EU to spend €135.5 billion in 2014 or 6.5% less than this year

From left to right: Algimantas Rimkunas, Lithuanian Deputy Minister for Finance representing the Council Presidency, Alain Lamassoure, Member of the European Parliament Chair of Budgets Committee, Janusz Lewandowski, Member of the European Commission, responsible for budget. (Council of the European Union, 11/11/2013).

From left to right: Algimantas Rimkunas, Lithuanian Deputy Minister for Finance representing the Council Presidency, Alain Lamassoure, Member of the European Parliament Chair of Budgets Committee, Janusz Lewandowski, Member of the European Commission, responsible for budget. (Council of the European Union, 11/11/2013).

The European Parliament might not get it all from the Council but it managed to bring the 2014 EU budget payments limit at €135.5 billion or €500 million more than the initial Council’s position. Commitments were set at €142.6bn that is in line with the Commission’s budget proposal. The initial Council’s position was to restrict payments to €135bn and commitments to €142.23bn. In short, the Council represented by the 28 member states more or less lost both fights, with the Parliament and the Commission.

The European Parliament was looking to increase payments by €1.3bn and commitments by €855 million, as compared to the Council’s position. Understandably, next year’s EU budget as agreed on the early hours of Tuesday is lower by 6.5% for payments and by 6.2% for commitments, compared to the EU budget for 2013. MEP Anne Jensen (ALDE, DK), who is steering the 2014 budget through Parliament, labelled the outcome as “an austerity budget” given that it is more than 6% down on this year. However, given the austere ideology that reigns all over the EU, this is a victory of the Parliament.

Conciliation Committee

After the Conciliation Committee was concluded, the MEPs said that they “ensured that victims of catastrophic flooding and drought in 2013 will be compensated, and that its priorities for 2014 in areas such as employment, research and innovation, border management and humanitarian aid are also taken on board”.

The Conciliation Committee is made up by the 28 representatives of the member states and 28 European legislators. Earlier on Tuesday, before the Conciliation Committee met, the ECOFIN-Budget council was convened to formulate the 28 member states’ position on 2014 EU budget. The agreement was struck later on the day in the Committee.

At this point it must be noted that in the EU budget commitments are legal promises to spend money on certain projects, which may be paid out over several financial years. Payments are the actual amounts to be paid in any given year. Usually payments are lower than commitments. This practice though, creates problems in the long run. Those differences accumulate as the years pass and a time comes when the beneficiaries of EU money may wait for a long time to get paid. It was like that this year.

Unpaid bills

Earlier this year, the Commission estimated it would run short of €11.2bn to pay its outstanding obligations during 2013 also including unpaid bills of 2012. By July 2013 the member states, that is the Council, agreed to pay only €7.3bn of the above amount. Legislators expressed their anger over this, because they sensed that the Council wanted to cover the gap of €3.9bn from the already slashed 2014 allocations. Last month the Council was forced to approve the rest of the outstanding payments amounting to €3.9bn.

The Council is expected to formally approve the agreed budget on 19 November and the European Parliament’s approval should follow on 20 November.

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