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Abstract:
The medium-term financing plan of the European Union, the Financial Framework, creates upper limits on commitment and payment appropriations in the Union. These limits apply both to the overall budget and also, as far as commitments are concerned, to the individual policy headings. The Financial Framework must be agreed unanimously in the Council of Ministers.
It is not surprising therefore that the negotiation of the Financial Framework is always a long and very complex matter. The negotiation of the 2007-2013 Financial Framework is no exception. Negotiations effectively began in 2003, when the net contributors demanded that the future budget should not exceed 1% of Gross National Income. They will probably not be concluded until Spring 2006.
The debate has changed since the introduction of the common currency, as all contributions to the EU budget affect a country’s ability to meet the Maastricht criteria for monetary union - and notably the limit of 3% of GDP for the government deficit. The debate is therefore characterised by budgetary prudence, even on the side of the net beneficiaries of the budget.
The current debate also includes the 10 new member states for the first time, which brings a new element to the discussions. The new members are markedly poorer than the old EU-15 and they all have ambitions to become full members of the monetary union. These characteristics lead to very particular negotiating positions across the new members, positions which are however not identical.
This working paper analyses the proposal of the Commission and the likely position to be taken by the 25 member states and suggests probable outcomes.
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