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Thursday, February 07, 2013

Could the EU budget be cut for the first time?

The rumours are flying in thick and fast from Brussels regarding the latest EU budget numbers and the likelihood of a deal. The range estimates we laid out in our briefing still stand up, with several suggestions that Herman Van Rompuy's latest proposal will be for €959bn in commitments and as low as €913bn in payments. In terms of figures this would represent a significant victory for the UK and other states that want to see budgetary restraint. Below is how such a deal would compare to Van Rompuy's November proposal, and more importantly, the current long-term EU budget (MFF).

Of course there are still plenty of twists and turns to come in the negotiations, not least how the headline figures above are distributed across the different headings such as the CAP, structural funds, administration etc. Follow us on twitter for the latest developments.


Denis Cooper said...

"€959bn in commitments and €913bn in payments"; does that mean that rather than €33bn of payments being deferred until the next 7 year period under the November 12the proposal it would be €46bn of deferred payments?

And what does "€bn 2011 prices mean"? That there will be automatic inflation adjustment and so the actual sums will be higher than shown?

Open Europe blog team said...

Thanks for the comment Denis.

The higher commitments do potentially mean that some spending will show up in the next budget period, although it may not be the full amount. Higher commitments allows for funds to be committed to long term projects and may not be paid out until a later date. We discussed this on the blog here: http://openeuropeblog.blogspot.co.uk/2013/02/the-accounting-details-that-could-make.html

2011 prices mean that the impact of inflation is taken out. So future funding paid out in the years 2014 – 2020 will be slightly higher to account for inflation between 2011 and the year it is paid out in. This is standard practice for such budgets, but the ‘real’ value of the money paid out should not change.

Anonymous said...

As an EU citizen, watching this whole process makes me sick. The national and vested interest seem to trump common sense and prudence.

The French have taken Europe to the edge with their ongoing farm subsidies, 35 hour working week and 'a la carte' attitude and in the process bankrupting themselves.

The EU is overseeing the biggest destruction of value that I have ever seen in my near 50 years. I see no long-term strategy on the table to resolve the debt crisis or generate growth - only petty bickering.

The UK is right about the EU budget. There is a 30% fraud level in the biggest EU budget and the accounts have not been signed off for 18 years. Someone please show me any entity on this planet that can get away with something similar without being shutdown.

The UK must exit this charade as soon as possible. The democratic deficit is now beyond belief and I believe serious social strife is coming. Once it arrives we have to hold our useless politicians to account. Confiscation of assets (to make good the cost to the British people) and prison sentences for all politicians who are responsible will ensure that this never happens again.

jon livesey said...

In a sense, the word 'budget' is a bit of a misnomer. You think of a national budget being the cost of running the Government, Defence and so on, plus welfare and similar transfer payments.

The administrative cost of the EU only amounts to about 5% of the EU budget, and 95% goes toward 'policies', which are subsidies of agriculture and transfer payments to regions.

So the EU budget is more like a foreign aid budget than a national budget, and when someone like Hollande supports a higher budget, it's not because he wants more EU in principle, but because French agriculture is a big recipient of CAP funds.

I think that the debate over the EU budget would be a lot clearer if leaders were a bit more transparent about their motives. There are countries that give and countries that get, and some countries talk up the EU as if it's a wonderful thing, when what they are really thinking of is the cash they get from other countries.

Andy said...

Well, I think that it will be better if you can show us the big picture: EU bugdet as a % of EU countries GDP.

Rollo said...

Smoke and Mirrors; there will be huge and growing sums outside the budget: non-budget spending as it is called. And the amounts will be automatically adjusted for inflation, so all the wages will continue to grow. And the central cancer will still keep increasing as any reductions will be on the few useful capital spendings that the EU 'funds' with our money. At a time of war, our defence spending has been forced down by 15%. Our total nett payments ought to be reduced by the same amount. They will not be. We will pay more. That will not stop Cast-Iron-Pledge-Cameron from flying back in waving a bit of paper claiming 'peace in our time'.

Anonymous said...

Every penny extorted and embazzled by the gravy train-riding, uber-EUSSR-Natioanlist EUSSR is wasted.