EU to hold ‘high-level’ conference on 2014-2020 budget next month

The European Union has announced a special conference is to be held in Brussels next month to kick-start discussions on the next multi-annual financial framework determining the bloc’s seven year budget between 2014 and 2020.

Last June, the European Commission published its proposals which include an overall increase in the EU’s budget and the introduction of new methods of financing, including EU taxes.

The proposals have already sparked a debate among the 27 member states, particularly between the net contributors like France, Germany, the UK and the Netherlands, who are seeking to reduce their individual contributions, and the net beneficiaries – the new member states like Malta who want to remain on the receiving end until 2020.

Following a meeting in Brussels on Tuesday between Donald Tusk – Poland’s Prime Minister and current President of the EU and Jose Manuel Barroso – President of the Commission, it was decided that a high level meeting dedicated to the next budget will be held in October.

Poland is one of the countries insisting on a larger budget for the EU – the same position as Malta – as it is one of the main beneficiaries of EU funds.

Speaking next to Mr Barroso, Mr Tusk said that following the initial reaction by member states “it is time to take stock and try to move forward.”

“I am not expecting that we will reach consensus during this conference or that the UK will agree with us,” he said.

“However, it’s good that we try to get our positions closer.”

Talks on EU budgets are always a complicated matter in the EU with all countries trying to achieve the best possible deal for their individual interests.

Discussions normally keep going to the end of the time-limit – the end of 2012 in this case – with final horse trading taking place in a final summit of EU leaders.

Malta, a net beneficiary which has been allocated over €1 billion in EU funds for the current framework (2007-2013), has already said that it will be negotiating to remain a net beneficiary.

Welcoming the Commission’s proposals, Finance Minister Tonio Fenech had expressed scepticism about the changes in the way the Commission is proposing to collect its money, particularly through direct taxes, including an EU VAT.

“Although we still have to study the proposals in detail, we welcome the proposed increase in the overall budget as this augurs well for Malta to retain its position of a net beneficiary by the end of the financial framework (2020),” he had told The Times.

“However we are sceptical on how much support there will be among member states on direct taxation, as is being proposed, and we prefer using the current method of national contributions into the EU budget,” Mr Fenech said.

Although Malta is still considered a ‘developing’ country in EU terms, as its GDP is still lower than the EU’s average, things have changed since 2007 and the main issue for the island now is whether it can retain this advantageous position.

According to EU rules, only those countries with a GDP of less than 75 per cent of the EU average will remain eligible for the highest amount of EU funding. According to the latest data, Malta’s GDP last year stood at 83 per cent of the EU’s GDP – raising doubts about the next round of negotiations.

However Malta argues that its economic position was negatively affected by the 2007 accession into the EU of Bulgaria and Romania, whose low GDP boosted Malta’s average in the EU’s comparative statistical data.

Mr Fenech had said that Malta will be insisting that this statistical imbalance created by the new entrants needs to be corrected.