A hard fought late night budget deal has put the EU back on track. Blair has rescued the remains of his European credentials while Germany’s Chancellor Merkel showed herself to be a new force to be reckoned with.
The breakthrough came early Saturday morning 17 December after more than 30 hours of tough negotiations when the UK agreed to a German compromise proposal to cut the UK rebate by 10.5 billion euros.
This raised the 2007-2013 budget to 862.3 billion euros, or 1.045 percent of EU Gross National Income. Compared to the 1.03 percent in the latest UK proposal it adds 13 billion euro.
The new EU budget will be spread out over the following main headings:
- Growth and Employment initiatives including regional policy: €308 billion
- CAP, Farm aid and Rural Development: €292 billion
- Justice and Interior Affairs, incl. immigration, terrorism: €10.2 billion
- Foreign and Humanitarian aid, aid to candidates: €50 billion
- Administration costs: €50.3 billion
When the budget talks broke down in June 2005, the UK had demanded a review of CAP spending in exchange for any concession on the UK budget rebate.
In the end what the UK got was a commitment from its EU partners to carry out a thorough review of all EU spending in 2008-09. But this holds no real promise as to the outcome of such review, which in any case would only take effect after the end of the EU budget package 2007- 2013. EU governments will then decide by unanimity on changes to the priorities, which would affect the next long-term budget for 2014-2021.
The UK will make an additional net contribution to the EU of 10.5 billion euro over the period 2007-13. Earlier this week the UK had offered to reduce the rebate by 8 billion euros over the seven-year period.
The summit deal restored 5.3 billion euros in regional funds for some EU’s new members states, which looked set to lose 12.3 billion euros in Britain’s proposal of 14 December. Poland received some 2.3 billion in extra funds.
The summit deal offered reductions in the net contributions of the Netherlands by 1 billion euros a year, Austria by 600 million euros and Germany by 300 million euros.
The EU summit also decided to give FYROM (Macedonia) status as candidate to EU membership, but with no promise of when such negotiations could start. France had made a budget deal a condition for granting Macedonia the status.