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EU budgets a touchy topic

Posted by Nick Prag at 30 October 2014, 16:00 CET |
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This week marks the last in the Barroso II Commission, and last week's summit was supposed to be a calm transition summit to a new regime at the EU's helm. Instead the stand-out topic of the summit, and of this last week, has been budgets, EU and national.

The Commission has this week been assessing national budget plans. Countries running excessive deficits, in particular France and Italy which just about scraped through an initial review of 2015 budgets may still have to do more.

But for the moment, Economic Affairs Commissioner Jyrki Katainen is leaving to a later date to identify whether there are any cases of "particularly serious non-compliance" which would oblige the Commission to consider a negative opinion.

Britain's prime minister David Cameron also left last week's summit with a budget headache, in the shape of a larger bill than he apparently expected.

Whether he should have been surprised by the extra EUR 2.1 billion demanded is a moot point. The process of budget contributions is based on a system agreed by the Member States and in effect owned by them. They supply the statistics that enable Europe to calculate what figure each state should contribute to the EU budget - a budget which is course not a payment for membership of the Brussels club, but earmarked for investment within the member countries to promote their economies, their growth and their jobs.

Calculations, which depend on how each national economy is performing, are done in the capitals and they are then processed by Eurostat, the EU's statistics agency. It would therefore be surprising if any of the countries were surprised by the figures they have offered.

While the timing of the process is not to the political advantage of Britain in particular, and the level of contribution is a lot higher than the UK might wish for, the principal and its transparency are difficult to question.

However, with France and Italy being offered the prospect of some leeway with their national budgets, and a history of flexibility from the Commission with budgets and budget payments in the past - particularly with regard to France - it is likely that Britain will also be allowed to play for time, and be afforded some flexibility in terms of the amount and the timing of its payment.


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Nick Prag

Nick Prag

Nick Prag is founder and managing editor of Prior to EUbusiness, he was senior editor at Europe Online SA in Luxembourg, where he played a major part in the launch of Europe Online International.