Tug-of-war over annual budget gets under way

The European Commission and members of the European Parliament are preparing for a bruising battle with the member states over the European Union’s next annual budget.

Three-way negotiations on the 2015 budget are to begin on Tuesday (28 October), the start of a 21-day conciliation period. Failure to reach a deal by 17 November would, in theory, mean that the Commission would have to submit a new proposal – although the experience of years past suggests that the days immediately following the deadline might be a good opportunity to strike a compromise.

The Parliament is today (22 October) expected to adopt its version of the 2015 budget in plenary in Strasbourg. It will restore cuts made by the member states to the Commission’s proposal and set out additional spending that would increase the annual budget to €146.3 billion available for commitments (the value of contracts that can be made during 2015, to be paid in future years) and €146.4bn available for actual payments during 2015. This means that the gap between the Parliament’s version of the 2015 budget and the Council’s version would be €1.2bn in commitments and €6.4bn in payments.

What the figures suggest is that the real battle will be over payments – hardly a surprise in light of the Commission’s claim, supported by the Parliament, that it is encountering severe payment shortfalls.

However, there are new elements to this year’s budget battle. In May, the Commission proposed an increase of €4bn to the current annual budget that would push it above the ceilings set for each annual budget by the multi-annual financial framework (MFF), arguing that so-called special instruments such as the Globalisation Adjustment Fund and others should be treated as outside the ceilings.

However, the method used by the Commission for its request – the activation of a contingency margin that allows the EU to deal with unforeseen events – would oblige it to decrease the appropriations available in the last three years of the current MFF, 2018-20, by a corresponding amount.

This was clearly done under the assumption that a mid-term review of the MFF in 2016 would lead to additional money being made available – an assumption that annoyed the member states.

It will now fall to a new European commissioner for the budget – Kristalina Georgieva – to negotiate a deal. The first formal three-way talks between Council, Commission and Parliament on the 2015 budget last week (15 October) ended in a complete failure to discuss the substance of the 2015 proposal.

Jean Arthuis, the Parliament’s new lead negotiator and chairman of the budgets committee, went into the meeting with the committee’s demand that the order of business be reversed and the 2015 draft budget discussed after the budget amendments for the 2014 budget had been dealt with. This was unacceptable to Enrico Zanetti, Italy’s junior minister for economic affairs and finance, who represents the member states in the negotiations.

The three sides are now going into the conciliation period without having held preparatory consultations.