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. The Commission proposed an EU´s 2012 budget totalling €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, the Commission proposes such an increase on the EU budget. According to the UK government the Commission’s proposals are “unacceptable.”

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 European Parliament today’s vote (26 October) 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 5,2% as compared to 2011's budget and an increase of commitments of 3,9%, requiring even more money from taxpayers. Whereas the Council has recommended a budget of €129bn, the European Parliament voted for a budget of €133.1 bn. This is now the European Parliament's position for the negotiations with the Council in the conciliation committee.

The Council cannot accept such position. The ECR budgets spokesman, Lajos Bokros MEP, rightly noted, "To insist on an increase of almost five percent flies in the face of the European public opinion in times of severe austerity in most member states and extreme austerity in some of them.” He stressed that “It is a blatant disregard of the hardships suffered by the taxpayer when the countries in crisis need to cut back on spending and the donor countries are being asked to dole out ever growing transfers.”

As the European Parliament amended the draft budget, a conciliation committee will 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, before the end of the year. Fierce negotiations between the Council and the European Parliament are, therefore, expected.

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. 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.