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30th Nov 2020

EU leaders struggling to break budget deadlock

  • EU Council president Charles Michel (m) sitting down with leaders of the so-called 'Frugal Four', including Danish PM Mette Frederiksen, Dutch premier Mark Rutte, and Austrian prime minister Sebastian Kurz (Photo: Council of the European Union)

EU leaders were trying to break the stalemate in divisive talks over the bloc's next seven-year budget as their summit continued to its second evening on Friday (21 February).

On Friday evening the EU Commission put forward a proposal on adjustments - endorsed by EU Council president Charles Michel - that would mean an overall spending of 1.069 percent of the bloc's gross national income (GNI).

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In actual payments from member states over the seven-year 2021-2027 period it would mean 1.049 percent of the EU's GNI.

Michel's original proposal was at 1.074 percent of the GNI, which proved too high for the net payers.

Talks have been stuck between a richer group of member states, the 'Frugal Four' - the Netherlands , Austria, Denmark and Sweden - that want to see EU spending capped at 1.0 percent and a larger group of member states that wanted to see more investment.

The new proposed cuts come mostly from the research and innovation Horizon, space, defence and neighbourhood programmes, a convergence program for countries not yet in the eurozone, military mobility, and some safety margins planned within the budget.

The numbers prepared by the EU Commission would also mean that the rebates to the net payers would remain at a nominal value.

Austria would receive an additional €100m and the Netherland could keep a higher mount of tax levies collected on behalf of the EU at its ports, while Denmark and Sweden would get corrections for supporting the eurozone budget.

There would be some money reshuffled to the cohesion and agriculture policies, but the balance of the budget between policies would remain.

One of the so-called 'own resources' of the EU budget, the contributions of member states from the EU Emission Trading System (ETS) is likely to be scrapped.

The 27 EU leaders sat down together on Friday night to discuss these new numbers.

Second try

After an inconclusive Thursday session between EU leaders with EU council president Charles Michel, bilateral talks continued on Friday morning.

The 'Frugal Four' were pointing at an around €20-26bn in spending that could be saved in the safety margin of the budget plans, and on cutting back on less essential programs.

However, Hungary's prime minister Viktor Orban told journalists on Friday afternoon that he and the loose group of countries that benefits from EU subsidies, the so-called 'Friends of Cohesion' were aiming for 1.3 percent of GNI - which closer to the European Parliament's proposal.

Orban said he doubted there could be a deal on Friday as positions were too far away.

Green Deal

Plastic and carbon proposals to help plug Brexit budget gap

Individual contributions of member states to the next EU budget could soon depend on the amount of plastic not recycled. There could also be revenues from a possible carbon border tax on imports into the EU.

Unhappy EU leaders begin budget haggle

EU leaders arriving at the Brussels summit criticised the budget proposal of EU Council president Charles Michel, as richer member states insisted holding onto their rebates, while poorer countries wanted to avoid deep cuts to their subsidies.

No breakthrough at EU budget summit

EU leaders failed to reach agreement on the EU's long-term budget, as richer states and poorer 'cohesion countries' locked horns. The impasse continues over how to fund the Brexit gap.

Germany asks capitals to give a little in EU budget impasse

European Parliament negotiators are demanding €39bn in new funding for EU programmes such as Horizon research and Erasmus, in talks with the German EU presidency on the budget. Meanwhile, rule-of-law enforcement negotiations have only just begun.

Budget deal struck, with Hungary threat still hanging

Ultimately, the European Parliament managed to squeeze an extra €16bn in total - which will be financed with competition fines the EU Commission hands out over the next seven years, plus reallocations within the budget.

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