needed to implement the 2014-2020 budget.

EU leaders too will have to endorse the “political agreement”, but the issue appears now more of a formality.

Commission President José Manuel Barroso said: "The deal includes more flexibility on both payments and commitments. The deal includes frontloading of expenditure on critical issues like youth employment, research, youth, namely Erasmus, and also SMEs. The deal includes also the possibility for the countries that so wish to increase the aid for most deprived people. 

"The deal also confirms the agreement reached for this year amending budget and it gives guarantees that there will be the payments for European beneficiaries. This is extremely important namely for those regions and those citizens in Europe that badly need this investment. So, I want to make this point clear: when we speak about the Multiannual Financial Framework, the budget for Europe, this is not an abstract concept. This is the growth fund for Europe."

UKIP leader Nigel Farage called it “a rotten deal for Britain”.

"It is still a rotten deal for Britain. This political agreement only came after the European Parliament demanded and got a retroactively increased 2013 EU budget. The British taxpayer has nothing to celebrate as 53 million pounds will still be leaving each day bound for Brussels. Why should we be paying a penny piece to this financially incontinent EUIt is telling that the EU has reduced its payment to the Court of Auditors, which is supposed to investigate fraud and EU waste," Farage concluded."

Council President Herman Van Rompuy welcomed the agreement, calling it “crucial to set in motion this seven year budget for the Union”. He encouraged both the Parliament and the member states parties to formalise the agreement “as soon as possible”.

“I also welcome the MFF agreement in light of the European Council meeting beginning today. Leaders will address the urgent problem of youth unemployment in Europe. The MFF, including the Youth Employment Initiative and other EU funds and initiatives, is an indispensable tool to help more young people to secure jobs. It must be effective as of 1 January 2014,” Van Rompuy is quoted as saying.

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.

However, the European Parliament made it clear that it would make full use of its new budgetary powers, demanding more flexibility to spend unused funds, a mid-term review clause and more money for growth and investment.

  • 4 July: (Most probable date) Parliament votes EU budget for 2014-2020
  • 9 July: Ecofin Council delivers on 2013 amending budget

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