WIREDGOV

The EU's draft budget for 2013, presented recently by the Commission, reflects the European Council's statements that growth and employment in the EU can only be achieved by combining fiscal consolidation and investment into future growth.

The EU budget usefully complements national efforts in this regard by concentrating investment on the priority areas defined in the EU's growth strategy Europe 2020, while at the same time taking into account the difficult economic context and pressure on national budgets. The draft budget 2013 freezes future expenditure: the increase of commitments (i.e. tomorrow's payments) is at the level of inflation (2%). It also freezes the Commission's administrative budget at well below inflation level, while cutting its staff by 1%, the first step towards the goal of a 5% reduction of staff in 5 years.

At the same time, it proposes a 6.8% increase in the level of payments. This contributes directly to growth and jobs in Europe. The EU budget must meet its contractual obligations of current and previous years vis-à-vis the Member States and other recipients.

€62,5 billion in payments are devoted to job friendly growth in Europe. A particular effort has been made towards the Research framework Programmes (€9,0 billion, 28,1% increase on 2012), the Competitiveness and Innovation Programme (€546,4 million, 47,8 % increase), structural and cohesion funds (€ 49 bn , 11,7 % increase), life long learning (€1,2 bn, 15,8 % increase).

'We fully agree with previous European Council conclusions calling for better use of EU funds to help Europe out of the crisis, says Budget and Financial Programming Commissioner Janusz Lewandowski. In the current circumstances, national budgets and the EU budget are more than ever two complementary sides of the same coin: as Member States face painful but necessary cuts, the EU budget focuses on investment and thus acts as an anti-crisis package. We will not restore growth by cuts only; Europe needs to invest wisely for its own future starting today. That is what the EU budget is for, that is what our draft budget for 2013 is about."

Savings and cost-efficiency

If cuts alone will not get us out of the crisis and we need investments, the reverse is equally true. Therefore Draft Budget 2013 includes a strong emphasis on savings and cost efficiency.

Payments are the consequence of past commitments, therefore to avoid future EU budgets facing big increases in payments, the Commission proposes a small increase (2 %) of commitments limited to the current inflation rate. Besides, planned increases will focus exclusively on growth and jobs.

Furthermore, budget lines for programmes that do not show tangible effectiveness have been cut while pressure was exerted on every EU institution and agency to seek savings wherever possible. Most EU agencies will actually see a real cut in their annual budget.

The vast majority of people across the EU feel the daily pain of the crisis as their national, regional and local governments have to make cuts, explains Janusz Lewandowski; therefore a "business as usual" attitude from the EU institutions is simply not acceptable regardless of new competences bestowed on them by the Lisbon Treaty! By the same token, it makes sense to transfer funds away from programmes that are not performing and towards priority areas such as small and medium-sized enterprises (SMEs), youth and employment.

Overall figures

Overall the draft budget for 2013 amounts to €150,9 billion in commitments, a 2% increase on last year, in line with the current inflation rate. Payments represent €137,9 billion which amounts to an increase of 6,8 %. They are the logical consequence of past commitments.

It is legitimate for people to wonder why we call for a 6,8 % increase in payments in these times of crisis, says Janusz Lewandowski. There are two reasons for this: first, 2013 is the last year of the current financial period and the last year of each financial period always sees a sharp increase in payments as EU funded projects across Europe reach completion: bridges, railways, motorways have been built for the greater good of all, now we must pay the bills for them. Second, in recent years the Member States within the Council and the European Parliament have adopted EU budgets that were well below our estimated needs for payments. This has led to a "snowballing effect" of unpaid bills as each year we could not honour some of our legal commitments due to shortages of funds. When your electricity or water bill arrives, you must pay it even if you seek savings…

Note: The figures in the draft budget do not take into account the costs of Croatia joining the EU in July 2013 (access to EU funds)

What next?

The EU budget is adopted by the Council and the European Parliament.

First, the Council will make its position known on the Draft Budget in July 2012, followed by the Parliament. In case of disagreements between them, a 21-day conciliation procedure will be triggered.

For more information

Homepage of Janusz Lewandowski, Commissioner for Financial Programming and Budget

http://ec.europa.eu/commission_2010-2014/lewandowski/index_en.htm

Homepage of DG Financial Programming and Budget:

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