EU Leaders Agreed to EU’s 2014-2020 Budget

Herman Van Rompuy, the President of the European Council, announced that European Leaders reached agreement on the EU’s 2014-2020 budget after more than 24 hours talks in Brussels. They set the budget at 960 billion euros which is lower than the current budget level of 994 billion euros. Before the meeting, the proposal budget level was 1.047 billion euro.

EU President Herman Van Rompuy told reporters : “From the overall European perspective, I want to emphasize that this budget is futureoriented, it is realistic, and it is driven by pressing concerns. These are its three key dimensions, and let me quickly run through each of them in turn.

First: it is a budget for the future. This was the aspect I insisted most upon. We simply cannot sacrifice our investments in education, research and growth.

Second dimension: this is a budget of moderation. We simply could not ignore the extremely difficult economic realities across Europe. So it had to be a leaner budget. For the first time ever, there is a real cut compared to the last MFF; we agreed it will be a cut of roughly €34bn for both commitments and payments (compared to the period 2007-2013), resulting in the overall ceilings of €960,0bn in commitments and €908,4bn in payments. It means a cap on commitments at exactly 1% of total European GNI: a sensible and nicely-round number. To ensure better spending, new elements are introduced:

– for countries, a macro-economic conditionality to increase synergy between cohesion funding and economic governance;

– and for projects, incentives for results, with money set aside for the best-performing.

Across the board, funding programmes will become simpler and better controlled. In today’s economic context, increasing efficiency and reducing costs is also in order for the EU administration itself. We spent some time on the revenue side, or in EU-language: “own resources”. Three points here:

– we decided on lower collection costs on duties and levies;

– we reached a compromise on rebates;

– and we opened perspectives for possible new own resources, in relation to a new VAT

system and the future Financial Transaction Tax.

This brings me to my third and final main point: this is a budget driven by pressing concerns. The most urgent challenge is unemployment, in particular among the youth. That is why we have set aside €6bn for a new Youth employment initiative. A powerful incentive.

In allocating structural funds, special attention was given to countries like Greece, Portugal, Spain, Italy, Ireland, while overall, poorer countries will receive a larger share of cohesion funding. One avenue for flexibility, among others, is the review clause for cohesion funds that we agreed, “to take into account the particularly difficult situation of … countries suffering from the crisis”. Our support to the most vulnerable people remains intact. So does our external action funding, even despite the crisis. This budget will allow Europe to keep engaging on vital global issues, such as climate change, nuclear safety, and development aid.”