Negotiating the 2014-2020 EU Budget: Barrage without land gain?

Former British Prime Minister Tony Blair once famously said that the EU Budget is harder to negotiate than the Peace Talks in Northern Ireland. Budget negotiations continue to put the European Union in a stalemate on a regular schedule. The European heads of state have failed to come to an agreement on the terms of the new multi-annual financial framework (MFF) for 2014-2020 at the special budget summit last week. Jan Mulder MEP, Member of ALDE and the Committee on Budgets outlined the liberal position in the European Parliament and argued for more flexibility in the budget at the Liberal Breakfast, organized by the ALDE Party and the FNF and moderated by Sir Graham Watson MEP.

The European Commission’s proposal foresees an increase of around 5% over 7 years, while the UK, Netherlands and Sweden want to cut the budget by €100 billion. Germany, France and Denmark also want some cuts, but have not settled on a figure. Mulder believes that cuts are highly unrealistic, although the status quo is equally undesirable. The development of the EU budget has been prudent, he claims. Over the last ten years, the EU budget has increased only slightly in comparison to the average increase in the budgets of the individual member states, and that despite the fact that EU’s responsibilities and policy areas have increased (and EU membership has more than doubled in that period).

Mulder argues, the 5% budget increase, asked for by the Commission, really isn’t much. He further advocates that the European Union should have its own resources.  Since 1988 the lion’s share of the EU budget has been made up of contributions from member states. Ever since 1984 when Margaret Thatcher’s famous outcry “I want my money back” caused some headwind from across the Channel and succeeded in assuring the UK’s rebate, the question of rebates has complicated budget negotiations even more. Following that British landmark victory, many more member states have been able to secure a rebate, with Denmark as the latest aspirant, trying to gain theirs this time around. While from budgetary perspective, it would be prudent to cut rebates, Mulder believes that “the UK rebate is a principle for eternity.” The latest proposal to finance the EU budget is to revise the EU’s income from the value-added tax (VAT) and to implement a financial transaction tax; this measure however only receives support from 11 of the 27 member states.

There are however three promising proposals from the liberals in the European Parliament, so Mulder: First of all, the role of the European Court of Auditors, which currently issues an annual general report, should be strengthened. In addition, it should issue a declaration of assurance. Second, the budget should be more flexible. Concretely, this means that it should be possible to transfer money between the 5 chapters that make up the EU budget. Last, the EU shouldn’t have to pay back any excess in their accounts to the member states at the end of the year. Other possibilities to save money that should be considered, according to Mulder, include salary cuts (similar in proportion to those on national levels) and one permanent seat for the European Parliament in Brussels.

With regards to the UK’s position in this deadlock, Cameron has threatened to veto any increase of the EU budget and has been employing sharp rhetoric when criticizing the EU. Graham Watson agreed with a question from the audience that Cameron must achieve at the least a freeze in the budget in order to maintain face domestically; he is not standing alone, however. His allies on the austerity-train, most notably the Netherlands and Sweden, surely feel as strongly, but have so far stood back, allowing Cameron to receive both lime light and criticism.

Susan Schneider