Liberal Democrats at Westminster and in Brussels have made clear that the EU needs to live within its means. We are in favour of a sensible and realistic deal that reflects the tough economic times that ordinary people are facing. But we also need to ensure that the money we are spending is delivering for the UK, helping us to create the stronger economy and fairer society that we all want to see.
On Friday, the member states reached agreement on a funding settlement that will shape the EU in years to come. There are many things that we can we welcome in the deal that was announced earlier. But there are a number of issues that are of concern.
I think people on all sides of the political spectrum will welcome the news that the EU's bloated administrative costs will take a hit. Although these only account for 4% of the total budget, there is no reason that EU staff should be immune from the cost-cutting measures being undertaken by countries across Europe.
The EU Parliament will be scrutinising the proposals closely in the coming weeks before deciding whether to accept or reject the deal in the beginning of March. We must be clear - there are areas of spending that help us generate growth and these need to be our priority going forwards.
One major concern is the proposed funding for the Connecting Europe Facility. This new instrument is set to invest in modern infrastructure such as high-speed broadband, cloud computing, and energy and transport networks, which are all vital in order to ensure that the EU remains competitive in the coming years. This investment will also help deepen the single market in energy and services - a longstanding objective of the UK. Finally, it will be spent on improving the efficiency of energy transmission, helping to cut energy bills for consumers.
The EU's research and development spending is another area which provides massive benefits for the UK. In the past four years the EU has provided more than €4bn in research grants and loans to over 11,500 British scientists and innovators, more than almost any other member state. This source of funding is crucial to Britain's most cutting edge, world beating and fastest growing sectors - such as the space industry, nanotechnology and stem cell research..
We also need to look again at the way that the EU spends its budget. We need far greater flexibility to spend a smaller budget more effectively and in a more targeted way. This is the best way to deliver on our priorities of jobs and growth. Giving the European Parliament the freedom to react to changing circumstances and to invest rapidly when required would help ensure that we are getting the most out of our place in Europe.
It is true that we need a slimmed down and more efficient EU budget. But we should not only be looking at the size of the budget, but how it is spent. Cutting spending in the very areas where it is most likely to contribute to the UK's future prosperity is clearly not in our best interests. We need to ensure that the EU budget is oriented towards future growth and competitiveness, helping us to build a stronger and fairer economy that is fit for the 21st century.
Follow George Lyon on Twitter: www.twitter.com/georgelyonmep