Europe on a budget

Analytics: What does the EU spend money on?

Member States of the European Union, as a rule, accept annual state budgets. The EU itself sets the budget for seven years. Such a procedure was introduced back in the 80s by the then European Commission President Jacques Delors, in order to improve the planning of economic programs of the European Union, designed for long periods. Since then, once every seven years, a dispute has arisen between the EU member states, the European Commission and the European Parliament on the size of the total budget and its expenses.

Budget deadlock

Jose Manuel Barroso

The lion’s share of the EU budget are contributions from member countries. It is clear that those states that contribute more to the general treasury than they receive from it for economic development are in favor of limiting expenditures. And countries whose contributions are less than EU subsidies hold the opposite point of view.

The draft budget forms the European Parliament together with the European Commission. Then the representatives of the EU countries in the European Council make adjustments, trying to take into account their own interests as much as possible. Negotiations on the draft of the new EU budget are now at this stage. The summit, which begins on Thursday, November 22, is designed to find a way out of the impasse.

According to the draft European Commission, from 2014 to 2020, the EU budget should be from 143 to 151 billion euros annually. This is about one percent of the total economic potential of the European Union. For seven years, a tremendous amount has accumulated – over one trillion euros.

But everything is relative, the deputy chairman of the budget committee of the European Parliament, the representative of the German Social Democrats, Jutta Haug, said. Germany alone in these seven years, Haug points out, is going to spend about 2.2 trillion budget euros.

Major expenses – subsidies

Presenting the draft seven-year EU budget, European Commission President Jose Manuel Barroso said that in times of debt crisis, in principle, it’s right to save. Therefore, Barroso proposes to increase expenses only marginally. Although, in his opinion, the European Union should do more to increase the confidence of Europeans in the EU and as a social project.

Press: Why the European Parliament interrupted negotiations on the EU budget

EU budget negotiations ended in failure

The European Parliament failed to convince the EU delegations of the need for a significant increase in the EU budget. Now the European Commission is to develop a new project. (

EU countries and the European Parliament traded because of the EU budget

Europe on a budget

The EU states and the Europarliament began a discussion of the consolidated budget of the European Union for 2013. Discrepancies in the issue of accepting the total amount reached 15 billion euros. (

"That’s right that we, including the governments of EU countries, tried to learn from the crisis, ”said Barroso in Brussels. – Everyone understands that it is necessary to adhere to the budget discipline, better coordinate economic policy". All this is good, but when it comes to solidarity at the European level, the head of the European Commission added, there is no such unanimity that, according to Barroso, "leads to a lack of understanding and support for the entire European project".

Approximately 80 percent of the EU budget is returned to member countries in the form of subsidies and programs to support the development of the economy. The remaining 20 percent spend on solving joint problems, for example, in the foreign policy sphere, on the maintenance of European institutions, the European Parliament, the administrative apparatus.

The two largest expenditure items are agricultural subsidies and funds for infrastructure development, that is, subsidies, in particular, for various construction projects.

The European Union was going to allocate more money for research, innovation, and for increasing employment. But it turned out to be impossible to find additional funds for such purposes by reducing, for example, agricultural subsidies, budget expert of the German Christian Democratic Union (CDU) in the European Parliament Reimer Böge complains."Not only money is needed, but also targeted programs, for example for Spain, where youth unemployment exceeds 50 percent"- declared Beuge in an interview with DW.

Investment promotion

Most of the agricultural subsidies are received by the French peasants.

With its targeted programs and subsidies for the construction of roads, bridges, industrial parks, as well as for research, the European Union, by the way, promotes investment in the EU countries themselves. In most cases, money from the treasury of the European Union is allocated, provided that the second half of the funds required for the implementation of a project are sought in the state itself.

The exception is the agrarian sphere. Peasants receive direct subsidies from the EU. Such subsidies are vital for European agriculture, and they, moreover, are half as much as farmers in the United States, for example, argue in Brussels.

"When France insists on preserving agrarian subsidies in the same volume, this is due to the fact that from 30 to 40 percent of the incomes of most French peasants are payments from the EU treasury"- explained Rymer Bege. As a result, research and development assistance programs have to be cut, he said.

Protest from london

One of the most decisive critics of the draft budget among EU donors is British Prime Minister David Cameron. He threatens to impose a veto, demands a reduction in costs and a reduction in contributions for the UK A month ago, at the last EU summit, Cameron announced that, from the point of view of London, it is better to have no agreement at all than to get a bad budget.

Europe on a budget

Not only the UK pays a smaller amount but also some other countries, including Germany. London bargained for such "discounts" because British peasants, as a rule, do without European agricultural subsidies. Germany receives "discount" for reimbursing a significant proportion of British underpayment.

A radical solution to the problem of the EU budget could be to form it not from the contributions of the participating countries, but, for example, with the help of a universal special euro-tax or a fixed part of the VAT to the EU treasury. However, such options in European capitals so far are rejected.

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