Wednesday, 12 December 2012

EU's admin costs to rise in 2013 to €8.4bn

Voting in Strasbourg today, MEPs have approved a €132.8bn (£107.2bn) EU budget for 2013.

The 2013 budget includes a 1.85% increase in the EU's admin costs from €8.3bn (£6.7bn) to €8.43bn (£6.83bn), at a time when member states on the other hand are making cuts to public services and national administration costs.

EU administration costs amounted to 5.6% of the EU budget in 2012, at €8.3bn (£6.7bn). This will rise to 6.35% in the 2013 budget
, showing that the EU's running costs - such as pay and perks for EU staff, plus the cost of buildings and facilities - are growing as a proportion of the overall budget, despite Europe's financial difficulties.

The deal also includes an extra €6bn (£4.86bn) added to the 2012 budget to cover a shortfall in the EU's funding for this year. This is less than the €9bn (£7.29bn) the Commission was demanding, likely resulting in a further request for additional funding being made by the EU as early as September 2013.

The addition of this extra €6bn to the 2012 budget gives the appearance that EU spending in 2013 will fall in comparison. But this does not take into account extra requests for funding predicted by the Commission later next year.

This process of annual and subsequent amending budgets to make up funding shortfalls is making the patterns of the EU's actual spending more and more opaque.

EU Ministers must still formally approve the deal, but difficulties are not foreseen since the EU's annual budgets are agreed by majority vote. Member governments demanding a budget freeze or cuts are likely to be over-ruled by the majority (17) of net beneficiaries.

David Cameron is therefore powerless to stop Britain's payments to the EU rising in 2013 and must now focus on the 2014-2020 budget framework negotiations in a bid to stem our liability to fund the EU's ever-increasing demands for public money.

A new meeting of the European Council - comprising the heads of state and government of EU member countries - is expected in early February to try to hammer out a deal on the EU's spending framework from 2014-2020.

Monday, 10 December 2012

EU's 2013 budget to rise 2.9% amid UK spending cuts

The European Parliament's budget committee this evening approved a deal that will see the EU budget in 2013 rise by 2.9% to €132.8 billion (£107.2bn).

MEPs, meeting this week in Strasbourg, will vote in plenary on Wednesday 12 December on whether to approve the above-inflation increase in the EU's 2013 spending.

The deal was agreed by negotiators for the European Commission, Parliament and Council on Friday 30 November, but the details were withheld until last Tuesday, while UK attention was focussed on the Chancellor's upcoming Autumn Statement.

EU Ministers must also approve the deal but difficulties are not likely, since the EU's annual budget is agreed by majority vote. Member governments demanding a budget freeze or cuts are likely to be over-ruled by the majority (17) of net recipient countries.

The deal is likely to increase Britain's 2013 contribution to the EU budget by several hundred million pounds. This means that some of the money saved through cuts to public spending outlined in George Osborne's own budget statement last week is likely to be spent in 2013 not on reducing our deficit or supporting growth, but on increased UK payments to the EU.

Commission demands

Prior to recent negotiations, the European Commission had been demanding a 2013 budget of just under €138 billion (£111.5bn).

Administration costs amounted to 5.6% of the EU budget in 2012 - €8.3bn (£6.7bn) - and the proportion proposed for 2013 has not yet been revealed. Much of this is very visibly wasted on excessive EU pay, perks, grandiose facilities together with EU self-aggrandisment.

Examples include the EU's £45m tribute to itself, the House of European History, and a £250m refurbished 'RĂ©sidence Palace' building for the EU Council and its president Herman van Rompuy, due to open next year.


Annual budgets are a translation of the current Multiannual Financial Framework (MFF) covering 2007-2013. The EU's next MFF, setting funding rules from 2014-2020, is currently being negotiated and requires unanimous approval of EU member governments.

Talks on the new MFF broke down in November, according to the Prime Minister as a result of disatisfaction by several member states over the European Commission's intransigence on cuts to administration costs. EU taxes have also been proposed in the context of the bloc's future funding and it has been suggested that member governments could not agree on whether the EU should be given powers to tax citizens directly. A further summit is expected in January.

On the new MFF, David Cameron has pledged "at best a cut, at worst a freeze" in the seven-year spending limits, although Britain's contribution may rise in any case. On 31 October, rebel Conservatives and Labour MPs teamed up to defeat the government, with a majority voting for a real terms cut in the EU's spending.

If no agreement is reached between governments and EU institutions in time to allow for legal ratification of the new deal by the end of 2013 - under a political, rather than legal, Inter-Institutional Agreement - the 2013 budget will be rolled over year-by-year with a built-in 2% rise to cover inflation.