Commission wants 6.8% rise in budget

Payments foreseen of €138 billion for 2013.

MEPs prepare to call for greater budget increase

EU budget complexities pose a public-relations challenge

The European Commission yesterday (25 April) put forward a draft budget for the European Union in 2013, proposing a €9 billion increase in payments, a 6.8% rise over the 2012 budget.

The proposal adopted by the college of commissioners foresees payments of €138 billion, up from €129bn in the current budget.

Janusz Lewandowski, the European commissioner for the budget, said that “a mountain” of commitments – promises to pay – that had accumulated during the current multi-annual spending period, 2007-13, and that were now being turned into requests for payment, made a larger increase in the budget for payments inevitable.

“We should pay out existing commitments,” he said.

Lewandowski stressed that the 6.8% increase in payment appropriations might be insufficient to cover commitments already entered into under the EU’s cohesion and farm-aid policies, particularly if payments are delayed from the current year and so have to be made under the 2013 budget. Payments for the cohesion policy account for €49bn in the draft budget, those for farm aid €44.1bn

‘Liquidity problems’

Lewandowski said that without payments from Brussels for projects to which commitments had already been made, member states such as Slovakia or Spain might suffer liquidity problems. He said that going below the requested levels in cohesion and agriculture funding would be “simply dishonest”.

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But the Commission is proposing that in the 2013 budget the EU should limit the growth in new commitments to 2%, the projected rate of inflation for 2013, so that they are effectively frozen. “This is not a big budget,” he said.

Fact File

The numbers

The draft budget for 2013 foresees €151 billion in commitments, up 2% from 2012, and €138bn in payments, up 6.8%. This would reduce the gap between commitments and payments from €18bn this year – a record – to €13bn next year.

The biggest of the five headings in the draft budget is “sustainable growth” with payment appropriations of €62.5bn, including €49bn for the cohesion policy – an increase of 11.7% over cohesion spending in 2012. Provisions for competitiveness spending are €13.6bn, up 17.8% over 2012 – the biggest increase in relative terms – to pay for research programmes that will be completed in 2013. The second-biggest budget heading is the preservation and management of natural resources, which includes payments of agricultural aid of €44.1bn (a 0.5% increase).

Administrative expenditure for all EU institutions is to rise by 2.8% to €8.5bn – but this excludes the costs of Croatia’s accession, expected in summer 2013, which will require an amending budget once the ratification process has been completed.

It is proposed that the EU’s spending on external relations will be €7.3bn (up 5.1%), which includes an increase of 21.1% in payments under the Instrument for Pre-Accession Assistance and of 11.6% for the European Neighbourhood Instrument. The heading for citizenship, freedom, security and justice comes last, with €1.6bn in payments, up 6.1% over 2012.

The only main heading of the budget that sees an actual reduction is that for citizenship, with a 3.6% reduction in commitments – a cut of just €26 million in absolute terms.

The budget foresees a net reduction in the European Commission’s head count of 0.5%, or 121 staff, taking into account the need for an additional 142 posts for Croatian nationals once Croatia joins the EU in the summer of 2013.

The Commission’s departments, notably those dealing with external relations and research, were working up to the last moment to calibrate their spending requests and reconcile them with demands for savings from José Manuel Barroso, the president of the Commission. The overall balance between departmental demands and the need for savings was not decided until a meeting of the heads of Commissioners’ private offices on Monday (23 April). A source familiar with the process said that the budget proposal was “slightly lower” than the demands made by the various departments, to reflect the political realities in the member states.

Negotiations between MEPs and the member states are expected to take off in earnest in June, with an agreement expected in the autumn.