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16th May 2022

EU's 2008 budget to target economy not farm aid

As the EU moves closer to a key debate on reviewing its budgetary policy, the European Commission has tabled a budget proposal for 2008 that for the first time pays more money towards initiatives that will boost the bloc's economy rather than subsidise its farmers.

"The commission is steady in its ambition of refocusing the budget on the global challenges facing Europe as a whole," EU budget commissioner Dalia Grybauskaite said on Wednesday (2 May) after she and her fellow commissioners approved next year's draft budget.

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  • The EU aims to approve a major review of its budgetary policy in 2009 (Photo: European Commission)

Under the proposal, €57.2 billion (44.2% of the budget for 2008) is to be put towards "sustainable growth," an amount that is for the first time higher than what the EU will be paying out for its Common Agricultural Policy (CAP) - €56.3 billion (43.6%).

Along with cohesion funds, worth €46.9 billion and put aside for big infrastructure projects mainly for the new member states - the economic package includes €10.3 billion for boosting the bloc's competitiveness in areas such as enterprise, Trans-European Networks and life-long learning.

But given that agriculture accounts for just a tiny portion of the EU's jobs and wealth, critics still consider the amount earmarked for farmers as being too big a portion from the European coffers – with the issue to be a hotly-debated topic during the review of the bloc's budget, which is to begin in earnest next year.

Galileo to get more cash

As part of the economic package, Brussels has suggested doubling the financial resources for the Galileo satellite navigation system, despite concerns over its future due to political wrangling between governments and companies involved in its construction.

Galileo's 30 satellites are to be launched into mid-Earth orbits at a cost of around €3.2 billion, with one third of that coming from EU taxpayers and the rest from a private consortium made up of eight European companies that have caused delays as they cannot agree on a joint commercial position.

Ms Grybauskaite suggested the aid for Galileo from common EU coffers should next year rise by 51 percent compared to 2007.

"I'm satisfied that we agreed Galileo is a pan-European project and we want to support it," she said, adding that the EU executive will most likely review further its budget proposal on this issue and ask for even more money for it.

The commission has MEPs on its side for an even higher increase.

"If member states disapprove of boosting the budget for Galileo they should really ask - do we want to carry out this satellite system or shall we just see Russia developing a parallel one which is better?" Reimer Boge, the German centre-right MEP who chairs the parliament's budgets committee, told EUobserver.

MEPs last year also pushed for more funds in Europe's foreign policy activities, which the commission suggests should total €6.9 billion next year – up by 4.5 percent – plus a reserve of €300 million for Kosovo and for aid to Palestinians.

Re-deployment rather than new staff?

After last year's row with member states over the administrative resources of EU institutions, Ms Grybauskaite rushed to highlight the commission's new approach to staff policy, which is focused on re-deployment rather than employing new personnel.

But the EU's 2008 expenditure for administration is still expected to rise by 5.7 percent compared to this year, mainly due to hikes in pensions (of 10.2%) for employees from all institutions and for European schools (11.1%) following the increase in personnel in Brussels after the two most recent enlargements.

The European Parliament is set to debate the commission's draft proposal along with the council, representing member state, on 13 July.

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Lagarde signals summer interest rate hike

European Central Bank president Christine Lagarde signalled an interest rate increase possibly as early as July, but some experts warn for a repeat of the 2011-2012 debt crisis.

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