Tuesday

6th Dec 2016

EU budget running low on funds, commission warns again

  • The European Commission has warned that it needs €4.7 billion to avoid another cash-flow crisis (Photo: snorski)

The European Commission has warned that it is running out of money again in the latest stand-off between the EU institutions over its unpaid bills.

The EU executive says that the bloc’s budget faces payment gaps worth €4.7 billion covering research and employment programmes, cohesion policy, and costs arising from the refugee crisis in Ukraine and Syria.

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An autumn cash-flow crisis for the commission has become a perennial fixture in the EU calendar.

After repeatedly warnings from the EU executive that flagship programmes such as the Erasmus student-exchange scheme and the European Social Fund were within weeks of running out of money, the EU institutions agreed to amending budgets worth €6 billion in 2012 and €11.2 billion in 2013.

Speaking during a European Parliament debate on the issue on Wednesday (16 July), commissioner Androulla Vassiliou remarked that the process made the bloc’s budgetary process “almost unintelligible and undermines the EU’s credibility”.

Vassiliou blamed governments for having only authorised “an artificially low level of payments.. on the understanding that a supplementary budget would be needed later in the year.”

This time Vassiliou told MEPs that governments would not be required to dip into their pockets to stump up the €4.7 billion, with the money collected from fines for breaching EU competition law, and surpluses in other budget headings.

But the commission still needs to permission of governments to do this, to avoid the funds being distributed back to national capitals.

For their part, most MEPs want governments to plug the gap to avoid the process repeating itself, yet again, next year.

“At the start of the parliamentary cycle we need to stop this slippage, to keep our finances in order,” said Liberal deputy Jean Arthuis, the new chair of the Budgets committee.

This year is the first year of the bloc’s new seven year budget cycle, and should be the last where the EU has to cover overhanging bills from the previous cycle.

But with overall spending already set to be 3 percent lower than in the 2007-2013 cycle, the commission says it will require “maximum flexibility” to shift funds between different budget headings if is to avoid running out of money.

Cash-strapped governments are reluctant to stump up extra money, and are set to cut the commission’s draft proposal for the 2015 budget by €2.1 billion when they meet next in September.

Italian minister Benedetto Della Vedova, representing governments, commented that “the interest of the council is that no member state should run the risk of having to pay extra bills,” adding that “we have to respect the commitments entered into but we have to ensure that the EU budget reflects the overall economic situation.”

Jonathan Ashworth, an MEP for the conservative ECR group, warned that without an overhaul of EU spending “an ever deeper payments crisis is inevitable”.

No euro crisis after Italian vote, says EU

The Italian PM's resignation after a failed constitutional referendum has not changed the situation, the Eurogroup president has said. Financial markets have remained stable.

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