Mixed response to commission call for EU budget increase

30 June 2011, The Parliament Magazine

The commission’s proposals for a five per cent rise in the EU budget have met with a mixed response.

Plans outlined by the commission would see the budget for the seven years from 2014 rise for the first time to one trillion euros. This compares with the €975bn for the current seven-year spending period.

Guidelines for how the money – notably funds for Europe’s regional policy and agriculture, around 75 per cent of Europe’s spending – will be used were also revealed by the commission.

Speaking on Thursday, parliament’s president Jerzy Buzek said, “The commission’s proposal on the long-term budget for the EU is an intelligent starting point for negotiations.

“The next MFF will be one of the most important in the EU’s history. It will set the direction for the EU at an exceptional time when the European project is under pressure from the sovereign debt crisis and from external instability”

“A system of real own resources would be fairer, more transparent, simpler and equitable. We should also see an end to rebates, exceptions and correction mechanisms that have accumulated within the current system.”

But the UKIP leader Nigel Farage was, predictably, scathing.

He branded the plan as “unacceptable,” saying, “This is just a greedy power grab from people who are out of control.

“It is the UK government’s policy of playing soft with the eurocrats that has given the EU the confidence to call for this ridiculous budget increase.

“That they want a 10.5 per cent increase over the 2014-2020 period, nearly five times the rate of inflation shows they are just laughing at David Cameron’s request for a budget freeze.”

He added, “What I want to know is will Cameron veto the commission proposal for a financial transaction tax which will cripple the city of London?”

Further criticism came from the UK-based think tank, Open Europe, whose research director Stephen Booth.

He said, “Although it has proposed some minor improvements, such as a reduction in farm subsidies and a new fund to promote energy and infrastructure connections, the commission has again opted for an above-inflation increase without the radical reform needed to make the EU budget more rational and on target.”

“The commission has also chosen to employ some creative accounting by moving some spending items off its main balance sheet, to hide the true rise in overall expenditure. This type of spin will not win the trust of taxpayers and citizens across Europe.”

“The EU has no democratic mandate to begin raising its own taxes. An EU financial tax sounds seductively simple, but will in fact be a hugely complex way to fund the EU budget, while raising costs for consumers through higher borrowing costs and end prices.”

Elsewhere, the NGO, Friends of the Earth Europe, said the draft budget – still to be ratified by member states – “offers ways to fight climate change and to move Europe’s economies to a sustainable development path”.

It cautioned, “But it still leaves the door open for harmful spending.”

The group called on the EU to “take the opportunities provided by this budget to combat climate change, end the waste of resources, reverse biodiversity loss, and move their economies onto sustainable development paths”.

Markus Trilling, of Friends of the Earth Europe, said, “This long-term budget calls for European public money to be spent wisely and smartly for the benefit of future generations, but in reality, it still allows for wasteful, fossil-fuelled spending.

“What we need next from the European commission is strong regulation to make sure funds are invested in energy and resource efficiency and renewable energy and the promise of this budget is not simply empty words.”

Meanwhile, the European Public Health Alliance said it welcomed the commission’s intention to continue funding health projects until 2020.

However, EPHA said it was “worried” by the priorities outlined by commission, as well as the relatively low level of financing that it promises for health.

“Although the EU faces a crisis of its health care systems, an ageing boom, and an obesity epidemic, the budget dedicated to health equates to 11 cents per year per person. This is clearly not enough to respond to one of the first priorities for people living in Europe: their health and theirs of their children,” said Archie Turnbull, its president.

Tony Long, Director of WWF’s European policy office said, “The commission’s proposal on the future budget falls short of moving boldly towards a green economy.

“European leaders have committed themselves over the last decade to achieving ambitious energy, climate, biodiversity and other environmental targets by 2020.

“This budget framework, which coincides exactly with these 2020 environmental target dates, holds out the promise of some minor environmental advances but is largely business as usual for Europe. This will mean we will almost certainly fail to achieve the transition to the new smart, sustainable and inclusive economy we were promised in the EU 2020 strategy.”

Natalia Alonso, Oxfam International’s EU head of office, said, “This marks a real turning point. It’s great news that the commission has joined the millions of ordinary Europeans who want the financial sector contribute more to society.

“But this tax will only win popular support if the revenue is used to tackle poverty and climate change – not if it disappears into the general EU budget.”

The European Environmental Bureau, meanwhile, reacted with disappointment, describing the plan as “vague on delivery and showing no departure from business as usual.”

More NGO reaction came from Marielle Hart, policy manager at the Stop AIDS Alliance, who said, “The commission has shown its mettle and demonstrated real leadership in proposing an FTT at EU-level. But 2018 is far too late for it to become a reality – it will completely miss the MDG deadline of 2015. Money is needed to help tackle poverty and improve health today.”

The business community was also quick to respond to the commission´s proposals.

EUROCHAMBRES, the Brussels-based EU represenative body for the business community, said it spports the proposed increase in the post-2013 EU budget, while “regretting the minimal shifts in how the funds will be spent.”

Arnaldo Abruzzini, its secretary general, said, “The overall increase in the budget is in line with chambers’ desire for ‘more Europe’. However, the commission’s spending proposals fall a long way short of the quantum leap that we were anticipating as a result of the lengthy EU budget review process.”