2015 EU budget in dire straits


Under the bill, the government is to decide when to announce to introduce the euro, the fixed conversion rate, the start and end date of both currencies being in use, and the start and end date of dual price display, as well as other issues related to euro introduction, Finance Minister Zdravko Marić has said. [aranjuez1404/Flickr]

The European Commission on Friday (28 November) presented a new proposal for the 2015 EU budget, after member states rejected it on 17 November. However, the new proposal is almost identical to the former one, and there is little chance that the institutions will come to an agreement.

The Commission adopted a new draft budget for 2015. It foresees €145.2 billion in commitments (+1.8% on 2014) and €141.3 billion in payments (+0.7% on 2014. The formal proposals, which were rejected by member states, was of 145.6 in commitments and 142.1 in payments. But member states asked for the proposal to be slashed, even at the expense of key policy areas.

>> Read: Member states slash EU budget for growth and jobs, innovation

The new proposal has been sent to the European Parliament and the Council where member states sit, with a view to continuing negotiations early next week.

A press release quotes Vice President Kristalina Georgieva, responsible for the EU budget, saying that the new proposal has taken into account the views of the European Parliament and the Council, and that it would hopefully pave the way for agreement on the 2015 EU budget and on the pending draft amending budgets for 2014.

In fact, the draft amending budget for 2014 is in even bigger trouble, as member states have rejected a proposal of the commission to bridge the shortage of €4.7 billion in the 2014 budget using additional resources available in the EU budget, coming from fines.

>> Read: EU budget talks stalled, as net payers want their money back

The talks, to be held next week, will cover the 2015 budget proposal, but also the Draft amending budget for 2014.

In case the three institutions fail to strike an agreement by 31 December 2014, from 1 January 2015, the EU would operate under the system of the “provisional twelfth”. In short, the budget appropriations for each chapter of the budget would be funded monthly by one twelfth of its 2014 budget or the relevant amount in the 2015 draft budget, whichever is less.

According to the Commission, the system of twelfths would have consequences for the perception of the ability of the EU to act. In particular, it would put on hold any new initiative or body that didn’t have a budget for 2014.

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.

After months of complex negotiations, the European Parliament finally approved the EU’s budget for 2014-2020 on 19 November 2013 (click here, for pages 1 to 31).  

The procedure regarding the EU annual budget is as follows: first the Commission presents the draft budget (done on 11 June this year); then the Council reacts; then the Parliament reacts. If the Council cannot agree to the Parliament's position, a 21-day conciliation procedure follows to find a compromise between the two institutions.

If the conciliation procedure fails, as happened in 2010, 2012 and this year, the Commission must present a new draft budget. This is precisely what happened today. 

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