Published on 7 Feb 2013

Europe, the budget: what’s changed since November?

In November when the EU’s 27 leaders last gathered to discuss the budget for 2014-20 Britain didn’t look like it might vote to leave the EU bang in the middle of the seven years ahead. How does that change things?

It reduces David Cameron‘s room for manoeuvre in the short term. He went into the November summit threatening to use the veto. This time he’s struck a different, softer tone knowing that shouting about the veto too much would’ve kicked off a round of hostile reactions from European capitals.

They’re watching him to see how much he really meant the proclamations in his January speech that he intends to be a team player in Europe and that he wants some kind of super-subsidiary for all. He knows he could easily kick off the sort of open hostility to his speech he’s so far avoided if European partners think he’s playing a different game.

But David Cameron wasn’t planning or needing to do the table-thumping/veto routine this time.

In November, David Cameron had just suffered a defeat in the Commons when 53 of his own side had allied with Labour to demand a cut in the overall EU budget. This time, the same backbenchers are chewing on the bone he threw them in the January renegotiation/referendum speech. He hopes that as they gnaw away at that they won’t be too bothered that he’s still going for a “freeze” not a “cut” in the EU budget and that he’s relaxed his definition of what a “freeze” is.  The 886bn euro figure originally floated as representing a freeze will be exceeded when the talks conclude. The PM’s likely to settle for a figure 20-something billion higher but it can plausibly be sold as the nearest thing you can get to a “freeze” in the world of EU budget numbers. The Tory firebrands on Europe don’t look like they’ll mount the barricades on this one.

There are 2 ways of measuring the budget: a permitted ceiling or “commitments” –  called “commitment appropriations” in the official papers – and “payment appropriations” (the money expected to be paid out in any given year). There’s also the actual out-turn payments which are usually lower again. The Treasury produced a graph in November to show how the three lines move (broadly but not strictly) in parallel. This Open Europe blog explains more.

How does the rest of Europe line up three months after it last gandered round this course? There are signs that Herman van Rompuy may have got his ducks more successfully arranged this time round. He unveils his draft budget at 3pm local time in Brussels and he could produce a “commitments” figure that he’ll hope will keep the “protect spending” group of countries (largely the recipient countries plus France) happy (it could represent an increase), and then push the “credit card limit” figure down from the November 943bn euro figure, maybe to 920bn euro or just below, to keep the “be tough on spending” countries (largely the net donor countries) happy.

There will need to be endless side deals to keep everyone on board. A special youth unemployment fund will be waved around, in part to compensate for cuts elsewhere.

But all the brave talk years past about this multi-year budget being a revolutionary moment when Europe would refocus on dynamic areas of the economy and re-think its massive (though declining) support for the relatively tiny sector of agriculture are being pretty much shredded. Instead a very traditional EU bazaar will (probably) conclude in Brussels this week: trading and shaving, not re-inventing.

It’s still an awesome business, 27 countries agreeing how to share pots of money. But it’s also still a stodgy one that proves hard to re-fashion. On one level this summit is distinctly second or third order beside the battle to save the Euro itself. But there are those who think (indeed, David Cameron put their case in his January speech) that Europe needs to be much more dynamic to succeed, and history may reflect that this budget round contributed very little to that and just kept the show on the road.

UPDATE: Herman van Rompuy is now not tabling his revised plans til 5.30pm local time. He needs to “fine-tune” things I’m told, which could be code for “someone’s got wind of something they hate and gone ballistic.”

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2 reader comments

  1. Philip Edwards says:


    Loved the update.

    So much better than “commitment appropriations” and “payment appropriations.”

    Why can’t accountants and economists follow the suggestion of the late, great Bill Hicks (originally to “market consultants”) to “….kill yourselves……no, seriously, kill yourselves….”

  2. Caliban says:

    So much for our mythical “influence on the EU”.
    Pro EU politicians (there are precious few non-politician supporters) are constantly pushing the line that by being in the EU we are best placed to change the EU into an institution we can support. And let’s face it, that means an Anglo Saxon take on freedom, corruption and state power.
    We consistently failed to do that when their were only 10 members ranged against us. Now we are expected to believe we can do it with 25 voting for more and more statism.
    Especially as the vast majority of those others are passing round the begging bowl and we are one of the very few net contributors to this dissembling, vainglorious, politicians private club.

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