A tight 2012 EU budget has been agreed upon by member states to ensure it does not increase by more than two per cent over 2011 as inflation is predicted to rise by the same percentage during the year.
This is effectively a freeze on next year’s multibillion euro EU budget, reflecting the prevailing austerity mood across Europe.
The EU Council’s decision, which has to be negotiated with the European Parliament, goes against the original proposal tabled by the European Commission earlier this year, asking member states for an almost five per cent increase. This had also been backed by MEPs, suggesting a looming “tough battle” over the upcoming negotiations.
Despite trimming the EU Executive’s proposal, six member states, practically the biggest paymasters in the EU, voted against the Council’s common position as they wanted even deeper cuts.
Austria, Denmark, Finland, the Netherlands, Sweden and the UK were still unhappy with the slashing of €3.65 billion in payments and €1.5 billion in commitments. On the other hand, Malta went along with the compromise reached.
The biggest victims of the proposed cuts are education and research with millions of euros slashed from the original 2012 budget.
At the same time, the Council limited the increase of the EU’s administrative spending to 0.5 per cent, cutting its own administrative budget by 5.45 per cent, in line with member states’ practices.
The position agreed by member states provides the basis of a mandate to the Polish EU presidency to negotiate the 2012 EU budget with the EP as soon as MEPs return from the summer recess in September.
According to the rules, the EP should adopt its position by the end of October and, in case of diverging positions, which is a most likely scenario, a three-week conciliation process will begin on November 1. Negotiations could go down to the wire until the end of year’s traditional EU summit in December.
According to the Council’s position, the EU’s 2012 budget should be set at €129 billion, or 0.98 per cent of the EU’s gross national income.
During the 2007-2013 period, Malta was classified as a net beneficiary. According to the latest data published by the Commission, in 2009, Malta contributed a total of €64.3 million to the EU coffers and received €71.5 million.
Although data is still not yet available, between 2010 and 2013, Malta is expected to rake in much more money than it gives to the EU as the major projects financed by the EU would have reached an advanced stage.
During its first five years of accession (2004-2009), Malta received twice what it contributed, leaving a positive balance in the island’s favour of about €350 million.
Malta was allocated more than €1 billion to finance projects in the 2007-2013 financial period.