Size matters in row over budget

MEPs and Council battle over size of 2011 budget.

Negotiations between the European Parliament and the Council of Ministers over the EU’s 2011 budget will be nasty and brutish, but not short.

MEPs and national finance ministries are at odds over the size of the budget. The Parliament is insisting on a 5.9% increase in spending compared to 2010, while national governments, which are struggling to rein in their own public spending, want to limit the increase to 2.91%.

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According to officials, MEPs appear ready to use additional powers handed to them under the Lisbon treaty to secure their budget demands.

After four days of intense debate, members of the Parliament’s budgets committee voted on Tuesday (5 October) to reject the position taken by member states in August to limit the increase in next year’s budget. MEPs instead backed a proposal from the European Commission, published in April, which foresees a €130.14 billion budget, up 5.9% from 2010. Member state diplomats said the budgets committee’s position was “politically unrealistic”.

The full Parliament is to vote on the committee’s recommendations at its plenary session on 18-21 October, after which negotiations with the Council will start in earnest to find an accord before the end of the year.

Influence of Lisbon

These negotiations are expected to be bruising because the Lisbon treaty has given MEPs stronger powers over the EU’s budget. They now have to agree all areas of EU spending, including support for farming and fisheries, rather than just the overall amount. In addition, there is only one reading in which to reach a final deal under the Lisbon treaty, rather than two, meaning there is less time to negotiate compromises.

MEPs have already declared their willingness to take tough positions in negotiations by threatening to block funding for ITER, the international nuclear fusion reactor project based in France.

The Council’s desire for a limited budget increase is equally strong. Vince Cable, the UK’s business minister, warned last week of a public backlash against the EU if MEPs did not tone down their demands for a larger increase to the budget.

“At a time when national governments, including mine, are having to make very painful cuts in public spending, no one can understand why the European budget is not being subjected to the same discipline,” Cable told MEPs last Thursday (30 September).

“There is a big backlash on the way, not only in the UK,” Cable said, urging the Parliament and the Commission to be “acutely sensitive” to the issue. The UK and several other countries want an even smaller budget than the Council agreed in August.

But Cable’s arguments were rejected by MEPs who argue that a larger EU budget will do more than cuts to help countries tackle their economic problems.

Sidonia Jedrzejewska, a Polish centre-right MEP who is drafting the Parliament’s negotiating position on the 2011 budget, warned that the public would start to question the added value of the EU if it could no longer fund cross-border education or training programmes.

“I am aware that in times of economic crisis we have to make cuts and concessions, but we cannot forget that our future economic growth will depend on today’s investments, especially in the areas of education, research and innovation,” she said.

Spending priorities

The two sides remain far apart on the spending priorities of the budget, as well as its overall size. MEPs have backed plans to increase spending on cross-border student exchanges, training and life-long learning projects linked to boosting growth and competitiveness. The Council wants this budget line cut by €891.14m compared to the Commission’s proposal.

MEPs have also rejected the Council’s demands for a €1.06bn cut to cohesion funds for poorer EU regions, a €820.71m cut in aid to farmers and the fisheries sector, and a €590.9m cut to external aid programmes, including funds given to the Palestinian Authority.

Despite their new powers under the Lisbon treaty, MEPs will not be able to dictate to national governments how much money they transfer to the EU. Unless the national governments opt for an expansionist budget (which they will not), MEPs will have to tell the public what their spending priorities are.