EU tables €144bn spending plan for 2016

More than 70 percent of EU spending is allocated to farming subsidies and regional aid, but the draft budget also includes €500 million in guarantees for the European Fund for Strategic Investment (EFSI), which aims to leverage €315 billion in private sector funded infrastructure investment projects.

Elsewhere, the Erasmus student exchange programme, which was one of the EU programmes at the centre of a cash-flow crisis in 2013 and 2014, is set to receive a 30 percent increase in payments taking its budget to €1.8 billion. Meanwhile, the bloc’s Migration and Integration Fund will be boosted by 36 percent, receiving a total of €521 million next year.

"Our 2016 budget supports the economic recovery through investment for growth and jobs, as well as helping manage external challenges such as migration,” said EU budget commissioner Kristalina Georgieva. “We are responding to the most pressing needs in Europe."

Georgieva also argued that the budget would continue to pay off overhanging bills from the 2007-2013 spending round. Having reached a peak of €24.7 billion at the end of 2014, the commission plan would reduce the backlog to €2 billion.

The budget is the third of the current seven year framework which began in 2014, and which caps total spending at €960 billion, fractionally below 1 percent of GDP.

Despite setting up a working group headed by former Italian prime minister and EU commissioner Mario Monti to look at new ways to fund EU spending, around 75 percent of the funds will continue to come directly from EU governments, with VAT payments the next largest contributor.

“This is a positive start and hopefully signals the end of ever-increasing EU budgets,” said Bernd Kölmel, spokesman for the anti-federalist ECR group.

“This budget represents the first time the EU’s spending commitments have been reduced, and the payments on hand have only been increased in line with inflation,” he added.

For their part, deputies from the centre-left Socialist and Liberal groups indicated that extra money could be allocated to the investment fund (EFSI) during a debate with Georgieva in the parliament’s budget committee.

Georgieva will be keen to avoid the last minute negotiations between MEPs and ministers on EU budgetary plans that have become an annual pre-Christmas ritual in recent years.

Governments will adopt their stance on the draft budget in July while the parliament will agree its position on the spending plans in September.