UK to fight additional cash for EU budget

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The European Commission's request for an extra €11.2 billion for this year's EU budget is "totally unacceptable," Greg Clark, Britain's financial services minister, said yesterday (27 March). 

 

The Commission requested the “amending budget” for 2013, a routine procedure repeated over years, due to the backlog of payments created at the end of the previous budget year.

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 Commission said in a statement.

In a statement from London, Clark said the demand was “totally unacceptable” at a time when most EU member states are taking difficult decisions to reduce public spending.

“It is extraordinary that the Commission should demand an increase in the EU budget that is bigger than the rescue package that was agreed for Cyprus earlier this week,” Clark added.

The bailout for Cyprus amounted to €10 billion.

It is not the first time that the UK objected to the amending budget, but if it is not approved, British firms awaiting reimbursement from Brussels will also suffer.

Budget Commissioner Janusz Lewandowski said the request “cannot come as a surprise” because the EU budget in recent years has been below the needs based on estimates from member states. He said this was creating a snowballing effect of unpaid claims transferred to the following year.

“The ostrich policy can only work for so long: postponing payment of a bill will not make it go away. Not one cent of the extra amount we request today is for the EU institutions, it will merely allow the EU to pay its share of infrastructure or science projects that member states agreed to start in the past,” Lewandowski said.

The draft amending budget can be adopted if a qualified majority of member states supports it – meaning that the UK can be outvoted.

Lewandowski said he was confident that the Council and the European Parliament “will deliver on their commitments to avoid any shortfall in payments and take a swift decision on this proposal.”

The Commission proposal to settle only part of the EU's €16.2 billion debt rolled over from 2012 threatens the EU with insolvency later in 2013, said French MEP Alain Lamassoure (EPP), chair of the budget committee.

"It is thus confirmed: there is a threat that the EU will run out of funds before the end of 2013. This is forbidden by the treaties and the Parliament will not accept a deficit", said Lamassoure after EU Commissioner Janusz Lewandowski's announcement of an amending budget worth €11.2 billion.

Because the amending budget is insufficient to pay the bills, the €5 billion shortfall will have to be paid from the 2013 budget, which was not calculated to cover rolled-over bills, says a statement by the office of Lamassoure.

The EU's 2013 budget - separate from the multi-year budget - was agreed last December. It was set at €132.8 billion - a 2.4% increase on the 2012 budget.

But this amount is €5 billion below the Commission's draft budget and €2.9 billion below the final level of payments in the 2012 budget, creating a very tight situation for payments as from early 2013 and a shortfall in payment earlier than last year. This is largely due to the backlog of payments created at the end of the year 2012 and moved to the 2013 budget.

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