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European Law Blog #2 – A Student’s Guide to the EU Budget

European Law Blog #2 – A Student’s Guide to the EU Budget

This week it’s a little bit less about the law and more about the money, how could we ignore the all important budget? Of course, we know all the students out there are wanting to know what it’s all about (‘What’s a budget?! ELB hears you cry). This is also a desperate attempt to ignore the horsemeat scandal that has the EU racing to cover up.

LET’S GET READY TO BUDGET: The basics

President Hollande was defeated in the EU budget negotiations. Image courtesy of jmayrault on Flickr under the Creative Commons licence

President Hollande was defeated in the EU budget negotiations.
Image courtesy of jmayrault on Flickr under a Creative Commons Licence

If you can understand  some parts of the monetary side of the European Union, it will put you in good stead to better understand the problems facing the EU at the moment – a skill that will help you when writing about the EU in an essay-style question. In the case of this budget, it shows the interaction between the Commission and the European Parliament, as the latter is threatening to block the deal. The official publication of the conclusions to the budget can be found in here.

  • The budget is for 2014–2020.
  • Its formal name is the Multi-Annual Financial Framework.
  • It is ‘aimed at contributing to smart, sustainable and inclusive growth’.
  • The negotiation began with a draft proposal from the European Commission in June 2011 and concluded with a summit of the European leaders on 8 February 2012, with a failed summit in November 2012.
  • The budget agreed is seen as the ‘first real cut back’ in the European budget in order to reflect the age of austerity, it is its first ever net reduction in EU spending.
  • The budget is split into ‘commitments’ and ‘payments’. The figures of commitments are the maximum amount of money allotted to the seven-year period. The figures for ‘payments’ is the amount of money which can actually be spent, or a ‘ceiling for spending’.
  • The battle was between those who wanted austerity on one side (UK, Germany, the Netherlands, Finland and Sweden) and those who wanted to continue spending in order to boost the economy (France).
  • Though the figure is reduced, the UK’s contribution will increase, which Cameron blames on changes to the UK’s contribution rebate, introduced by Margaret Thatcher in 1984 and amended by Tony Blair in 2005.

‘HARD BARGAINING’: The figures

  • The commitment figure is 960bn euros (£812bn).
  • The payments figure is 908bn euros (£783bn) – this is a reduction of 34bn euros.
  • The original proposal by the Commission was 1.025tn euros – this is an increase of 4.8% on the current budget (2007-2013).
  • The Commission’s proposal has been cut by 3.3%.
  • The agreed budget is 1%, down from 1.12%, of EU gross national income.
  • The majority of the budget (46.8%) is dedicated to sustainable growth and employment – this is the EU’s ‘cohesion policy’ for lower income states and funding for the European Social Fund.

If you would like to know more (and who wouldn’t?) you can find handy graphics from the EU here and the BBC here.

‘A BUDGET FULL OF REBATES’: Reaction

During the negotiations, the Commission President Jose Barroso criticised the summit leaders for ‘only acting in their own national interest’ and accused some countries of competing to be the toughest on the budget, what he calls a ‘shameful’ game.

After the announcement, the reduced budget was seen as a victory for Cameron and one he thought the British public should be ‘proud’ of. However, the European Parliament has criticised the budget for stifling growth.

The budget was defended by European Council President Herman Van Rompuy as ‘a clear shift towards growth-friendly investment’, whilst an unhappy President Barroso emphasised the difference between the Commission’s proposal and the agreed figures. Some criticised the difference between commitments and payments, which increases the EU’s unpaid commitments to 300bn euros. The position of European Parliament and President Martin Schulz were put forward by the Vice President Gianni Pittella: ‘broadly disappointed’, ‘far short of… expectations’ and claims that it ‘does not meet our ambitions or those of our citizens’. A simple summary of some views can be found here.

‘Sorry Mr Van Rompuy, it is not a budget for the future but of the past’

– Guy Verhofstatdt,
former Belgian Prime Minister

In other news…

British officials at the budget claimed that French President François Hollande didn’t turn up for a scheduled meeting. The French strongly denied it. The British newspapers declared it ‘le snub’. Harsh words.

German minister Annette Schavan clearly never experienced a threatening lecture of the consequences of plagiarism. She has resigned after it was alleged that she plagiarised her doctoral thesis. As the Minister for Education this may have been quite embarrassing. She denies the claims and is taking legal action.

You probably think nothing scares the big, bad EU, well, think again: according to recently resigned Italian Prime Minister Mario Monti, the EU is terrified of Silvio Berlusconi winning the upcoming early election, because it ‘has had enough of the lack of financial discipline and inability to make decisions that puts the eurozone in danger’. It was his fault all along!

For Continental news in English, have a look at The Local, which provides news in English from France, Germany, Sweden, Switzerland and Norway.

EU law tweet of the week

This week’s highly insightful snippet comes from the EU Ambassador to the United States João Vale de Almeida (@ValedeAlmeidaEU) on 30 January:

Looking forward to meeting @MayorLandrieu shortly. He is the only mayor I have met with ‘EU’ in his name!

That’s deep.

The absol-EU-tely must read article of the week

To begin this feature, the ELB believes it’s vital for all students to know exactly what they are talking about when referring to EU institutions. We cannot emphasise enough how important it is to know the difference between the courts of the EU and the courts for the European Convention on Human Rights. If you get this wrong in your EU exam, the whole world loses respect for you. Thankfully, the excellent legal blogger, tweeter and 1 Crown Office Row barrister Adam Wagner (@AdamWagner1) has summarised what you need to know:

‘No, The Sun, the Human Rights Act is not in the EU’

Who is Jose? Profile on the Commission’s enigmatic main man

Image courtesy of Európa Pont on Flickr under the Creative Commons Licence

Image courtesy of Európa Pont on Flickr under the Creative Commons Licence

Name: José Manuel Durão Barroso
Nationality: Portugese
Occupation: President of the European Commission from 2004
Previous occupation: Prime Minister of Portugal, 2002–2004
Education: Graduated in Law from the University of Lisbon, Diploma in European Studies and a Master’s degree in Political Science from the University of Geneva, doctoral research for Georgetown University in the US (though no Ph.D listed on his CV)
Political leanings: Said to be a very radical Left activist in his younger years, though his position as President of the Commission was seen as a swing to the Right, describes himself as a ‘centrist reformer’
Notable controversies: In 2005 he enjoyed a free holiday on the 51ft yacht of a Greek shipping tycoon shortly before the EU agreed to provide state aid for said tycoon’s company to the tune of 10m euros. UKIP captain Nigel Farage et al tabled a no-confidence vote in Barroso only for it to be shot down.
Top quote: ‘We don’t want a mediocre, defensive Europe that tries to bury its head in the sand to avoid the realities of the 21st century.’
Coming next week:
  • Strictly legal news – no budgets allowed
  • Classic cases revisited: Factortame
  • The EU-loving students’ guide to Twitter
  • Who is Herman? Profile of the President of the European Council
  • And much more from the Continent…

The ELB is written by Associate Editor of TSL, Natalie Hearn. Law Graduate from the University of Birmingham, prospective EU Law Masters student, currently teaching English in Japan. Follow her on Twitter: @ninjahearn 

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