European policy consultants
Rural development and renewable energy

Budget Commissioner: budget should not be derailed by prospect of British exit

Lewandowski said the outcome of the promised referendum is far from certain and should not derail ongoing talks on the EU's budget for 2014-2020 (25th January).

“We need long-term commitment from the UK as a precondition for the budget until 2020. Even with a referendum in 2017, I think we cannot expect an immediate exit, it should be somehow on the horizon 2020,” he said, speaking at the European Policy Centre.

London wants to go further and freeze the EU budget at its 2011 level, allowing only an inflationary adjustment that would effectively trim the Commission's budget proposal by €200 billion over the next seven years (2014-2020).

EU leaders are meeting on 7th-8th February in another attempt to reach agreement on the Union’s long-term budget after a first summit failed in November. There is a real prospect that decisions may be postponed to December '13 - after the German federal elections.

But Lewandowski said he expected EU leaders to be “creative” in finding an agreement that Cameron can sell to his Parliament.

One area where British demands are strongest is the ‘Administration’ chapter, which covers the pay for employees of EU institutions, although administrative costs constitute only 6% of overall EU spending.

The challenge, said Lewandowski, is not only to finance Europe with less money, but to run it with fewer civil servants. “For the first time in EU history, we expect the number of posts to decline in 2013,” he said.

Lewandowski said some countries had insisted on cutting €30 billion more from the last €973 bn)proposal tabled by European Council President Herman Van Rompuy, but he argued this would be too great a cut.

He stressed that headline budget figures were referring to ceilings of expenditure and that actual spending levels were always lower. In the previous 2007-2013 period, actual spending for each year was around €70 billion lower than provisions. likening the multi-annual financial framework to "the limits of your credit card".

Lewandowski also touched on the issue of national rebates granted to a number of countries, including Britain. Germany, the Netherlands and Sweden all appear on a list drawn up by Van Rompuy as countries that would receive annual refunds of €2.8 billion, €1.15 billion and €325 million respectively, and Lewandowski added Denmark and Austria as other countries asking for rebates, adding that it was not the end of the list.

Lewandowski pointed out that, almost regardless of the outcome of the meeting in February, for the first time the EU budget will decrease instead of growing, despite the fact that the European Union had extended its action to new policy areas.

Lewandowski noted also the increased influence of the European Parliament, and warned that if the busget is cut further, it may prove difficult to obtain the minimum of 371 votes to pass the budget with qualified majority.

MEPs are unlikely to vote on the budget without passing some additional regulations in related areas, he said. For example, the Parliament is likely to insist that the EU’s unspent money is rolled back into the EU budget, instead of being returned to the member states according to their share of the total contribution.

European Parliament President Martin Schulz said MEPs would not hesitate to use recently acquired powers to block spending plans for the next seven years. He also said that in the absence of an agreement of the long-term budget, an annual budget at the level of 2013 spending - which is what would happen in the absence of agreement - 'wouldn't be a bad solution'.

See Euractiv: www.euractiv.com