The European Parliament rewrites the EU budget in a bright day for the Union

José Manuel Barroso, President of the European Commission (third from right), and Janusz Lewandowski, Member of the EC in charge of Financial Programming and Budget (third from left), received Martin Schulz, President of the European Parliament (second from left), Enda Kenny, Irish Prime Minister and President in office of the Council of the EU (second from right), and Eamon Gilmore, Irish Deputy Prime Minister and Minister for Foreign Affairs and Trade (first from right). They gathered in the Berlaymont building for a discussion on the Multi-Annual Financial Framework (MFF) 2014-2020 (EU budgets) and reached a political agreement. (EC Audiovisual Services, 27/6/2013).

With major breakthroughs in two key policy areas, the European Banking Union and the EU budgets for the period 2014-2020 materialising in the early hours of Thursday 27 June, the  27-28 June Summit of the 27+1 EU leaders couldn’t offer anything more. It degraded into a procedural affair. In relation with those breakthroughs the European Sting reported yesterday that the draft text of the bank resolution and recovery directive, giving birth to the Banking Union, was agreed in the first hours of Thursday (at 2.00 h). The day however had more to offer. Let’s follow the facts.

Earlier yesterday the European Sting had also announced that the much-advertised ‘agreement’ between the Irish Presidency and the European Parliament over the EU budgets for the next seven years existed only in the minds of some Dublin government leading figures. The Irish Prime Minister Enda Kenny and his deputy Eamon Gilmore after they realised it late on Wednesday night, rushed in the early hours of Thursday to Brussels and with the help of the Commission President Manuel Barroso tried to avoid the accident. If the 27 EU leaders, who were set to convene on 18.30 h on Thursday, had to deal with the wreckage of the ‘agreement’ on EU budget, Ireland would have suffered a serious blow.

Saving Ireland

To avoid that Barroso organised swiftly an early morning meeting at the Commission headquarters between Enda Kenny, Eamon Gilmore, Martin Schulz, EU Parliament President, Janusz Lewandowski, the responsible Commissioner for budgets and Alain Lamassoure, European Parliament Budgets Committee chair, and of course himself. Schulz and Lamassoure having been rather ignored by the Irish all along the long negotiations for the EU budget, were not in a very good mood yesterday morning. As a result it took €28.5 billion to be added to the margins for payments for the next seven EU budgets to convince the EU Parliament representatives that the Union has really a long-term growth agenda, which can be accepted and voted by the majority of legislators.

The new and real this time agreement struck for the 2014-2020 EU budgets between the Parliament and the Commission contains serious spending increases. In detail:
* Every year, starting in 2015, as part of a technical adjustment the Commission will increase the payment ceiling for the years 2015-2020 upwards.

* Especially for the years 2018, 2019, 2020 those increments cannot exceed the following limits; for 2018: €7 billion, 2019: €9bn and for 2020: €10bn. All that will be added to the original payment ceiling of the relevant years.

*Up to €2,543 million (in 2011 prices) may be frontloaded in 2014 and 2015, as part of the annual budgetary procedure, for specified policy objectives relating to youth employment, research, ERASMUS in particular for apprenticeships, and SMEs.

* Margins left available (meaning funds not spent) below the spending ceilings for the years 2014-2017 shall constitute the Global budget commitments, to be made available over and above the ceilings established for the years 2016 to 2020 for policy objectives related to growth and employment, in particular youth employment.

* Each year, as part of the technical adjustment the Commission will calculate the extra amounts to be made available. The Global margin or part thereof may be mobilised by the budgetary authority in the framework of the budgetary procedure pursuant to Article 314 of Treaty of the Functioning of the European Union.

*The Council also commits to take all necessary additional steps to ensure that the Union’s obligations for 2013 are fully honoured. This last item will cover the unpaid bills of the EU for the years 2012-2013, around €12.5bn.

Increased spending

The Global budget spending commitments are not special to any budgetary year. They will constitute an independent Growth Fund. The Parliament asked for it from the very beginning of the negotiations. In short the Parliament must have got something more, probably much less than the MEPs wanted. Not to forget that 2014 is election year for the EU legislators, who will be obliged to face their unemployed young constituents in the streets and the squares of their home towns.

Schulz explodes

Later on yesterday Martin Schulz was speaking at the EU Summit opening, dedicated to tackle youth unemployment. Seemingly being under the spell of the morning confrontation with the Council Presidency he didn’t chew his words. He said : “EU institutions face a test of their credibility by failing to act on promised reforms…Ordinary people are increasingly losing faith in the ability and the willingness of democratic institutions to take action…many promises had been made about ensuring financial products and markets would once again be subject to proper regulation and scrutiny, but that these measures were still far from being implemented”. He also pointed to the shortage of measures to boost growth and denounced the hesitation to take decisions on the future development of the Economic and Monetary Union.

In every respect yesterday was a very special day for the European Union. Not because the 27+1 leaders were in Brussels, but due to the fact that the Parliament secured more funds to fight youth unemployment and support the SMEs.