The member states took the axe to the figures proposed by the European Commission in its draft 2011 EU budget. The match with the European Parliament is set for October, against the backdrop of the future debate on the general overhaul of the EU budget.

The EU Council of Ministers adopted, on 12 August by written procedure, its position on the draft 2011 budget, which under the Lisbon Treaty now constitutes its sole reading. It is based on the vote by Committee of Permanent Representatives (Coreper), on 8 July (see Europolitics4017). The states made a total cut of €3.6 billion (-2.8%) in the payment appropriations tabled by the executive, sending a clear message: in times of economic crisis and national budget restrictions, there is no question of paying more into the EU coffers. Seven states, including most of those that traditionally argue for a “fair return” on funds invested in the EU budget (Austria, Denmark, Finland, the Netherlands, the Czech Republic, the United Kingdom and Sweden), voted against the proposal on the grounds that the cuts are not deep enough.

The Commission’s aim of increasing expenditure in 2011 by 5.9% over 2010 was thus knocked down a few notches. The states intend to restrict the expenditure increase to 2.9%. They propose a draft budget of €126.6 billion in payment appropriations, ie 1.02% of the Union’s gross national income (€141.7 billion in commitment appropriations). The sector most concerned by the cuts is Cohesion Policy (Subheading 1b), which is slashed by more than €1 billion. Measures to stimulate growth and employment (Subheading 1a) also lose €841 million, although leaders have been stressing for months the need to guarantee the success of the Europe 2020 economic strategy that will replace the failed Lisbon strategy. Another sector hit by the reductions is support for European farmers (Heading 2), which drops by €820 million.

PARLIAMENT’S REACTION

The institutions’ administrative spending (Heading 5) is no exception to the rule and is axed by €162 million. The Commission, which owing to its size gets the lion’s share of the appropriations, is urged to lower the pensions of its former agents, limit costs for the European schools and freeze the salaries of its civil servants. Heading 4 (external affairs) is also severely affected, slashed by nearly €388 million (without counting the emergency aid reserve). There is no mention of funds for the External Action Service, since the states consider that this new body must remain “neutral from the budget standpoint”. High Representative Catherine Ashton has not yet announced details on the subject.

In general, MEPs are concerned about the Council’s very restrictive attitude. At their vote in October, they are expected to reinstate appropriations for next year, going even higher than the Commission’s figures. A standoff is to be expected, particularly since the 2011 budget will be the first to be adopted under the Lisbon provisions, which give Parliament the final say. The Chair of the Committee on Budgets, Alain Lamassoure (EPP, France), would like to seal a “negotiation package” with the Council. He suggests that MEPs adopt a “responsible” position by limiting states’ contributions to the EU budget provided they involve the national parliaments in creating economic governance, agree to finance the 2020 strategy and agree to reopen the debate on own resources.

Lamassoure warns that the EP could be willing to go as far as “rejecting the budget” if the Council makes no effort. The states are sceptical about such a possibility, however. This scenario could be a way of launching the debate on budget reform. In September, the Commission will present a communication meant to prepare the ground for the major manoeuvres that will start in spring 2011 to put in place the financial framework for 2014-2020.