Last April, the European Commission presented the 2012 EU’s Draft Budget. It has not proposed to cut the budget, but to increase it, ignoring, therefore, the UK, and other member states, pleas for a freeze or, at least, a limited increase, according to the inflation rate. Hence, the Commission proposed the 2012 draft budget – €147.4 billion in commitments appropriations which represents an increase of €5 324,3 million or 3.7% comparing to the 2011 budget, and €132.7 billion in payments appropriations, which represents an increase of €6.2 billion or of 4.9% on the 2011 budget. At a time of severe strain on the majority of Member States’ public finances, where governments are reducing public spending, the Commission proposes such an increase on the EU budget. According to the UK government the Commission’s proposals are “unacceptable.” It has been reported that the European Commission’s proposal for the EU’s budget in 2012, calling for a 4.9% increase to the budget, will increase the UK contributions to the EU budget at £600m.
On 25 July, the Council adopted, by QMV, its position on the EU draft budget 2012. It has agreed to a budget of EUR 129.088 billion in payments as compared to the Commission's €132.7bn proposal, and €146.245 billion in commitments. Although the Council has reduced the amount of the Commission proposed draft budget, there is still an increase of 2.9 % for commitments and 2.02 % for payments compared to 2011. The Council should have proposed lower figures as the UK has suggested. In fact, the UK, Austria, Denmark, Finland, the Netherlands and Sweden voted against such proposal. The UK has called for a spending freeze for 2012, but these member states did not have enough votes to block the compromise draft by the Polish EU Presidency. The Council’s formal position is the Polish presidency mandate to negotiate the 2012 budget with the European Parliament.
The European Parliament has always sought a bigger budget for the EU than that proposed by the Commission and member states. The MEPs believe that a 4.9% increase is the “bare minimum” necessary to meet the EU’s commitments, particularly, the regional aid funding and the Europe 2020 strategy. Therefore, the vote at the European Parliament’s Budget Committee to increase the EU’s 2012 budget did not come as a surprise. The MEPs rejected the cuts made by the Council, and proposed an increase in payments of 5,23% as compared to 2011's budget and an increase of commitments of 3,95%, requiring even more money from taxpayers.
The ECR budgets spokesman Lajos Bokros MEP said "We cannot accept the position adopted by the committee and neither will the council.” Moreover, he stressed that "The European Parliament is once again showing itself to be out of touch with the real world. National governments are asking for budgetary restraint from the EU, yet MEPs have once again voted for more money for their pet projects,"
David Cameron should not give up on his effort to achieve a 2012 EU budget freeze. The UK is not alone in its fight against the proposed increase in the EU's 2012 budget. The European Parliament's first reading will take place on 26 October. The budget is deemed to have been adopted if the European Parliament within 42 days from the Council communication approves the Council draft budget or has not taken a decision. If the European Parliament amends the draft budget, the Lisbon Treaty provides for a Conciliation Committee to be convened. The European Parliament is very likely to follow the recommendations of the Budget Committee, therefore, a conciliation committee would be convened in November. Such Committee will be composed of Council representatives and representatives of the European Parliament aiming at reaching an agreement on a joint text. Fierce negotiations between the Council and the European Parliament are, therefore, expected.
It is essential for the UK to achieve a blocking minority in the vote on the conciliation agreement. If the Conciliation Committee does not agree on a joint text within 21 days, the Commission shall submit a new draft budget. If the EU 2012 budget is not approved before the end of the year, spending would have to be frozen at 2011 levels.
