The Conciliation Committee has reached an agreement on the EU's 2012 budget before the deadline – 22 November. If the Conciliation Committee had not agree on a joint text within 21 days, the Commission would have had to submit a new draft budget, as happened last year. In fact, if the EU 2011 budget had not been approved before the end of the year, spending would have been frozen at 2011 levels. The Commission, the European Parliament and the Council Presidency all worked, at behind closed doors trilogue meetings, so that a deal could be reached before the deadline. On 19 November, after several hours of talks, the Council and the European Parliament meeting within the Conciliation Committee reached an agreement on the size of the EU Budget for 2012.
The Commission proposed an EU´s 2012 budget totalling €147.4 billion in commitments appropriations, representing an increase of €5 324,3 million or 3.7% comparing to the 2011 budget, and €132.7 billion in payments appropriations, representing an increase of €6.2 billion or of 4.9% on the 2011 budget. The UK government considered the Commission’s proposals as “unacceptable.” The Council 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. In the other hand, the European Parliament 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, €6.6 billion more than 2011. Eight Member States, including the UK, Germany, France, Austria, Denmark, Finland, the Netherlands and Sweden could not accept the European Parliament and the European Commission proposals.
Hence, the Conciliation Committee agreed to limit the total amount of payments for the 2012 EU budget to €129.088 billion and €147.232 billion in commitments. The MEPs accepted, therefore, the Council proposal of €129.088 billion in payment appropriations, which represents an increase on 2.02% compared to 2011. However, the Council and the European Parliament also agreed to amend the EU budget 2011, therefore the increase in the 2012 budget compared to 2011 budget is, in fact, 1.86%, according to the Conciliation Committee’s press release.
According to Mark Hoban, Financial Secretary to the Treasury, “This is an excellent deal for the UK.” Moreover, he said “We have stopped the European Commission and Parliament's inflation-busting proposals and have delivered on the Government's promise to freeze the EU budget in real terms.” It is important to recall that the UK voted against the Council’s position. And now, Mark Hoban is claiming victory for having achieved the outcome that the UK voted against a few months ago. In the other hand, the Council accepted the European Parliament’s demand for the EU 2012 spending committees to rise to €147.2 bn. Such arrangement will increase the UK’s contribution to the EU budget by about €409m.
Moreover, an increase on this year’s budget was also part of the compromise deal. Hence, in order to limit the increase on the 2012 budget, the member states have conceded a €200 million increase to the EU’s 2011 budget. Whereas there was unanimous agreement on the EU’s 2012 budget, the Council endorsed the results on the draft-amending budget No 6 for 2011 by qualified majority. It is important to note that the UK voted against the draft amending budget, but was outvoted by other Member States. The draft-amending budget to the 2011 budget entails an increase in payment appropriations by € 200 million.
Moreover, in exchange for the limited increase, the member states also committed to accept requests for additional payment appropriations through amending budgets, in order to avoid any shortfalls. In fact, there is a Joint Statement on payment appropriations by the Council and the European Parliament where they asked “the Commission to request additional payment appropriations in an amending budget if the appropriations entered in the 2012 budget are insufficient to cover expenditure …” Moreover, they committed to “take position on any draft amending budget as quickly as possible in order to avoid any shortfall in payment appropriations.” According to Commissioner Lewandowski “There is now a serious risk that the European Commission will run out of funds in the course of next year, and will therefore not be able to honour all its financial obligations towards beneficiaries of EU funds such as Europe's regions and towns, businesses and scientists.” Unsurprisingly, he said “When this happens, I count on both the Council and the European Parliament to honour their joint statement to the full, providing us with additional means to honour our commitments". Consequently, we should expect the budget to be amended several times during 2012.
The Council and the European Parliament have now 14 days to formally approve the EU’s 2012 budget. The Council is expected to formally approve the compromise deal on 30 November and the European Parliament on 1 December. If the EU 2012 budget was not adopted at the end of the year, spending would have to be frozen at 2011 levels and the EU institutions would have to live on a month-by-month basis with reduced funding. The EU Institutions would have to work under the system of the "provisional twelfth.” This would have been a welcome outcome.
