EU clinches deal on multi-billion euro budget for 2014-2020

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Negotiators reached a provisional deal late Wednesday (19 June) to finalise the European Union's €960 billion long-term budget, amid doubts that the socialists will back the agreement in the European Parliament.

The deal between representatives of EU member states and the European Parliament on a seven-year spending package was announced after many hours of haggling.

"We have concluded the negotiations,” said Irish Deputy Prime Minister Eamon Gilmore, who represented EU governments in the negotiation.

“The lead negotiator for parliament and I have agreed a package that we are both going to recommend to our respective sides," he told reporters in Brussels after more than 24 hours of talks.

Gilmore said he would ask EU ministers to endorse the deal at a meeting in Luxembourg on Tuesday.

Parliament ratification uncertain

But ratification of the deal was immediately thrown into doubt by the head negotiator for the Socialist and Democrats group in parliament – the second largest political group in the EU assembly –, who said he was not satisfied with the outcome.

Ivailo Kalfin, a Bulgarian Socialist MEP, tweeted after the talks: “Negotiations concluded. Not satisfactory to all. We cannot confirm agreement tonight."

The agreement needs majority support from the Parliament to come into force as planned at the start of 2014.

Without the support of the socialist group, it is unclear whether the deal will pass a parliamentary vote scheduled for early July. Further talks among MEPs and governments may be needed to secure majority backing, EU officials said.

That could delay the start of EU development funding for poorer regions hit by recession, as well as a new initiative to combat rising youth unemployment in parts of the EU.

Spending limits unchanged, more flexibility

The deal left unchanged the overall spending limits for 2014-2020 agreed by EU leaders in February. They included the first ever real-terms decrease in long-term spending, while agriculture and regional development funding will continue to enjoy the largest budgets.

But negotiators did agree that a limited amount of unspent funds could be moved from one year's budget to the next, instead of being returned to national coffers as at present.

EU officials have said that, contrary to the spirit of the leaders' February deal, that change could mean increased spending over the next budget period compared to now, depending on the outcome of subsequent annual budget negotiations.

In a statement, the European Commission said the package includes “strong flexibility measures” so that the EU budget can be spent in its entirety instead of being returned to the member states when sums earmarked under specific headings are not fully used.

The deal also includes a binding revision clause in 2016, in parallel with a review of the EU budget’s so-called “own resources”, which refers to the EU’s ability to raise its own taxes to win additional sources of revenue.

These were two key demands of the European Parliament, which were backed by all major political groups.

Further elements of the agreement include a reinforcement of the EU Solidarity Fund to make it more responsive to natural disasters such as floods. Also, the €6 billion Youth Employment Initiative, agreed in February, would see its finances for 2014 and 2015 strengthened so that it can be mobilised more quickly.

Youth unemployment will be a key topic for discussion at a meeting of EU leaders on 27-28 June.

The rapporteur of the European Parliament on the EU's multiannual financial framework, German MEP Reimer Boege from the European People's Party (EPP), today issued the following statement:

"Despite numerous efforts and the dedicated work by of the European Parliament's negotiating team it proved impossible yesterday to obtain a truly sustainable offer from the Irish EU Presidency on the EU's multi-annual financial framework. The statement by the Irish Council Presidency of an alleged agreement on the financial framework is nothing more than a manipulation. The European Parliament's negotiating team last night decided not to continue the negotiations, if they can be called such at all, and submit the texts to the European Parliament."

The Alliance of Liberals and Democrats (ALDE) said they take the budgetary powers of the European Parliament too seriously to confirm reports that negotiations on the next multiannual financial framework are closed.

"At this stage, there is still no agreement between the Parliament and the Council," said Guy Verhofstadt, ALDE group leader. The group will meet next week to consider the Irish presidency's proposals, which are not yet available.

"In this game of inter-institutional brinkmanship, the Council should think twice. Remember that the MFF requires a qualified majority for approval by Parliament. On the basis of the disparate and partial evidence we have so far seen, an agreement has not yet been reached," Verhofstadt continued.

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.

  • 25 June: EU ministers to endorse the agreement at a meeting in Luxembourg
  • 1-4 July: European Parliament expected to vote on the agreement at its July plenary session
  • Autumn: EU Parliament and member states expected to approve by co-decision some 65 regulations, which represent the legal base of the EU budget.
  • 2014: New EU budget period starts running until 2020

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