Funding cut hailed as win for austerity

For the first time in its 56-history, the EU agreed to cut its budget, a move hailed by austerity-focused northern countries as a victory and by others as a case of European’s being the losers.

The total ceiling was set at €960bn over seven years, which is less than 1% of the EU’s gross national income and 94% of the money either returns to the member states or is spent on common projects.

Member state leaders that had made a domestic battleground of the EU’s budget fought for more than 24 hours over what amounted to less than 0.0003% of the EU’s combined wealth to cut the spend.

While the war cry was that the EU should be using scarce resources to promote growth and jobs in the block, much of which is in crisis at the moment, in the end they raided the growth areas earmarked by the European Commission for extra funds.

While areas such as research and development suffered a cut from the original €80bn estimate, it still retained an substantial increase in spending. All countries can benefit from this provided they have the scientists and researchers to win bids.

Research Commissioner for Máire Geoghegan-Quinn said believed it would improve the EU’s chances of creating growth and jobs for EU citizens.

Areas designed to unite the continent and create better cross-border links, such as transport, suffered massive cuts partly due to German lobbying and the area having fewer champions than national projects.

Development aid was another casualty, while the European Globalisation Adjustment fund. from which workers from Waterford Glass and Dell benefited, was also cut by two thirds.

Paul Murphy, Socialist Party MEP, said the budget is, for the first time, being linked to the austerity measures adopted by the EU. If countries fail to cut their deficits by the amount recommended by the EC, they can lose some of their cohesion funding — funds intended to bring poorer regions up to the standard of the more wealthy.

The focus now shifts to the European Parliament and the Irish presidency. This is the first budget in which the MEPs have a real say, as their consent must be secured by absolute majority before it can be adopted.

The heads of the five main political groups all decried the cuts in the overall budget and said they would insist on a secret ballot of MEPs to ensure national governments could not exert pressure on their MEPs.

EU leaders, however, gave Ireland the tools it needs to gain the support of the parliament by agreeing three demands of the parliament. Up to now, if money was not spent on specific programmes in one year, it could not be carried over to the next.

The European Council agreed to allow this flexibility in future — a key demand of the parliament. They also agreed the whole budget would be reviewed — in 2016 for cohesion policies and at some date to be agreed for the whole.

Finally, the parliament has demanded for some time that the current system of 75% of the EU’s budget coming directly from member states own treasuries should be changed so the EU has its own source of funding.