MEPs and ministers prepare for annual budget tug-of-war

EU governments and MEPs will next week (13 July) kick off the annual tug-of-war over next year’s budget as budget ministers hold their first Council meeting on spending plans for 2008.

In preliminary discussions in the Council ahead of the budget ministers’ meeting, EU governments’ representatives have rejected a call by the European Commission to increase the funds needed for actual spending in 2008 by more than 5% compared to 2007. The Council does not accept that such a large increase is needed, given that the EU never manages to spend all the funds allocated.

In May the Commission proposed a budget of €129.2 billion for 2008 in commitments (taking into account multiannual programmes), up 2% compared with 2007, and €121.7bn for payments (the actual amount expected to be spent), a 5.3% increase on this year.

Member states are looking to scale back the proposed increases across the board.

Discussions on next year’s budget are being complicated by two thorny political issues. The EU needs to find additional money to finance the launch of the Galileo satellite navigation system after a consortium of private companies withdrew from the project. Most member states and the Commission want to make up the shortfall, around €2.4bn, from EU funds, but the UK and the Netherlands are insisting that the money should come from public-private partnerships and are calling for a review of the project’s financing needs. But MEPs are insisting that funding for Galileo should come from the EU budget and are rejecting injections of money from member states’ national budgets.

EU governments and MEPs are also divided over how to pay for the planned European Institute of Technology (EIT), a flagship project designed to boost innovation by bringing together academic and research institutes and industry. EU governments agreed last week to provide €308 million in start-up costs from unspent funds from the budget. But MEPs want the Council to provide additional funds as the EIT project was not discussed in 2005 when the EU decided its financing for the 2007-13 period.

Next week’s budget Council is the first of two meetings to agree the 2008 budget. The second will take place in November following negotiations with MEPs over their demands.

MEPs are expected to raise questions about oversight of the Union’s proliferation of agencies dealing with policies ranging from maritime safety to chemicals and anti-discrimination which have a combined budget of more than €1bn. They will also press the Council for information on the planned security mission in Kosovo and could contest a proposed 26% increase for Common Foreign and Security Policy to more than €200m next year.

EU governments and MEPs will next week (13 July) kick off the annual tug-of-war over next year’s budget as budget ministers hold their first Council meeting on spending plans for 2008.