European policy consultants
Rural development and renewable energy

November 2012 summit should secure agreement on the future budget 2014 - 20.

The 22nd November European Council meeting will be dedicated to the Multiannual Financial Framework (MFF) for 2014-2020.

Ministers discussed a revised "negotiating box", presented by the Cyprus Presidency at the Council meeting on 24 September. This sets out a reduced number of options and reflects the Presidency's suggestion that eventually there will have to be spending cuts in all MFF headings.

"All member states accepted the "negotiating box" as a basis for further work", said Mr Andreas Mavroyiannis, Deputy Minister for European Affairs of Cyprus, who chaired the meeting.

The Presidency took the view that the overall expenditure ceiling for 2014-2020 as proposed by the Commission (i.e. 1 033 billion euro in commitments and 988 billion euro in payments), will "have to be adjusted downwards".

The Presidency will introduce the specific amounts for the various headings in time for the November meeting, following further consultations with the member states.

President of the European Council Herman Van Rompuy will launch bilateral consultations in November with the aim of reaching agreement on as many negotiating points as possible before the November Summit.

Commitments are legal promises to spend money on activities whose implementation extends over several financial years.

Payments cover expenditure arising from commitments entered into the EU budget during current and preceding financial years.

Cyprus, which holds the presidency of the European Council in the second half of 2012, has suggested €50bn in cuts across all headings of the EU's next Multi-annual Financial Framework (MFF).

As part of the Cypriot proposals, there would be some cuts in the CAP budget (currently 40% of the total EU budget). This would mean a 2% cut to in direct payments and market management measures under Pillar 1 and a 1.2% cut in rural development spending under Pillar 2.

NFU director of policy Martin Haworth says: "It would be unrealistic for us to expect the CAP to be exempt from the austerity measures that are being applied throughout the European Union. But whatever the size of the budget, we do expect our government to ensure that (English and Welsh farmers) can compete on a level playing field with the rest of Europe."

The NFU is not opposed to moving more of the CAP budget towards rural development at a European level, but objects to UK government proposals for modulation (ie. powers to shift money from pillar 1 to pillar 2) at up to 20% at national level.

"Removing up to 20% of English farmers' direct payments, when we know that other member states are looking for ways to bolster their farmers' direct payments through 'reverse transfers', would hit our farmers far harder than the proposed EU budget cut", says Mr Howarth.

On 7th November German Chancellor Angela Merkel dined in Downing Street with PM David Cameron.

EU leaders will meet as the European Council in Brussels on 22nd November - and probably throughout the following weekend - to try to find common ground on the budget framework for 2014 - 2020. The European Commission has proposed a sligh real terms increase, taking the budget to nearly €1trillion (£800bn) over the period. Mr Cameron has denounced the Commission's proposal as "ludicrous" and insists Britain is taking the hardest line of the 27 member states by supporting a real-terms freeze.

The Prime Minister originally saw the Germans as allies on the issue after they were among signatories to a British-inspired letter two years ago calling for a freeze. But Mrs Merkel has made it clear that Germany favours a small rise in the budget. The Independent reports that Mrs Merkel's allies are exasperated at what they view as an unrealistic British stance.

Mrs Merket had earlier told the European Parliament "I want a strong Great Britain inside the European Union. I cannot imagine a Europe without Britain. You can be very happy on an island, but being alone in this world doesn't make you any happier."