asst. prof. dr. alexander brgin iue1 the budget repetition

Asst. Prof. Dr. Alexander Bürgin IUE 1

The Budget

Repetition


The Budget

1. Expenditures


The size of the budget is relatively small

• Around 1 % of the total Gross National Income of the EU and 2.5% of public expenditures of MS

• Reason: EU policies are mostly regulative and not distributive or redistributive


Structure and Ceiling for the period 2007-2013

http://ec.europa.eu/budget/budget_glance/what_for_en.htm


http://ec.europa.eu/budget/index_en.htm


CAP-expenditures are the biggest part of the EU-budget

• Reasons:– Agriculture Policy with great transfer of financial

responsibility from national budgets to EU budget (used for price gurantees and payment of direct income suppport)

– One of the oldest EU-policy, lots of MS reluctant to downsize CAP

• CAP-reforms led to a reduction from 70% (1980s) to 45 % (mid-1990s) imbalance between CAP and other (more important) policy areas still existent


Stimulating growth has become an important part of the budget

• Sustainable growth has become one top-priorityy of the Union.

• The EU economy needs to be more competitive and less prosperous regions need to catch up with the others.

• Over the period 2007–13, out of every euro spent from the EU’s annual budget, eight cents will go to make the EU more competitive.


Faster funding for Europe's regions

• Funding for cohesion in 2009: €48.5 billion for Europe's regions (a 2.5% rise on 2008).

• Out of every euro spent, 36 cents will go to such cohesion activities.

Asst. Prof. Dr. Alexander Bürgin IUE 9http://ec.europa.eu/budget/reform/budget_glance/how_managed_en.htm


The Budget

2. Revenues


The revenues of the EU are mainly national contributions

• The revenues of the EU consists (2006) of:– Common Customs Tariff duties and other duties

stemming from trade with non-members (11,5% of EU Budget)

– Agriculturl levies for non-members designed to increase import prices to EU-levels (1,2%)

– A percentage rate to the VAT (14%)– Contributions of the MS based on their GNI (72%)

(larger states = largest gross contributors, Germany as largest net contributor)


Where does the money come from?

http://ec.europa.eu/budget/budget_glance/where_from

_en.htm


The Budget

3. Budgetary Decision Making


The Financial Perspective constrains the annual budget procedure

• The financial perspective was introduced 1988 after an interinstitutional agreement on Budgetary Discipline between EP, Council an Commission

• Purpose of financial perspective– As a several year programm it allows the EU to use

funds in a more ordered way– By specifiying ceilings on all categories of EU

expenditure it imposes discipline– By restricting the annual budget procedure it helps to

avoid conflict


The process leading to the financial perspective is highly political

• Reasons:– Decisions are taken at the highest political level

at the European Council acting by unanimity– Differences reflecting the national economic

neeeds and preferences– Differences are sharpened by the fact that

outcomes are expressed in numerical figures– Net contributors try to reduce their share


http://news.bbc.co.uk/2/hi/europe/4492714.stm


The influence of EP and Commission on the financial perspective is limited

• The EP is not a direct participant in the main decision-making process but its approval of the financial perspective is required

• The Commission structures the negotiation with ist initial proposals


In the annual budget procedure Council and EP jointly constitute the budget authority

• The preliminary draft budget of the Commission has ist first reading in the Council

• The EP can propose amendments to the Council draft

• Before Lisbon Treaty: The Council has the last word on compulsory expenditures (can reject EP amendments) - EP has the last word on non-compulsory expenditure (in the framework set by the financial perspective)


The Lisbon Treaty increased the budgetary power of the EP

• Current distinction between compulsory and non-compulsory expenditure disappears

• Parliament and Council decide together on whole EU budget (previously Council had last say on compulsory expenditure

• Financial perspectives will be legally binding• A single reading followed by work in a

conciliation committee replaces two readings in both Council and EP


Assessment of EPs budgetary competences

• Revenues: No influence on the revenue-side of the budget Revenues

• Financial Perspective: political agreement between MS – but EP has to approve the FP

• Annual budget: EP power constrained by expenditure ceilings and compulsory expenditures – but: EP can reject the budget

asst. prof. dr. alexander brgin iue1 the budget repetition

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