Parliament gamble threatens to derail EU budget deal

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Pressed by the European Parliament, finance ministers will meet on Tuesday (14 May) to throw an extra €11.2 billion into this year’s EU budget as part of a wider deal on finances for 2014 to 2020.

Finance ministers will try to broker an agreement on the 2013 budget, amid threats from the European Parliament that the longer-term budget could be frozen in the absence of an agreement to top it up.

The meeting will be held on the basis of a compromise struck on 6 May during the trilogue talks between the EU's three law-making institutions – the European Commission, Parliament and the Council of Ministers, represented by the Irish presidency.

Under the compromise, the extra €11.2 billion would be payable in two tranches, a first one of €7.3 immediately, and a second one of €3.9 billion later in the year.

Meeting the next day, EU national representatives failed to gather sufficient support for the plan, with most countries opposed to pouring more money into the 2013 budget.

Sticking to its hard line on budget matters, Britain described the Parliament's additional funding request as “totally unacceptable”. Other countries meanwhile, did not question the need to amend the budget as such, but criticised the €11.2 billion amount as excessive. These include Germany, France, the Netherlands, Austria and Denmark.

Member states will be expected to draw the extra cash from the EU's current budget for 2007-2013, which calculates national contributions as a proportion of their gross national income. If the amended budget of €11.2 billion is passed, Germany would pay an additional €2 billion, France €1.8 billion and the United Kingdom €1.2 billion.

Supporters of the deal argue that failure to pass the amending budget will leave some local authorities and small businesses in trouble as the EU would find itself in the incapacity to pay EU-funded programmes aimed at supporting them.

Parliamentary threats on long-term finances

If the finance ministers fail to approve the compromise, the Parliament's president, Martin Schulz, has warned that the assembly would freeze all negotiations on the 2014-2020 budget, agreed by EU leaders on 8 February (see background). His statement was backed by the chair of the Parliament’s budget committee, Alain Lamassoure, a French deputy from the centre-right European People's Party (EPP).

“An agreement is still possible if the Parliament obtains absolute guarantees that the €11.2 billion will be paid. It could then accept the payment in several tranches,” Lamassoure told the AFP news agency.

EU leaders are holding a summit on 22 May, with energy and tax evasion issues at the top of the agenda. The amending budget for 2013 is not on the agenda for the time being, but might well eclipse the other issues if the finance ministers fail to reach an agreement.

In the absence of an agreement for 2013, the European Parliament is likely to reject the 2014-2020 budget during its 1-4 July session. In the absence of an agreement over the long-term budget, the EU budget for 2013 will apply for 2014 and for successive years.

The EU's 2013 budget was agreed in December 2012. It was set at €132.8 billion - a 2.4% increase over 2012, barely covering inflation.

But this amount is well below the European Commission's request. An extra €9 billion is needed for refunding payments made on cohesion - or development projects in the EU's poorer regions - and an extra €2.2 billion, to cover needs in practically all other areas of the budget, with the exception of administration, where no additional requests have been made.

The 2014-2020 budget was agreed at the level of heads of state and government on 8 February, but still needs approval from the European Parliament.

The draft budget for 2014-2020 is slimmer than its predecessor. It was scaled down to 1% from 1.12% of EU gross national income. It is the first net reduction to the EU budget in the bloc's history.

  • 14 May: Finance ministers meet in Brussels to seek agreement on the 2013 amending budget
  • 22 May: EU summit dedicated to energy, taxation
  • 1-4 July: European Parliament session during which the 2014-2020 budget will be voted

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