EU Australia Online - News & information from the capital of Europe direct to Australian businesses

EU Gets A Cut-down Budget

  • February 9th, 2013
  • Posted by 7thmin

council-building7.jpgEuropean leaders emerged physically spent, though spending less than before, early Friday in Brussels, with a mammoth budget to carry the EU through the next seven years.

The agreement cuts proposed spending by 3 to 3.5% against the last budget; it is the first such reduction in the history of the European Union, and is a rebuff to the executive European Commission which initially wanted an actual 5% rise.

Conservative governments engaged in austerity budgeting at home, notably Germany and the United Kingdom, had refused to pay more, and now will mount watch to see if the European Parliament approves the cut-down version.

van-rompuy.jpgHerman Van Rompuy, 65, (picture), the President of the legislative summit, the European Council, brokered the deal at the marathon session, far into the night; just as he did with an interim agreement reached last November.

His appointment after the creation of the President role, in a move to expand the functions and powers of the European Union itself, might be seen in the dim light of early morning in Brussels as fortuitous. (See EUAustralia Online, “Lisbon Summit: Europe’s latest treaty”, 19.10.07)

The budget for the collective government of 27 states and 500-million people is huge and complex, with shifting aggregates of Euros, though agreed figures at the Council’s end saw gross spending come down from €993.6-billion (A$1295-billion;, 9.2.13) to €960-billion (A$1243-billion); to take the EU through to 2020.

It was distilled by The Guardian in these terms:

“Leaders filed into the council chamber to debate Van Rompuy’s proposal to cut the ‘payment ceiling’, likened to a credit card limit … from €942.8-billion (A$1219-billion) to €908.4-billion (A$1176-billion). This represents 0.95% of EU GNI – slightly below the 1% demanded by the German chancellor, Angela Merkel. Van Rompuy proposed cutting the higher ‘commitment ceiling’ from €993.6-billion for the last budget from 2007-13 to €960-billion …” See,

Mr Van Rompuy said the budget outcome offered “something for everyone”.

“It is realistic, and it is driven by pressing concerns”, he said.

Members of the European Parliament, under the new constitutional arrangements set up in 2008, will vote on approving the budget for the first time.

Their debates will see a re-play of the argument at the European Council: on one side, pressure for austerity; on the other, arguments that stress in the economy demands a higher level of spending, to aid growth and recovery.

Eastern and Central European countries have produced a lobby for more spending. As smaller economies and relative debutantes in the EU system of internal development assistance; like others before them, they have been depending on funds from Brussels for economic modernisation, support for agriculture and building up infrastructure.


BBC News, London, “EU leaders agree 3% budget cut deal in Brussels”, 8.2.13., (9.2.13).

Nicholas Watt and Ian Traynor , “EU agrees historic budget deal after all-night talks”, The Guardian, Manchester, 8.2.13., (9.2.13).