After 24 hours of talks, EU leaders have struck today (8 February) a deal on the 7-year budget clamoring success, but have set themselves on a collision course with Parliament, which prepares to fight off the decision to cut spending that reflects austerity undertaken by many EU countries.
The long-term EU budget for 2014-2020 agreed today (8 February) is smaller than it was back in 2007-2013. It goes down to 1% from 1.12% of EU GNI. It is the first net reduction to the EU budget in the Union’s history.
The EU leaders’ agreement sets the figure for “commitments” – the maximum amount of money allotted during the seven-year period – at €960bn, while budget “payments” – the amount of money that can actually be spent – have been severely reduced by €34bn to €908.4bn.
With regard to the different spending headings, the figures from the final text agreed by EU leaders differ little from those announced in the morning.
The most visible difference appears to be the increased rebates for Netherlands (from €650 to €695 million per year) and for Sweden (from €160 to €185 million per year), as well as a new country receiving a rebate – Austria, with a total of €60 million for the next three years, compared to the draft text circulated in the morning.
"Is this your dream budget? I would say if I were alone, no, it would have been different," French President François Hollande said after the summit.
“The agreement is a good agreement as it gives predictability for investors to create growth and jobs,” German Chancellor Angela Merkel said at her presser held at the same time, adding that it was important to show that the EU is capable to achieve results.
Commission President José Manuel Barroso said that despite the fact that the levels agreed below what the EU executive considers desirable, the deal remains “an important catalyst for growth and jobs”.
Parliament political leaders say will reject deal
However, the leading MEPs took a completely different view.
“The European Parliament cannot accept today's deal in the European Council as it is. We regret that Mr Van Rompuy did not talk and negotiate with us in the last months,” the leaders of the four largest political groups stated in a press release published before the summit ended.
Joseph Daul (EPP), Hannes Swoboda (S&D), Guy Verhofstadt (ALDE), Rebecca Harms and Daniel Cohn-Bendit (Greens/EFA) slam the agreed EU budget, saying it risks to lead to structural deficit.
“Large gaps between payments and commitments will only store up trouble for the future and not solve existing problems,” the four leaders stated.
European Council President Herman Van Rompuy said the difference between commitments and payments was in the order of 5% and the EU executive had taken measures to narrow it down, not allowing for the deficit to mushroom.
Asked how he expected to strike an agreement with the Parliament, Van Rompuy said the leaders of the four political groups had reacted before completion of formal discussions.
Indeed, the press release of the four presidents was issued before the end of the summit, at a moment when according to sources Van Rompuy was pushing to add texts allowing more flexibility in the use of the budget. Such texts indeed appear in the final “Multiannual Financial Framework”.
He said that EU leaders had assumed their responsibility, and now the Irish Presidency would enter in dialogue with the European Parliament on a number of subjects, including flexibility of spending. Then, the Parliament would also assume its responsibilities, Van Rompuy said.
“One has to think twice before rejecting this European budget. Because for the people, for the enterprises, for employment, for youth, for youth employment, for prosperity, the stakes are really high,” he said.
Van Rompuy also said his services had been in permanent contact with the European Parliament, which goes against what said by the four Presidents.
The leading MEPs said they remain firm on the respect of Article 310 of the Treaty which requires a balanced budget, and outlined several conditions for rubber stamping a deal, including genuine own resources for the EU budget to gradually replace the current system based on national contributions.
It remains unclear if MEPs will chose to veto the budget as agreed by EU leaders by secret vote, which lowers the chances that it could be passed.