Tuesday

24th May 2016

Budget deal unlikely before spring 2013, expert says

  • There is still time until midnight, maybe something will happen on the 2013 budget. (Photo: Toni Verdú Carbó)

Acrimonious EU budget talks are part of a "choreography" which makes it improbable that a deal can be reached before February or March next year, a German expert has said.

"I don't think we will have a deal at the [EU] summit next week [22 November]. It is part of the game for [British PM] Cameron to go back to London and say he fought like a lion. But there will be a deal in February or March," Peter Becker, an expert with the Berlin-based think tank Stiftung Wissenschaft und Politik told this website.

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Becker has studied previous negotiations for the seven-year EU budget and found that they all followed the same pattern where at least two summits are needed for leaders to agree on a budget.

With the European Parliament having to give its consent on the final figures, the process is likely to drag out until May 2013, he predicted.

Britain is the most inflexible in its demands, threatening to veto any deal that does not foresee at least a spending freeze, if not a cut for 2014-2020 compared to the previous period.

But France, Sweden, Denmark and Austria have also threatened to veto the deal, for different reasons.

Meanwhile, after a separate set of talks for the 2013 EU budget failed over the weekend - with a last-ditch attempt to seek a compromise set for Tuesday (13 November) - the stage seems set for a fiasco at the 2014-2010 EU budget summit next week.

"There is still time until midnight [on Tuesday]. Maybe something will happen on the 2013 budget. But of course these negotiations are linked to the seven-year framework," Becker said.

He explained that if no deal is reached in time on the seven-year budget, then the 2013 envelope will be duplicated in 2014.

The situation explains the unwillingness of EU net payers to top up next year's budget with €9 billion to keep student exchange programmes and social schemes afloat.

If no deal is reached on the seven-year period, the big losers will be new member states which depend heavily on the EU's so-called "structural funds" - about a third of the total EU budget - aimed to help them catch up with richer EU countries.

The legislation for these funds expires next year, so any delay could mean less money for countries like Poland or Hungary.

"If talks drag on, then the new structural funds will be delayed as well, which probably means less money," Becker said.

Technically, a set of new laws underpinning the structural funds could be issued in the absence of a seven-year budget deal, but politically it would be a "disaster," the German expert said.

In the absence of the seven-year framework, member states would have to go through these negotiations year by year, as was the case in the 1970s and 1980s, he noted. "About four times there was no budget or it came very late because they couldn't agree," Becker recalled.

Meanwhile, germany is once again emerging as the referee on the budget dispute, as was the case in 2005.

The German position is "right in the middle" between the European Commission proposal, which backs the increase demanded by new member states, and the call for cuts from net payers.

Chancellor Angela Merkel also wants a 2014-2020 deal next week so that the talks can move on to the future of the eurozone, banking union and finding a solution for Greece.

"The problem is with the UK. One gets the feeling from France and others that they are willing to compromise, but the Brits are not so much about reaching a deal, they want to use the budget talks in proving why they don't want Europe," Becker said.

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