Commission warns of ‘significant’ spending cuts if no agreement reached on EU budget

The €1.85 trillion fiscal package is currently being blocked by Hungary and Poland because each objects to the rule of law mechanism which ties funding for each Member State to an obligation to respect fundamental EU values.
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By Martin Banks

Martin Banks is a senior reporter at the Parliament Magazine

02 Dec 2020

A European Commission spokesman has admitted that failure to reach agreement will result in “significant cuts” to both the EU’s budget for the next seven years and the Coronavirus recovery package, known as Next Generation EU.

Eric Mamer, chief spokesman for the Commission, told a news briefing, “If there is no agreement then we would revert to what is called a Regime of the Provisional twelfth.”

“This will impose strict limits on both the type and level of spending and imply significant cuts compared with the current proposed MMF and Next Generation EU. So, if this package is not adopted, there would be significant cuts in spending.”

A European Parliament source explained that if there is no agreement the EU institutions will work from 1 January 2021 under the system of the “provisional twelfth” as set out in the Lisbon Treaty.

This means that each chapter of the budget will be funded monthly up to a maximum of one twelfth of its appropriations. Any new body or initiative that did not have a budget line will not be funded.

“We simply cannot reopen the agreement. It has been signed and agreed and we must work on the basis of the agreement but we will not reopen it. Next week we need to reach an agreement” António Costa, Portuguese Prime Minister

“No flexibility or planning in expenses will be possible, regardless of the bills to be paid or the commitments made,” the source said.

Portuguese Prime Minister António Costa, speaking in Parliament on Wednesday, also warned of “huge cuts if there is no deal.”

He said, “No one wants that so I hope we all have this in mind when we meet in Brussels next week.”

Portugal takes over the EU presidency on 1 January and, speaking at a news conference with David Sassoli, Parliament’s President, Costa said failure to reach a budget deal will “paralyse EU policymaking.”

He said, “We simply cannot reopen the agreement. It has been signed and agreed and we must work on the basis of the agreement but we will not reopen it. Next week we need to reach an agreement.”

“If there is no agreement then we would revert to what is called a Regime of the Provisional twelfth. This will impose strict limits on both the type and level of spending and imply significant cuts compared with the current proposed MMF and Next Generation EU” Eric Mamer, European Commission chief spokesman

Sassoli said, “There is no Plan B if there is no agreement on the budget and recovery plan. If there is no agreement we are back to square one and our citizens do not deserve or expect this. That would jeopardise the recovery so we are waiting for Council to give the go ahead.”

EU countries and leading MEPs have said they are not willing to backtrack on the rule of law deal and EU leaders are scheduled to meet in Brussels next Thursday and Friday to find a compromise.

Earlier this week, German chancellor Angela Merkel, who is in charge of brokering a deal as her country currently holds the EU Council presidency, said she supports limited concessions to Hungary and Poland.

But, she said, this is conditional upon both sides adopting the budget and recovery package.

She told a video conference, “Some say don’t compromise and don’t change a single comma while others say please come up with a result.”

“There is no Plan B if there is no agreement on the budget and recovery plan. If there is no agreement we are back to square one and our citizens do not deserve or expect this. That would jeopardise the recovery so we are waiting for Council to give the go ahead” David Sassoli, European Parliament President

On Monday, EPP member Jeroen Lenaers told a Parliament committee that ongoing Article 7 procedures for rule of law problems in Hungary and Poland had been “inconclusive” because Member States had failed to follow up with sanctions.

He was speaking in a debate between MEPs from the Civil Liberties Committee, the German Council presidency, EU Justice Commissioner Didier Reynders and representatives of the Polish and Hungarian governments.

The meeting heard that the Article 7 disciplinary proceedings were imposed almost three years ago against the Polish government and more than two years ago against the Hungarian government.

Most recently Poland has caused further outcry after its Constitutional Tribunal ruled that abortion in cases involving severe and irreversible foetal defects was illegal.

The Article 7 procedure may eventually lead to sanctions, such as the suspension of voting rights in the Council. Such sanctions are rarely, if ever, used.

Meanwhile on Tuesday, EU legislators reached a provisional political agreement on how EU countries will be able to spend EU regional, cohesion and social funds for 2021-2027.

Parliament and Council negotiators agreed that the total resources for economic, social and territorial funds available for 2021-2027 will be €330 billion.

The deal means less developed regions will continue to benefit from substantial EU support.

Bulgarian deputy Andrey Novakov, EPP spokesman in the Committee on Regional Development, reacted by saying, “After two years of negotiations, during four presidencies of the Council and two terms of the European Parliament, Member States now finally have clarity on the programming, implementation and closure of their programmes.”

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