Transcript The EU budget

The Reform of the EU budget in
turbulent times –
state-of-play on the EU budget
review
Stefan Lehner
Director, European Commission, Directorate-General for Budget
Meeting of Budget and Financial Committees Chairpersons,
Prague, 27-28 April 2009
The EU budget –
some facts and figures
The size of the EU budget
% of EU GNI
1.25%
'93-'99 average
1.18%
1.20%
Payment agreed in the
Financial framework
Payments actually
executed
1.15%
1.10%
'93-'99 average
1.06%
1.05%
'00-'06 average
1.06%
'07-'13 average
1.05%
1.00%
0.95%
'00-'06 average
0.94%
0.90%
0.85%
1993
1994 1995 1996 1997 1998 1999
2000 2001 2002 2003 2004
2005 2006 2007 2008 2009
2010 2011 2012 2013
Heads of Representation, Lisbon 12 June 2007
The structure of the EU budget
(financial framework 2007 – 2013)
Cohesion for
growth and
employment
35,6%
Total
administrative
expenditure
5,8%
Citizenship,
freedom, security
and justice
1,3%
Competitiveness
for growth and
employment
8,6%
The EU as a global
partner
5,7%
Preservation and
management of
natural resources
42,9%
Total: € 975 billion
(in current prices)
Heads of Representation, Lisbon 12 June 2007
EU Budget expenditure trends
Expenditures structure (1988-2013)
70,0
% of total
60,0
50,0
40,0
1988
30,0
2013
20,0
10,0
0,0
Common
agricultural policy
Cohesion policy
Other policies
 The profile of EU spending has changed considerably over 25 years.
But has it changed enough?
 For example: The Common Agricultural Policy absorbed 61% of the
budget in 1988. By 2013, the share of CAP spending could almost
halve (32%), though CAP will stay a major part of EU spending.
Heads of Representation, Lisbon 12 June 2007
Significant shift in EU budget funding
% of total
Revenues structure (1988-2013)
80
70
60
50
40
30
20
10
0
1988
2013
Traditional
own
resources
GNI-based
VAT-based
own resource own resource
The EU budget is increasingly based on the GNI contribution,
from 11% of the total in 1988 to 74% in 2013.
Heads of Representation, Lisbon 12 June 2007
Debates on net contributions led to a rise
in budgetary «corrections»
 UK correction – 66% of the difference between
contributions and its receipts
 Lump sum payments to the Netherlands and
Sweden
 Reduced VAT rates and reduced UK correction
payments for the Netherlands, Sweden,
Germany, Austria
 Retention of 25% of traditional own resources
for all Member States collecting them
The financing of the EU budget has become incomprehensible
Heads of Representation, Lisbon 12 June 2007
EU budget reform
Commission launches a reform
of the EU budget
The mandate: “In accordance with the conclusions of
the European Council, the Commission has been
invited to undertake a full, wide-ranging review
covering all aspects of EU spending, including the
Common Agricultural Policy, and of resources,
including the United Kingdom rebate, and to report in
2008/2009.“
(Inter-Institutional Agreement between the European Parliament, the Council and
the Commission, 17.5.2006)
Heads of Representation, Lisbon 12 June 2007
The Commission approach to the Review:
“Reforming the Budget, changing Europe”
Analyse longer-term challenges and issues facing the EU
Apply European value added, subsidiarity and proportionality
principles to define a more efficient European budget and a new
repartition of tasks with the Member States and the regions
Seek a new consensus on EU spending priorities – and
posteriorities, on how the budget is managed and on how to fund it.
The Review will NOT make a proposal for the next financial framework
Heads of Representation, Lisbon 12 June 2007
The Timetable so far
 Consultation Paper setting out the
challenges and issues at stake
 12th September 2007
 Launch of public consultation phase
 15th June 2008
 Deadline for submission of contributions
 12 November 2008
 Political Conference
Heads of Representation, Lisbon 12 June 2007
Public consultation: Broad participation

All Member States presented official contributions;

Over 2.000 citizens in 20 Member States directly debated budget reform;

300 contributions represent broad diversity of interests.
Citizens
12%
Other
7%
Universities/scientists
Public/governmental
sector
34%
13%
Private sector
14%
©European Commission
NGO
20%
Heads of Representation, Lisbon 12 June 2007
Consultation results:
Europe’s biggest challenges
At the top of the list:
Climate change
Two thirds of contributors consider it Europe’s big test for the
future;
EU competitiveness in a global economy
One in two respondents put growth as Union’s main challenge;
Energy supply security
Just as many are concerned about energy issues.
Other



areas of serious concern:
Inequalities between countries, regions;
Demographic trends - shrinking/ageing population;
External pressures, security threats, migration.
©European Commission
Heads of Representation, Lisbon 12 June 2007
Consultation results:
A new direction for EU spending /1
Contributions move spotlight to policies for
future:
 Competitiveness, research, innovation
 Environment, climate change
 Energy
Policies addressing growth, climate and energy are at the top of
spending priorities
Heads of Representation, Lisbon 12 June 2007
©European Commission
Consultation results:
A new direction for EU spending /2
=
Cohesion – support signalled, policy change required

Agriculture – one of the hottest topics of the consultation
©European Commission
Heads of Representation, Lisbon 12 June 2007
Consultation results:
Financing a budget for the future
To ensure resources match political ambitions:
 Traditional Own Resources – widely supported;
 GNI-based contribution
– strong emphasis that this resource is working
well and could be extended further;
 Alternative own resources
– calls to "keep the door open" or examine
new possibilities linked to policy priorities;
 VAT-based contribution
resource;
– urge to simplify the system by abolishing this
 Corrections
– wide disappointment with non-transparent system of over 40
corrections, strong demand to abolish exemptions.
There is a clear link between the structure of expenditure, financing
and corrections
Need to think the budget globally
Heads of Representation, Lisbon 12 June 2007
Unforeseen turbulences influencing
the debate

The “food crisis”: A sharp increase in price for major agricultural products
revived “security of supply” concerns; since summer prices have declined,
leaving the outlook for agriculture quite uncertain.

The “oil crisis”: prices for non-renewable resources have also seen a steep
increase followed by a sharp decline; expectations remain pessimistic.

The no-vote in the Irish referendum: Uncertainties on future Treaty

Climate change accelerates: Recent indicators are above worst case

The “financial crisis” and looming recession: Some new discussion on
base for EU are complicating the outlook on future EU tasks and functioning.
climate scenarios.
the role of the EU budget to react to such crises.
Heads of Representation, Lisbon 12 June 2007
Steps towards a result
What’s next
2009 - Commission presents the Budget Reform proposal
Based on:
 Contributions to the public consultation;
 Scientific studies;
 Meetings, debates with NGOs, academia and other interested parties;
 Conference on budget reform;
 Internal Commission debates.
2009/10 - discussion and conclusions by the EU institutions
2011 – Commission proposal for the next Financial
Framework
Heads of Representation, Lisbon 12 June 2007
The public debate on EU budget
reform continues
 The Commission website to present the
issues, and to document contributions and
the debate also in the future:
http://ec.europa.eu/budget/reform/index_en.htm
Heads of Representation, Lisbon 12 June 2007
The Reform of the EU budget in
turbulent times –
state-of-play on the EU budget
review
Stefan Lehner
Director, European Commission, Directorate-General for Budget
Meeting of Budget and Financial Committees Chairpersons,
Prague, 27-28 April 2009