Unpaid bills main hurdle in EU budget talks

The acrimonious talks - a yearly phenomenon - revolve around a final amendment to the current budget for 2014 and adopting next year's budget. If no agreement is found by mid-next week, the EU budget will have to be rolled over on a monthly basis, which would pose problems for some EU-funded programmes, notably aid for farmers.

A group of Baltic farmers protested in front of the parliament on Wednesday, demanding more subsidies to offset a Russian import ban on EU fruit and vegetables and expressing concern over a possible budget blockade.

The 'cautious optimism' about a last-minute deal stems from one issue having been cleared up: the British and Dutch "corrections" to the EU budget, based on adjustments to the gross national income (GNI).

The Dutch government has agreed to pay its share by the end of December, while the UK will pay in July and September 2015, after its rebate is calculated in May.

Some countries have already paid their adjustments, to the tune of €3.3 billion in total, with the commission already redistributing €300 million to member states like Denmark, who are set to be compensated for having paid too much over the years.

"The corrections issue is now a constructive force in the debate," one EU official said.

But the more contentious issue for next year's budget is a huge backlog of unpaid bills from the so-called cohesion programme, which distributes billions to poorer EU member states for infrastructure projects.

Under its latest proposal tabled last week, the EU commission is asking member states to approve at least €4bn for these unpaid bills, so that the €28 billion backlog is stabilised and does not balloon further.

The European Parliament, for its part, wants to narrow the gap between what the EU 'commits' to pay next year and what it actually pays.

The new draft budget announced last week by the EU executive foresees €145.2 billion in commitments and €141.3 billion in payments, lower than the commission’s original proposal, but still a 0.7 percent increase on spending in 2014 to cover for part of the unpaid bills.

To the UK and "a large number of other countries", this is still unacceptable, as they want to limit spending at €140 billion, while the European Parliament is demanding at least €4 billion "over-the-ceiling" emergency spending for the unpaid bills.

Talks are set to resume over the next days with the aim of reaching an agreement by mid-next week.