2017 EU General budget

Written by Linnea Richardson on 27 October 2016 in EU Monitoring
EU Monitoring

On October 25, the Plenary discussed the Parliament’s position on the 2017 budget, with input from the Commission and the Council.

Many MEPs stressed the need to reinstate the cuts proposed by the Council in its position, pointing to the need to reinforce core priorities such as jobs and growth and addressing the refugee and migration crisis. Notably, there was disagreement between the Council and the Parliament regarding how the 2017 budget negotiations relate to the discussions on the mid-term revision of the MFF.

On October 26, the Parliament adopted its position with 446 votes in favour, 184 against and 60 abstentions. The Parliament’s adoption begins a budgetary negotiations and the “conciliation process” which will last until November 17.

Please find a summary of the debate below.

Jens Geier (S&D, DE), rapporteur general, said that he is “fed up” with Member States’ position on how the EU should be funded. Finance ministers want to slash the budget, while simultaneously calling on the EU to further assist them with EU funding. Even worse, Member States gave consent to the current budgetary situation and the MFF ceilings, he noted. The Member States hypocrisy is great, and it drives Euroscepticism, he argued. If the Parliament does not follow the Council’s position, it is accused of being overgenerous with tax payers’ money, a claim he refuted. The Parliament wants the EU to be as generous as possible in relation to tackling central priorities such as jobs and growth and addressing the refugee crisis. The Council agrees on these priorities, and yet at the end of the financial year the EU ends up being short on money. He wanted to demonstrate what can be done when the EU budget is fully mobilised. In freeing up funds from the mid-term revision, the EU can provide more resources for research, cross-border transport infrastructure and SMEs. Commenting on the proposal to provide young people with free InterRail passes, he said he was of the opinion that this money could be better spent in other ways. However, he agreed on the importance of investing in young people and said that the Youth Employment Initiative must be further strengthened.

Indrek Tarand (Greens/EFA, EE), rapporteur for the other sections, said that the 2017 budget is stronger, greener and more democratic than ever before. It is stronger because it includes targeted efforts to restore cuts made to EFSI and suggests boosting programmes like the Youth Employment Initiative and instruments like the DCI. It also offers more measures to tackle the refugee and migration crisis. The budget is greener because of targeted investment in LIFE, for example. While the EU should go beyond these increases after having ratified the Paris agreement, it is a good first step in the right direction. He found the budget to be more democratic as it tries to force the Commission to come up with a stricter code of conduct for ex-Commissioners and hold them more accountable. On the InterRail proposal, he agreed that perhaps the money could be better spent in another way, but suggested that perhaps the Commission can issue a competition for free InterRail vouchers, as it is important for young people to be able to discover other parts of Europe.

Commenting on the European Parliament’s own budget, he said that it is a delicate issue covered by the gentlemen’s agreement. He found it contradictory that the Parliament has committed to reduce its staff according to the established plan agreement, but then has increased political group staff that are not counted as normal staff but are still covered by staff regulations. He said he had been warned not to go into detail on this, but in spite of this he wished to state his opposition to this behaviour. On the remaining other sections of the budget, he said that the Parliament has decided to restore the budget lines of the other sections to the Commission’s levels.

Ivan Lesay, State Secretary of the Slovak Ministry of Finance, representing the Council, noted that on September 13, the Presidency presented the Council’s position on the Commission’s draft budget for 2017. At this time, the Presidency underlined that the Council’s main position concerns the need to prioritise EU expenditure. Jobs and growth, along with addressing the refugee crisis, must be a priority. However, it is the Council’s explicit wish to have margins to be able to cope with unforeseen events.

Commenting on the Parliament’s position in further detail, he stated that the Council is very concerned by the significant increases in appropriations proposed by the Parliament, which in some cases (such as reinforcements to Horizon 2020 and CEF) goes beyond the MFF ceilings. These reinforcements would go against the interinstitutional agreement reached on the European Fund for Strategic Investment (EFSI). In addition, he expressed his confidence that the Parliament shares the objective to reduce the institutions’ staff by 5 % by 2017.

Overall, there is a gap of 6 billion in commitment appropriations and 4.2 billion in payment appropriations between the Council’s and the Parliament’s position. The Council is willing to work constructively to breach this gap, and is prepared to stick to the deadline to reach an agreement.

Kristalina Georgieva, Vice-President and Commissioner for the Budget and Human Resources, explained that the Commission’s 2017 draft budget is a disciplined proposal that focuses on two priorities – jobs and growth and addressing refugee, migration and security challenges. She thanked the Parliament and Council for supporting these priorities. She welcomed the Budget Committee’s amendments to restore the cuts made by the Council in its reading position. She hoped that progress could be made during the negotiations to ensure the necessary funding. However, she also recognised that in a number of areas the Parliament has gone further than the Commission’s proposal, going beyond the ceilings in some cases. From the Commission’s position, this would need to be addressed in an executability letter to see how far it is possible to actually go.

She also presented the first amending letter to the 2017 draft budget that was put forward by the Commission last week. The letter has three main objectives. The first is to apply the changes of the mid-term revision to the 2017 budget and reinforce key spending programmes under heading 1a. This includes providing another EUR 500 million to the Youth Employment Initiative, for example. The second objective is to strengthen external action and address the root causes of migration through providing EUR 750 million to support the Migration Compacts and the European Fund for Sustainable Development, the external investment plan. Thirdly, it updates the agriculture expenditure by offering an additional EUR 500 million to the dairy sector, in addition to the EUR 200 million that has already been assigned to the fruit and vegetable sector. These measures would require using the Contingency Margin to make use of the flexibility available. She remarked that this amending letter is in line with many of the amendments proposed by the Parliament.

In addition to the discussion on the 2017 budget, she noted that there is a separate track of discussions on the mid-term revision of the Multiannual Financial Framework (MFF). For the Commission, it is clear that these processes are separate but have to be discussed in parallel to the annual budget negotiations in order to complete negotiations during the conciliation process.

On payment appropriations, she explained that the Parliament had been given the latest state of play on the payments situation last week. According to the Commission’s estimates, the Parliament’s proposals to restore appropriations in line with the Commission’s proposals are in accordance with the estimates.

In conclusion, she said that the Commission remains at hand to provide the Parliament and the Council with as much detailed information as possible. She hoped the Parliament will be able to agree on the 2017 budget without reservation so as not to hinder implementation.

If you are interested in reading the full briefing, please sign up for a free trial of the Dods EU Monitoring service.

About the author

Linnea is the consultant for EU budgetary affairs at Dods EU Monitoring

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