Parliament backs €9 billion EU budget hike

Goran Farm, the Swedish deputy who leads for the Socialist group on the Budget committee, described the parliament’s position as “very modest, with a clear focus on jobs and growth.”

Member states had agreed to a 2.8 percent increase but the EU’s seven net-contributing countries, which include Germany, France and the UK, insist that they will not cede more ground at a time when governments are imposing national austerity plans. Critics of the council position say that governments are trying to block funding to pay for projects they have already agreed to.

Helga Truepel, the Green group’s spokesperson, said the commission’s increase was to cover payments already agreed by governments. “Council prefers to keep the level of payments under the EU budget artificially low while knowing very well that the commission is currently unable to honour its financial obligations,” she said.

For his part, Richard Ashworth, spokesman for the British conservative dominated ECR group, accused the committee of adopting an “Oliver Twist mentality” and backing “an inflation-busting increase that those who pay the EU’s bills are unable and unwilling to pay.”

Under the Lisbon Treaty, parliament enjoys equal power with governments on the adoption of the EU budget which must be no higher than 1.23 percent of GDP.

The vote by the budget committee comes after the commission revealed that it would table a supplementary budget to plug an estimated €10 billion hole to ensure that payments under programmes such as the European Social Fund and Erasmus scheme could continue to be made.

While negotiations on the next seven year budget framework starting in 2014 remains deadlocked, a number of EU funding programmes are on the brink of insolvency.

Socialist group leader Hannes Swoboda accused governments of “blackmailing successful programmes” with the immediate future of the EU’s Erasmus student exchange programme affected by the budget gridlock.

Although the Commission has sought to play down the prospect of students not receiving their grants, the European Students’ Union (ESU) said that failure to reach a budget settlement could leave students in the 2012-13 semester empty-handed.

ESU chair Karina Ufert urged the EU executive to “solve the current financial shortcomings of the European Social Fund by using money from underspent EU funds.” Over 2 million students have used the Erasmus programme in its 25 year existence.

The Cypriot Presidency is hoping to cajole ministers into a compromise deal over the coming weeks. They will then attempt to bridge the gaps with the parliament and commission position.