Finance ministers move to keep lid on spending

Date: 08/05/1997

By Rory Watson

THE heavy battalions of EU finance ministers are being brought into the annual Union budgetary debate for the first time to reinforce attempts to keep a tight lid on next year's expenditure.

The finance ministers will have an early input into the debate over the European Commission's proposal for spending increases of under 3&percent; in 1998 on Monday (12 May), in a move designed to establish a clear political framework for the lengthy budgetary negotiations.

With their eyes trained on cutting public expenditure and meeting the entry requirements for the single currency, finance ministers will take a tougher line towards the proposed 91.3-billion-ecu EU budget than colleagues in major spending departments handling agricultural and regional policies.

Their involvement in the debate is likely to act as a financial straitjacket on farm ministers, who have traditionally been almost immune to the annual budgetary process.

It is also expected to provide greater political authority for the junior ministers who will handle most of the technical details and ensure more coherence between EU policy decisions and their financial implications.

“If you really want a rigorous budget, then national ministers must take the same stance at every Council of Ministers' meeting. If one Council votes against the budgetary rigour and discipline requested by another Council, then that seems to me to be somewhat bizarre,” said Budget Commissioner Erkki Liikanen.

The proposals, which envisage EU spending commitments next year of 91.3 billion ecu and actual expenditure rising by 2.9&percent; to 84.7 billion ecu, have drawn a cautious welcome from MEPs.

German Christian Democrat member Stanislaw Tillich, who will prepare the European Parliament's formal response to the package, has already described them as “a step in the right direction”.

He acknowledged that the Commission had kept as close as possible to the guidelines the Parliament itself had set, and approved of the move to increase EU spending on selected policies - consumer issues, Trans-European Networks, research and development, small and medium-sized enterprises, and training - more than on other areas.

But the Parliament's budget committee, which will begin considering the proposals next week, is expected to insist that spending on the Union's Mediterranean and central and eastern European Phare programmes should not be cut.

The unusually tight budgetary proposals reflect not only the approaching single currency deadline, but also the need to handle any extra spending stemming from EU enlargement within existing financial ceilings.

Under the agreement reached by Union leaders in 1992, next year's budget could legally have grown by 7&percent; in commitments and 10.5&percent; in payments. By keeping to below 3&percent;, the Commission has already created a proposed cushion of 5.8 billion ecu between actual and possible spending. It intends the margin to be even greater by 1999.

But it is not just enlargement and EMU which are influencing the emerging budgetary debate. The Commission, which is trying to introduce sounder financial management into Union business, is acutely conscious that in recent years it has overestimated the amount of money needed to fund EU policies.