24 July Budget Council

Date: 31/07/1997

BUDGETARY rigour was the order of the day when EU governments gave their first verdict on the Union's draft 1998 spending estimates, with ministers reducing the commitment expenditure proposals tabled by the European Commission from 91.3 billion ecu to 90.9 billion ecu. If the cuts are maintained at the end of the budgetary process in December, next year's spending will be just 2&percent; above 1997 levels. The increase in actual payments made during 1998 would be even lower at 0.7&percent;, with 82.9 billion ecu set aside to cover the cost of EU policies. Summing up the mood among ministers, Luxembourg's Marc Fischbach said afterwards: “The atmosphere in member states is one of austerity. The European Community must follow this example.”

MINISTERS imposed a flat-rate reduction of 1.4 billion ecu on draft agricultural spending, but reinstated a similar sum for cereal farmers which the Commission had originally cut on the grounds that growers had been overcompensated over the past four years. As a result, Common Agricultural Policy spending would rise by 0.45&percent; to 40.987 billion ecu next year.

SIMILAR pruning was carried out on other areas of the budget. The Union's regional and social funds were trimmed by 1 billion ecu and cuts of 757 million ecu and of 387 million ecu were made on internal and external policies.

THE ministers' actions came in for criticism from a delegation of MEPs led by the chairman of the European Parliament's budget committee, German Socialist Detlev Samland. The Euro MPs made it clear that they favoured selective rather than linear cuts in agriculture and declared their opposition to the reductions made on regional and social expenditure and on various internal and external policies.

ON STRUCTURAL spending, MEPs insisted it was essential to keep to the levels agreed at the December 1992 Edinburgh summit. They also deplored the ministers' decision to cut funds for Asia, Latin America and Africa and argued that the Union had to realise that the world did not stop at the Mediterranean nor at the countries of central and eastern Europe.

THE Parliament, which shares budgetary powers with EU governments, set out its own priorities for next year's budget. It wants expenditure focused on the fight against unemployment, on moves to help small and medium-sized businesses, on policies to promote education and training for young people, and on preparing the Union for the challenges of enlargement.

BUDGET Commissioner Erkki Liikanen welcomed the fact that the overall budget rigour originally introduced by the Commission had been respected. But he made a special plea for a more serious discussion of administrative expenditure in future. Liikanen pointed out that after the ministers' first examination of next year's spending levels, administrative expenditure would increase by 3&percent; for the Parliament and remain stable for the Council, but would fall by 2&percent; for the Commission after 49 million ecu had been lopped off its proposed budget.