Proposed EU budget sees 6.8% rise

Wed, Apr 25, 2012, 01:00

The European Commission has proposed a 6.8 per cent increase in the EU budget to €138 billion in 2013, promising growth-oriented investments to turn around the region's economic fortunes.

"Europe needs to invest wisely for its own future starting today," EU budget commissioner Janusz Lewandowski said in a statement.

The proposals earmark €62.5 billion in payments for "job friendly growth" in Europe, with research framework programmes in line for a 28.1 per cent rise to €9 billion. The competitiveness and innovation programme is to see funding rise by almost 50 per cent to €546.4 million, while structural and cohesion funds will amount to €49 billion, an increase of  11.7 per cent.

The overall increase in the budget had been widely expected after draft documents relating to the budget were leaked.

The budget increase is said to be necessary to meet prior EU payment commitments, but such a rise is sensitive given calls over the past two years for EU governments to slash public spending to bring the euro zone's debt crisis under control.

The plans also propose to freeze future expenditure, holding the commission's administrative budget at well below the level of inflation and cutting staff by 1 per cent. It is targeting a 5 per cent reduction of staff over five years.

Once finalised, the commission's EU budget proposals must be jointly agreed by member governments. While the European Parliament usually supports the commission's spending plans, they are likely to face strong opposition from large governments who are net contributors to the EU budget.

"The UK has been consistent that at a time when member states are tightening their belts, the EU must show budgetary restraint," a British government spokesman in Brussels said.

In negotiations last year on the EU budget for 2012, governments ultimately saw off proposals from the commission and parliament for a 5 per cent rise in EU spending, settling on an increase of 2 per cent.

In the 2011 budget for the EU, which amounted to €126.5 billion in payments, Ireland’s national contribution was €1.264 billion.

Talks on next year's budget are likely to take until December and will run in parallel with more difficult haggling over the EU's next long term budget, for the period 2014-2020. There the commission has proposed an allocation of almost €1 trillion.

Talks yesterday between EU foreign ministers in Luxembourg on the commission's long-term proposals revealed deep divisions between the biggest net contributors to the EU budget and its main recipients. Germany, Britain, Sweden and the Netherlands are among the countries seeking to cut at least €100 billion from the commission's proposal, with regional development funding one of the most likely targets for spending cuts.

But poorer member states in central and eastern Europe, who stand to benefit most from regional funding for new roads and other infrastructure projects, said they would oppose any cut in the proposed €336 billion budget for such measures.

The commission has suggested an increase in spending on areas such as research and innovation from 2014 in an effort to boost economic growth and job-creation.

Additional reporting: Agencies