Progress being made at EU budget talks, Gilmore says

Talks are resuming this morning in Brussels in an effort to finalise the European Union’s seven-year budget, worth €960 billion.

Tánaiste Eamon Gilmore, who is chairing the negotiations as part of Ireland's presidency of the EU Council, said "a lot of progress" had been made at the talks yesterday.

Speaking on RTÉ Radio ahead of the meeting this morning, Mr Gilmore urged leaders to come to a compromise so the budget for 2014-2020 could be passed.

"I would encourage them to support the adoption of this European budget which is needed to support jobs and investment right across Europe but in Ireland in particular," he said.

Ireland wants an agreement to be reached before Lithuania takes over the EU presidency on June 30th.

Mr Gilmore said leaders were working to develop a more flexible budget system which would allow money not spent in one year to be carried forward into the next. Up to now, unspent money had to be returned to member states.

They are also providing for a mid-term review to allow for revisions to the budget if the economic situation changes by about 2016, he said.

If an agreement is not reached, the EU risks delays to the disbursement of funds destined for poorer regions and the fight against youth unemployment.

In February, EU leaders unanimously agreed to fix spending over the next seven-year period at €960 billion, which represents the first ever decline in real term spending compared with the previous period.

The deal must be approved by a majority of MEPs in the parliament before it comes into force. While they have refrained from trying to unpick the headline figures agreed at the summit, they are demanding other concessions that could undermine the austere spirit of February’s deal.

Chief among these is the power to move unspent funds from one year’s budget to the next, instead of returning them to national coffers as at present. Governments say they are willing to allow such transfers up to a maximum of €4 billion per year, but the parliament insists on unlimited flexibility.

Even with a €4 billion limit, EU officials agree the change could result in increased spending over the next budget period compared to the current one, depending on the outcome of annual budget talks, where actual spending is decided.

That ensures that cost-cutting governments in Britain and the Netherlands, for example, will be reluctant to make further concessions on the issue.

While there is pressure on MEPs from national governments and voters in some countries to conclude the talks, most believe governments feel the greater sense of urgency.

Next week, EU leaders will meet in Brussels to discuss the specifics of an initiative to tackle rising youth unemployment. But the €6 billions earmarked for the scheme is dependent on a deal on the long-term budget.

If the talks drag on beyond September, officials warn that the bloc would likely be forced to adopt a provisional budget for 2014, delaying some long-term EU programmes in areas such as infrastructure spending and research.

Additional reporting: Reuters