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Friday, November 23, 2012

Open Europe publishes (and analyses) leaked draft of Van Rompuy's new EU budget proposal

We’ve got our hands on a leaked copy of the latest HermanVan Rompuy (HvR) proposal for the EU budget (see here for the full doc). The headline spending figure remains broadly unchanged in the new proposal, standing at €1,014bn (a €4bn increase), but more cash is spent on farm subsidies and structural funds, in a move designed to appease France, Poland, Italy and Spain.

(The figures here includes off budget items, if they are discounted the second proposal is actuall a decrease, from €973bn to €972bn. This is mostly due to items which weren't off budget in the original proposal, being off budget in the second version).

No figure is given for payments appropriations – the figure that the UK government is targeting – but given that this figure has widely been cited to be €940bn, it’s likely that it’ll have to come down more if acceptable to the UK (with the government's initial proposal at €886bn).

Also, just like with the previous draft, the latest HvR proposal foresees cuts to the UK rebate – which is a non-starter for Britain.  As a refresher (from our recent flash analysis):
“The proposal also includes an adjustment in the way in which the UK rebate is calculated. This could result in the UK rebate falling by as much as 11% or €3.5bn across the next budget period, solely due to this adjustment.

The plan also suggests that ‘corrections’ such as the UK rebate will be “fully financed by all member states”. It’s not entirely clear what this means, but it does suggest that the UK could actually be responsible for funding part of its own rebate. If this were the case then the rebate could be reduced by a further €3.316bn, cutting the rebate by a further 11.5%, and 21% (€6.8bn) from its original amount.”
The increased spending on CAP and Cohesion moves further away from the spending split which many in the UK would like to see (more growth focused) while although the headline figure has not increased it is still probably slightly too high. See table below for the full break down (click to enlarge):

So, despite talk of progress last night, it still seems that, from a UK perspective (but also likely a Swedish, Dutch and German one) there are some significant divisions.


Rik said...

Cameron is definitely not served by a quick deal.
If you look at the papers in the nett payers and the remarks and comments very likely a majority of the people there agree with him it is their governments that want to give in and compromise.

Also looking at how the money is spent it is 19th/20th century stuff. Nothing to do with getting ready for the 21st century.
CAP/Cohesion (with a lot of corruption and some things making absolutely no sense). Good move to bring the salaries up.

I do think if this gets longer in the public eye support will rise for more cuts. Several governments are pretty weak and even Merkel will not want the almost perpetual bad EU news with elections coming close (next to the Euromess). Anyway nearly all can use some success (in the big payers camp). Especially on the EU front (as the Euro rescue is as popular as the plague) and certainly can hardly afford another way of negative news (around French farmers and Polish noise protection for cows).

Anyway in order to show Cameron means business he cannot come to a deal now. Especially for the homefront he would look like an incompetent idiot nearly with any realistically possible deal. As all of those are likley to be considered insufficient.

Better show he is fighting (will be appreciated anyway at home) and the longer the news about this stays in the spotlight the stronger his position will get. The factual situation around the budget is for very few voters in Northern Europe good digestible. And the longer it stays in the news the more unpleasant facts will come up. Fat cat burocrats, complete nonsense projects, corruption etc).
As well that if it gets to springtime Merkel will want to limit negative EU news as much as possible by every month a Cameron show around the budget she will want the stuff of the table well before the election.
Just wear them down it creates news and therefor support and it shows Cameron's new EU policies are serious.

Make them anyway ready as well for a revised UK/EU deal.

Jesper said...

It seems likely that any agreement will have more than a bit of rushwork in it.

Interesting part regarding establishing a link between cohesion policy and economic governance in the Union (page 29). It seems funds to Member States can be withdrawn under certain conditions. Why not the same for EU institutions that fail to get auditor approval?

Lower wage to be accomplished by increasing hours worked but keeping the salary the same? I'd rather have some EUrocrats working less so that they produce less unwanted rules, regulations and proposals.

I can understand the logic of adding economic governance (item 9) into this but what has been added is not enough. And 'an effort' to ensure that the principles of subsidiarity and proportionality are taken into account? Only an effort!?! Are they trying to get even more disliked?

Then item 114... Equal treatment of taxpayers in all Member states. Interesting choice of words but lets leave that for now. EU is not even close to be transparent and well governed enough to be considered to be given own taxation rights.

There'll be errors in analysis of these proposals and there'll be errors in the proposals. The failure to start on time is a basic error.

Then leaking proposals instead of publishing them? A transparent organisation would publish proposals.

Anonymous said...

Jesper, please do not suggest that they could work more for the same pay! I'd rather pay them slightly more to not do anything because the more they work the more bureaucratic and micromanaged the place gets!

I read somewhere that in case there is no agreement then the original proposal (or previous amount) kicks in, but I did not have time to fully understand it. Does someone know is that true?

Jesper said...


I'm not suggesting to maintain pay while increasing hours worked, it is in the draft proposal - read item 100.

I've never been a fan of those schemes. For workaholics it makes no difference, for the others that are still working they're forced to work more hours for the same salary and the ones that don't get hired because of the 'need'(?) to concentrate the hours worked on as few people as possible; they're suddenly seen as unemployed 'scroungers'.

As economic policy it is daft, it is better to share the wealth so that many are involved in growing the wealth.

I'm not surprised that such a suggestion comes from these institutions.
I'm surprised that they dare to use the words 'social cohesion' in it. Dividing people into 'haves' and 'have nots' is by definition damaging social cohesion.

Solidarity among those already employed by EU-institutions seem high but their solidarity with the rest of the EU does seem sorely lacking.