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BackIn the midst of the serious EU financial and economic crisis, the EU Budget Commissioner Janusz Lewandowski shocks with new information, this time concerning the EU budget: due to their self-imposed austerity packages, the Member States are desperately looking for funds to stimulate their economies again. The problem: based on the multiannual financial framework of the EU, there are theoretically billions available for investments at structural or social level. However, the EU countries were already tight fisted when it came to providing funds for the 2011 EU budget, and now there is a shortage of money for the projects, which were supposed to boost the EU economy - a great shortage…
The discussion in Brussels very much reminds of the proverb of the cat chasing its own tail: the EU countries exercise austerity in respect of their national budgets, sometimes on a scale never seen before, and at the same time want to take measures to boost their economy. A contradiction, which is becoming increasingly clear, as the cost-cutting efforts result in the fact that the majority of EU countries do not have any resources available for investments. The consequence: the EU slides deeper and deeper into recession and the cost-cutting efforts prove to be unsuccessful, as the debt brake has to cope with falling tax revenue, whilst on the expenditure side - what a surprise - costs explode as a result in unemployment, which is rocketing in many countries.
Member States wait for EUR 11 billion in EU funds
As it turns out, the debt brake has a negative impact on the multiannual financial framework: an EU budget volume for 2007 to 2013, for projects at structural and social level for example, had been fixed in 2006. However, the Member States have not made sufficient payments for the EU budget of the financial year 2011 as EU Budget Commissioner Lewandowski recently reported at a hearing with MEPs: hence, in December, EU countries registered payment requests with the EU Commission of EUR 15 billion in total; however, the EU budget only had EUR 4 billion available. As a result, the Commission had to forward payments amounting to EUR 11 billion to the 2012 budget.
Countries do not draw on their EU structural fund allocations - this also affects Austria
On the other hand, EU Commission President Barroso warned that there would not be much time left for EU countries drawing on their allocated funds for investment projects. Austria, Bulgaria, France, Rumania and Spain had still not claimed 30 % and more of their structural fund allocations.
EU financial framework from 2014: difficult negotiations ahead
All these are bad omens for the negotiations concerning the EU financial framework 2014-2020, which was supposed to help to overcome the crisis and to support investments in major projects. The negotiations in respect of the EU budget from 2014 are already going on in the European Parliament and in the Council. Whilst the Conservative British Prime Minister David Cameron said right from the start that he could not imagine an EU budget with a volume of more than 0.8 % of the Gross Domestic Product, the European Parliament supports the request of the Commission for a financial framework at level of 1.00 %.
In view of such great differences in the opinions on the EU financial framework and the current policy in respect of the multiannual budget framework, it is questionable, even at this stage, whether agreement on the budget volume can be achieved by the end of the year. It would be a serious setback for the European Union, if the heads of government were unable to come to an agreement: it would mean that the financial, economic, social and government crisis would finally be joined by a political crisis at EU level.
Member States wait for EUR 11 billion in EU funds
As it turns out, the debt brake has a negative impact on the multiannual financial framework: an EU budget volume for 2007 to 2013, for projects at structural and social level for example, had been fixed in 2006. However, the Member States have not made sufficient payments for the EU budget of the financial year 2011 as EU Budget Commissioner Lewandowski recently reported at a hearing with MEPs: hence, in December, EU countries registered payment requests with the EU Commission of EUR 15 billion in total; however, the EU budget only had EUR 4 billion available. As a result, the Commission had to forward payments amounting to EUR 11 billion to the 2012 budget.
Countries do not draw on their EU structural fund allocations - this also affects Austria
On the other hand, EU Commission President Barroso warned that there would not be much time left for EU countries drawing on their allocated funds for investment projects. Austria, Bulgaria, France, Rumania and Spain had still not claimed 30 % and more of their structural fund allocations.
EU financial framework from 2014: difficult negotiations ahead
All these are bad omens for the negotiations concerning the EU financial framework 2014-2020, which was supposed to help to overcome the crisis and to support investments in major projects. The negotiations in respect of the EU budget from 2014 are already going on in the European Parliament and in the Council. Whilst the Conservative British Prime Minister David Cameron said right from the start that he could not imagine an EU budget with a volume of more than 0.8 % of the Gross Domestic Product, the European Parliament supports the request of the Commission for a financial framework at level of 1.00 %.
In view of such great differences in the opinions on the EU financial framework and the current policy in respect of the multiannual budget framework, it is questionable, even at this stage, whether agreement on the budget volume can be achieved by the end of the year. It would be a serious setback for the European Union, if the heads of government were unable to come to an agreement: it would mean that the financial, economic, social and government crisis would finally be joined by a political crisis at EU level.