The European Union’s Lisbon treaty passed an important test last week, when national governments reached an agreement with the European Parliament on a budget for 2012.
The two sides had been at odds over the size of the budget, with MEPs calling for a 5.23% increase in the budget for next year compared to 2011, saying that more funds were needed for the Europe 2020 jobs and growth strategy and for research and innovation projects.
National governments’ representatives in the Council of Ministers had been insisting that any increase should be limited to the rate of inflation, to reflect the efforts that they have been making at national level to rein in public spending. The European Commission had initially proposed a 4.9% rise.
After nearly 16 hours of negotiations that started on Friday morning (18 November) and lasted until 2am on Saturday, the two sides agreed a budget increase of 1.86% – less than the 2% rate of inflation in the EU.
Speaking in the early hours of Saturday morning (19 November), Janusz Lewandowski, the European commissioner for financial planning and budget, said that, while he was pleased that a deal had been reached, it was a “real austerity budget” that reflected that member states were in the middle of a serious financial crisis.
Alain Lamassoure, the French centre-left MEP who chairs the budgets committee and led the Parliament’s delegation in the negotiations, said the Parliament had agreed to scale back its demands for 2012 in return for pledges on funding for lifelong learning and for relations with countries of the southern Mediterranean.
Ministers and MEPs now have until 1 December to approve the budget formally.
The negotiations also included revisions to the 2011 budget. The EU already needed an extra €1.6bn on the budget for 2011, but agreed only €200 million. That amount has been pledged to cover the costs of European Social Fund projects. A further €38m will be transferred from rural-development projects to finance payments from the European Solidarity Fund to deal with the effects of an earthquake in Spain and flooding in Italy.
EU 2012 budget
Commission position in April: €132.739bn (+4.9% on 2011)
Council agreement in July: €129.088 (+2.02% on 2011)
Parliament position in October: €133.139bn (+5.23% on 2011)
Result of tripartite negotiations, 18-19 November:
€129.088bn; 1.86%increase on 2011
Changes to 2011 budget
Commitments increased by €3.25m, payments by €200m and revenues increased by €1.28bn
€38m redeployed from rural development for European Solidarity Fund for earthquake in Spain and flooding in Italy.
Lewandowksi warned that the low level of payments agreed meant that the EU could face difficulties in “paying its bills next year”. Ministers and MEPs agreed that the Commission will come back with additional requests for funding next year if there are not sufficient funds to meet spending commitments. Lewandowski said he hoped that national governments and MEPs would provide the Commission with“additional means to honour our commitments”.
Jacek Dominik, the junior Polish finance minister who chaired the meeting, pointed out after the agreement was reached that this was the first time that the EU’s annual budget had been agreed under the new procedures introduced by the Lisbon treaty. Those procedures allow only one negotiating round for national governments and MEPs to resolve their differences. The new method appears to have achieved its aim of increasing the pressure on the two sides to find agreement quickly.
The other change introduced by the Lisbon treaty is that MEPs now have the same budgetary powers as the Council over all parts of the EU budget. Before Lisbon, they had no direct control over so-called compulsory expenditure – ie, spending on support for farmers, rural areas and the fisheries sector – which account for around 40% of the total budget.
The victory of national ministers in imposing a limited increase against the wishes of MEPs suggests that, despite the additional powers that the Parliament has won under Lisbon, national governments have retained the upper hand in budget negotiations.
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