Wednesday

1st Jun 2016

Focus

EU commission asks for €11bn to plug budget gap

  • Lewandowski - member states must end 'ostrich' policy (Photo: ec.europa.eu)

An extra €11.2 billion is needed to cover unpaid bills from the EU budget, the European Commission said on Wednesday (March 27).

Budget commissioner Janusz Lewandowski said he tabled the amending budget in a bid to plug gaps in the 2012 and 2013 spending plans.

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The request for cash "cannot come as a surprise," he said, adding that earlier postponement of payments had created a "snowballing effect of unpaid claims transferred onto the following year."

"The ostrich policy can only work for so long: postponing payment of a bill will not make it go away," he noted.

Lewandowski explained that €9 billion is needed to replenish cohesion funds for the EU's poorest regions.

The emergency budget also includes €643.7 million to cover the costs of EU research and development programmes. Some €3 billion is needed just to cover bills from 2012.

The emergency funds would "merely allow the EU to pay its share of infrastructure or science projects that member states agreed to start in the past," Lewandowski said.

His request provoked a furious response from the UK government, which is part of a group of member states demanding cuts to EU spending.

Treasury minister Greg Clark said that the commission request is "totally unacceptable."

He added that it is "extraordinary that the commission should demand an increase in the EU budget that is bigger than the rescue package that was agreed for Cyprus."

Agreement on how to settle the EU's overhanging bills is likely to be a key stumbling block in ongoing negotiations on the EU's multi-annual financial framework (MFF) - its 2014 to 2020 budget.

In a resolution backed earlier this month in Strasbourg, MEPs insisted that the EU's existing debts must be settled before they sign off on the next seven year framework.

Under the treaties, the EU is forbidden from running a deficit budget.

Alain Lamassoure, the French centre-right MEP who chairs parliament's budget committee, said that the commission on Wednesday confirmed the "threat" that it is running out of money.

"To pretend to be deciding on a seven-year budget when we are not even able to pay the current year's bills will not enhance our trustworthiness," Lamassoure noted.

But national governments are reluctant to open their pockets despite the appeals.

An EU official told this website that reaching a deal on 2013 payments will be "a major hurdle to overcome."

It is also unclear whether the €11.2 billion will be enough to sustain spending until the end of 2013.

Another EU official indicated that a second emergency budget could still be tabled in November or December.

MEPs are prepared to stick to the overall spending 2014 to 2020 figures agreed by governments, which amount to €960 billion in commitments and €908 billion in payments.

But they are calling for a flexibility mechanism to allow funds to be shifted between budget headings and across different years.

Lewandowski will present his amending budget proposal to MEPs on the budget committee on 15 April.

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