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New Open Europe briefing: Agreement to cut the EU budget faces significant obstacles this week

06 Feb 2013

Ahead of this week’s summit on the EU’s long term budget Open Europe has today published its estimates on the size of the latest EU budget proposal and analysis of the likelihood of a deal being agreed.

Open Europe’s Director Mats Persson said,

“We see a 35% probability of a deal this week. If Italy and France keep on insisting on more cash to achieve short-term political gains, the talks will fall.”

“Though the overall size of the EU budget will be kept in check, due to the inherent bias in these talks towards the status quo, the actual spending areas will remain unreformed, largely inefficient and out of step with economic reality. This reflects very poorly on Europe’s collective ability to rise to the challenges of this century.”

To read the full document, ‘EU budget talks: towards the right headline, but wrong content?’, click on the link below:
http://www.openeurope.org.uk/Content/Documents/Pdfs/EUbudget2013.pdf

Key points

  • We believe there is a 35% probability that a deal will be struck on the 2014-2020 EU Multiannual Financial Framework (MFF) this week.

  • EU Council President Herman Van Rompuy will present a new compromise proposal for the long-term EU budget, which will likely total between €940bn and €960bn in commitment appropriations (as opposed to payments). This compares to the Commission’s original proposal of €1033bn. This means that, for the first time, the EU is on track to deliver a cut compared with the previous budget period.

  • One possible outcome is a further cut of €20bn from the previous proposal tabled by Van Rompuy in November 2012. If this is applied uniformly to all levels of the budget (payments and commitments) we estimate the figures will be as follows:  

Total Commitments (including off budget items): €991bn
Total Commitments: €953bn
Total payments: €920bn

   

  • Italy and France hold the key to the talks – if both continue to insist on capping the UK’s EU rebate or, more critically, increasing their net receipts for their own political gain, the talks could well break down.

  • Though some more cash will go towards digital and energy infrastructure – where the EU budget can add value – and less development spending will be recycled amongst richer member states, the EU budget will remain largely unreformed and current flaws and inefficiencies will remain in place. 

  • There’s no evidence that Cameron’s recent EU speech will have a bearing on the likelihood of a new EU budget deal. That said, long term divisions and entrenched positions provide significant obstacles to a final deal being struck this week.

NOTES FOR EDITORS

1) For more information, please contact the office on 0044 (0)207 197 2333, Mats Persson on 0044 (0)779 946 0691 or Raoul Ruparel on 0044 (0)757 696 5823.

2) Open Europe is an independent think-tank calling for reform of the European Union. Its supporters include: Lord Leach of Fairford, Director, Jardine Matheson Holdings Ltd; Lord Wolfson, Chief Executive, Next Plc; Hugh Sloane, Co-Founder and Chief Executive, Sloane Robinson; Sir Stuart Rose, former Chairman, Marks and Spencer Plc; Jeremy Hosking, Director, Marathon Asset Management; Sir Henry Keswick, Chairman, Jardine Matheson Holdings Ltd; Sir Martin Jacomb, former Chairman, Prudential Plc; Lord Sainsbury of Preston Candover KG, Life President, J Sainsbury Plc; Michael Dobson, Chief Executive, Schroders Plc; David Mayhew, former Chairman, JP Morgan Cazenove; Tom Kremer, Chairman, Seven Towns Ltd; Michael Freeman, Co-founder, Argent property group.

For a full list, please click here:
http://www.openeurope.org.uk/Page/Supporters/en/LIVE

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