Battle Of The Budgets

• July 18th, 2010
• Posted by Emma Cillekens

ECONOMY: Debate between maintaining conditions for an after-recession recovery, and on the other hand the drive for budget cutting and settling of public debt, has been contested over EU spending plans.   

MOOD OF AUSTERITY

The Brussels-based European Voice (15.7.10) identified Members of the European Parliament resisting pressure to extend the mood for austerity, saying they had “accused national governments of seeking cuts to the European Union’s budget that would undermine attempts to spur economic growth.”

It reported:

“Ambassadors from the member states have agreed a draft budget for 2011 of €126.58 billion (A$188.37-billion, dcerates.com, 18.7.10), €3.6bn (A$5.3bn) less than the draft budget presented by the European Commission in April.

“The reductions agreed by the ambassadors would affect most areas of EU spending, but the biggest cuts would be to programmes intended to boost growth and competitiveness.

“The Council of Ministers wants to cut the allocation for growth by almost €2bn and save €1.075bn (A$1.6bn) on cohesion spending compared to the Commission’s proposal. A further €821 million (A$1.221bn) would be cut from spending on support to farmers and the fisheries sector.”

“JOBS AND GROWTH” POLICY

In the background, the EU as a body was until this year promoting its expansionary “jobs and growth” strategy, as in the precise of the European Parliament approval of the current, 2010 budget, on 17.12.09, from  the European Commission:.

“The 2010 budget … amounts to €141,5bn (A$210.5bn)  in credit engagements.

“Economic recovery is at the heart of next year’s spending and the proposal channels the biggest share of funds (45%) into growth and employment measures – a 3.3 % rise on 2009 – to help restore competitiveness across the Union.

“Funds for major programmes linked to research and energy will increase by more than 19.1% and cash for cohesion policy will grow too, with the EU-12 set to receive 52% of cohesion and Structural Funds.

“All headings in the budget will see an increase, reaching a total of €141.4 bn (A$210.4bn) in commitments (1.20% of GNI) and €122.9bn (A$182.8bn) in payments (1.04% of GNI).”

In contrasting spirit the new conservative government of the United Kingdom, in step with its gutting of departmental budgets, demanded similar acts in Brussels.

CUTS AND CONTROLS

The Chancellor of the Exchequer, George Osborne, told European Ministers (19.5.10),   a spending freeze would be in order, in place of projected 6% increases.

In the last week the President of the European Council, Herman van Rompuy, (15.7.10) described mechanisms to be brought into use next year, for closer scrutiny of national budgets to enforce agreed constraints  — and  closer monitoring of public debt.

His statement indicated a sharing of information on economic programs, moving towards obliging changes in budgets that might be seen as destabilsing for the economic community as a whole – but not going so far as to consign decision-making to a central agency under a biding system.

Reference

Constant Brand and Simon Taylor, “MEPs clash with member states over 2011 budget”, European Voice, Brussels, 15.7.10. http://www.europeanvoice.com/article/imported/meps-clash-with-member-states-over-2011-budget/68495.aspx, (18.7.10).

European Commission, Brussels, “Europa”, “The current year: 2010 – investing to restore jobs and growth”, 17.12.09. http://ec.europa.eu/budget/budget_detail/current_year_en.htm, (18.7.10).

Geoffrey T Smith, “EU: Van Rompuy: Deeper Budget Monitoring From 2011”, Dow Jones Newswires, 12.7.10.

Roddy Thomson, AFP, “Britain plays hardball with EU budget”, Business Day –SMH.com, Sydney, 20.5.10. http://www.smh.com.au/business/britain-plays-hardball-with-eu-budget-20100519-vfd9.html, (18.7.10).

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