The general review of the EU budget is not listed as a priority by the Swedes during their six-month programme. The European Commission is nevertheless expected to present a strategic proposal “in the autumn” as the first step towards the overhaul of EU finances.The proposal will simply be a communication setting out initial policy guidelines. Issues such as the size of the EU budget or the breakdown of funds between different headings will not be addressed until 2011 when negotiations are launched on the new 2014-2020 financial framework. Yet Sweden will not be able to disregard this during its presidency.European Council mandateThe issue has been on the table for quite a while. In the early hours of 17 December 2005, after several nights of marathon negotiations on the 2007-2013 financial perspectives, the European Council decided to place a budget “review clause” in its conclusions. The budget needs to be adapted to new socio-economic, political and environmental realities and to an enlarged Europe. It is also time to put an end to the reflex of certain member states of ceaselessly arguing about a “fair return” on their budgetary contributions.In May 2006, the Council, Parliament and Commission signed an interinstitutional agreement on the financial perspectives and confirmed their will to set a date for the reform.The three institutions agreed to give the Commission a mandate to “undertake a full, wide-ranging review covering all aspects of EU spending, including the Common Agricultural Policy (CAP), and of resources, including the UK rebate, and to report in 2008-2009”. Parliament must be “involved” in the review on the resources side of the budget.The task handed to the Commission is extremely difficult because it touches on highly sensitive aspects of EU finances. That is why it has so far only been addressed very generally and been constantly postponed, particularly to prevent disrupting the ratification process of the Lisbon Treaty. The Commission launched a wide-ranging public consultation in September 2007. The results were set to be made public in May 2008 but in the meantime doubts had emerged over the Irish referendum a month later on 12 June and the Commission decided to postpone publication. After the Irish rejected Lisbon anyway, the Commission published the results in November 2008.Outcome of consultatioWhat does the consultation show? Firstly, the participants stressed the challenges facing the EU, from climate change to European competitiveness in the global economy, security and energy supply. They recommend higher allocations for new technologies and research in these areas. The CAP is seen as too old and costly and should be reformed. On the revenue side, the results reveal broad support for an increase in traditional own resources and the creation of new sources of income. There is virtual unanimity on putting an end to the opaque system of exemptions. All derogations should be abolished, and first and foremost the biggest: the British rebate obtained by Margaret Thatcher in 1984 to compensate for the small benefits the UK received from the CAP.For its part, the European Parliament announced its view on the subject with the adoption in May 2009 of the report by Budget Committee Chair, German Conservative Reimer Böge. The text is based on the assumption that the Lisbon Treaty will come into force. The financial perspectives would in that case be written into the treaty as the “multiannual financial framework” and would become legally binding. They would be adopted under a “special legislative procedure” requiring Council unanimity and Parliament’s approval (different from co-decision). The Böge report tries to align the multiannual financial framework with Parliament’s mandate. It insists on reducing the framework from seven to five years, which is possible under Lisbon, and extending the current framework for 2007-2013 until 2015-2016. That would enable the newly elected Parliament to negotiate the new financial framework and its successor to do the same for the following one.It remains to be seen whether the Commission will take account of this resolution and the reports by Alain Lamassoure (EPP-ED, France), adopted in 2007 and 2008, which suggest an overhaul of the own resources system, abolition of the scheme for national contributions and the creation of new own resources in the spirit of the Rome Treaty.What level of ambition?Former Budget Commissioner Dalia Grybauskaité, now the president-elect of Lithuania, had hoped to present a proposal in spring 2009. But in the context of the economic crisis, Commission President José Manuel Barroso – who oversees the matter – decided to wait. An internal source told Europolitics that “the crisis complicates things further, even more than the second Irish referendum on the Lisbon Treaty set for early October”.The Commission is still obliged to present a document before the end of the year to respect the mandate it was given by the European Council. However, the mandate is vague enough to give it a bit of leeway. The executive must carry out an assessment in the autumn of the interinstitutional agreement on the financial perspectives, a normal technical procedure when the current financial framework reaches mid-term. It could “take advantage of that exercise to introduce more ambitious elements,” notes the same source. “Everything will depend on the Commission president and on the degree of ambition he plans to put” into the revision clause, considering the present context.If a communication is presented in the autumn, the October or December European Council could adopt conclusions on it.