Wednesday

20th Jan 2021

Von der Leyen warns on EU budget cuts

  • Commission preisdent Ursula von der Leyen wants to wrap up budget talks early next year (Photo: European Commission)

EU Commission president Ursula von der Leyen on Wednesday (4 December) said she is "concerned" about "severe cuts" to the planned EU budget in the latest proposal by the Finnish presidency.

The recent number from the outgoing Finnish EU presidency on the seven-year budget, kicking off in 2021, proposes a budget cap at 1.07 percent of the EU gross national income (GNI).

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The commission last year proposed a ceiling at 1.11 percent, while the European Parliament wants to see an overall size of 1.3 percent.

The Finnish proposal is more in line with those member states, such as Germany, the Netherland, Austria, Sweden, which want the first post-Brexit budget to stay below 1.0 percent, but still exceeds their expectations.

"I am concerned about the severe cuts that are in this proposal compared to the commission proposal," von der Leyen told journalists after the first meeting of her commission team.

"I want to discuss this with my peers in the European Council next week. It is time we work together to ensure that we can deliver on the objectives we have all agreed together," von der Leyen said.

Von der Leyen plans to argue to EU leaders that their strategic agenda, focusing on border protection, climate change and defence, needs to be backed by investment.

The budget will be discussed by EU leaders next Thursday and Friday at their summit in Brussels.

A breakthrough is not expected however as there are deep divisions among member states which argue for a 1.0 percent cap on spending, and those wanting to see a bigger budget - particularly those that receive EU subsidies.

Last month 16 EU leaders signed statement pledging to keep cohesion funds, EU funding for less developed regions, in real terms compared to the current budget.

The Finnish proposal makes both sides unhappy, as it does not reach the 1.0 percent goal of the net payers, but still cuts further into EU subsidies.

The European parliament's negotiating team said that the Finnish proposal would "condemn the EU to failure".

Von der Leyen also said she wants to use the EU budget and European Investment Bank to create a €100bn 'Just Transition Fund' that would help countries adapt their industries to the low-carbon economy.

The fund would partly be used to soften the positions of Hungary, Poland and the Czech Republic, which have objected to the EU's 2050 climate-neutrality goal.

The commission chief will lay out her plans for a European green deal next Wednesday.

Brexit-sized hole

The traditionally difficult haggling over the EU budget is complicated this year by the UK's departure, as richer net payer countries do not want to pay more to fill in the gap for Britain's roughly €12bn annual contribution.

Negotiations will need to be handled by the new EU Council president Charles Michel, von der Leyen pointed out.

Von der Leyen argued for a swift deal, saying "it is important for all of us to reach an agreement early next year".

But member states' positions have hardened recently, as there has been no progress during months of negotiations.

"The budget negotiations are like the Game of Thrones series. You keep waiting for the big battle, but in reality, nothing happens for months," one EU official quipped.

Agenda

UK election plus EU summit in focus This WEEK

EU leaders will try to agree on the 2050 emission-free target - but they will deeply disagree on EU spending over the next seven years. Meanwhile the UK will elect its new political leadership.

Leaders face crucial EU summit for climate action

EU leaders are meeting on Thursday and Friday in three different formats: a regular summit to discuss the EU's long-term budget and the 2050 climate-neutrality goal, a European Council (Article 50) meeting, and a European summit.

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