EU budget to see 6.8% hike

Next year’s EU budget of €138bn includes an increase of 6.8% because of the massive, last-minute bills it is receiving from member states for spending on areas such as agriculture, research and other EU policies.

Several governments have publicly said they will not fund such an increase, but commission president Jose Manuel Barroso told them yesterday they cannot demand money from the EU on the one hand, and refuse to pay their contribution on the other.

He especially hit out at the British prime minister David Cameron, who he said was, in private, looking for the EU to increase spending on the ITER nuclear fusion research project, while publicly demanding a cut in the EU’s budget. “Do the British people know this?” he asked.

Governments that were the first to ask for an increase in the budget areas that would directly benefit them were then objecting to contributing.

The net contributors were also the first to demand payment from the commission for EU policies, he said. “I appeal to EU governments to speak the truth.”

Accused of forcing governments to cut back on their spending while hiking their own, the commission president said they are in fact freezing spending as the 2% increase just covers inflation, most of which goes back to member states.

The administrative budget to run the EU’s institutions that comes to 5% of the total budget is also frozen and staff numbers are being cut by 5% over the next five years.

There is a big jump in the demand by member states for money they are due from the EU because 2013 is the last year in the six-year budget cycle and because they are under financial pressure. Spain, for instance, put in a bill for €2bn at the last minute recently, budget commissioner Janusz Lewandowski said.

When the EU agrees to co-fund a project such as building a bridge, the amount of money is earmarked as a commitment. As the work gets under way the bills come to the EU, which must then pay them from its funds. The commission is not allowed to run deficit budgets.

Over the past few years member states and the European Parliament have adopted EU budgets that were well below what was needed for payments. As a result money due to member states could not be paid because of the shortage of money and had to be rolled over.

“This has led to a snowballing effect of unpaid bills as each year we could not honour some of our legal commitments due to shortage of funds,” he said, adding that they must have an honest budget that reflects the realities.

Savings have been made across every area and money has been diverted to policies that create growth and jobs. Of the total of €62.5bn for job-friendly growth, research is getting a 28% increase to €9bn, competitiveness and innovation programmes a 48% increase, lifelong learning is up by 16% and structural and cohesion fund is up €49bn.