Politics

EU Budget Talks Fail

European Union

European Union (Photo credit: erjkprunczýk)

Talks on the European Union’s (EU) 2013 budget collapsed on Friday as its austerity-minded member states refused to plug a funding gap of about 9 billion Euros (11.4 billion U.S. dollars) in the EU’s 2012 budget, EU’s lawmakers said.

“The differences between the positions of (the European) Council and (the European) Parliament were too far apart to continue talks overnight,” Alain Lamassoure, the European Parliament’s (EP) lead negotiator, said in a statement released by the EP.

“The European Commission will now have to present a new proposal to enable talks to resume,” and the Parliament and the Council would have until midnight on Tuesday, when EU finance ministers are scheduled to gather, to reach an agreement, Lamassoure added.

The deadline for a deal on a 2013 budget is Tuesday, but net contributors, led by Britain and including Germany and France, are looking for a sharp decrease to match the spending cuts and austerity policies of most European capitals.

The fail of Friday’s negotiations, which were destined to agree on the 2013 EU budget but hit stalemate over the funding gap in the budget of 2012, has dealt a blow to a plan to come out with the EU’s 2014-2020 long-term budget later this month.

The shortfall includes about 1.5 billion Euros which should have been paid to Italy, Poland and Spain to compensate victims of flooding or job cuts, as well as funding for the Erasmus student exchange program. (1 euro = 1.27 U.S. dollars)

Countries using the Euro de jure Countries and...

Countries using the Euro de jure Countries and territories using the Euro de facto Countries in the EU not using the Euro (Photo credit: Wikipedia)

The British Government fired a fresh broadside at Brussels over “breathtaking” demands for a bigger EU budget.

David Cameron is already on the “warpath” over pressure for an inflation-busting 11percent increase in the EU‘s 2014-2020 financial program–threatening a veto at a summit unless there is at least a spending freeze, if not cuts.

Richard Ashworth, leader of the UK’s Conservative MEPs, said he had made clear that not all MEPs backed the 6.8 percent rise, telling Parliament President Martin Schulz that he was “completely out of touch with political reality” at a time of painful national budget cuts.

According to reports, the European Commission said its request for additional money this year was needed to avoid cutting off EU funds for education, infrastructure and research projects.

The demand was based on government estimates of claims for EU funds that they expected to submit before the end of this year, it said. But net budget contributors including Germany, Britain and the Netherlands questioned the figures.

“We take the view that implementation of the budget in 2012 is not a basis for the claims made by the Commission,” Germany’s Permanent Representative to the EU Peter Tempel said.

“These extra needs mentioned by the Commission should be met above all by redeployment, and we expect the Commission to react to that point,” he told EU colleagues during the meeting.

The UK and seven other EU countries – France, Germany, Sweden, Finland, Denmark, Austria and the Netherlands – signed a joint statement in July saying even a 2.79% rise was “more than we would have liked”.

And Clark warned this afternoon that, the bigger the increase in next year’s budget, the lower the chance of any deal at all when EU leaders sit down in a fortnight to thrash out the contentious seven-year spending program.

And a last minute Commission declaration that it could get by on an extra €8 billion from the member states for this year instead of €9 billion only worsened the mood.

European flag outside the Commission

European flag outside the Commission (Photo credit: Wikipedia)

“The Commission suddenly decided it needed one billion euro less than it had previously insisted was the required amount to meet a shortfall this year… and that soured things.” said one EU official.

“The ministers decided to leave it for now and there’ll be more consultations by phone over the next few days.”

The issue is now likely to end up on the table for talks between EU finance ministers in Brussels on Tuesday, with just hours before the deadline expires.

If no deal can be done, this year’s spending level is “rolled over” into next year, with no increase at all.

An EU summit aimed at reaching a deal on that budget will be held on 22-23 November.

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