19/03/2013 05:17 GMT | Updated 18/05/2013 06:12 BST

How the European Parliament Will Ensure That the EU's New Long-Term Budget Adds Up


It all looked so promising... After member states failed to reach an agreement on the long-term EU budget at the November summit, they managed to cobble together a deal in February. For the first time ever the budget would be reduced compared to the previous one and it offered every country something that could be claimed as a victory. So why is the European Parliament refusing to rubberstamp it?

What EU leaders forgot in their rush to clinch a deal is that under the Lisbon Treaty, the budget for 2014-2020 also has to be signed off by the Parliament, the EU's only-directly elected body. The proposal in its current state was soundly rejected by a majority of MEPs on 13 March and in the coming weeks they will embark on talks with member states to improve what is currently on the table. Although the February deal falls far short of what they are asking for, MEPs are not looking to renegotiate it from scratch. Instead they are looking to prevent existing budget problems from snowballing out of control.

The first objection has to do with the deficits that the EU has been ratcheting up. The EU has in fact two annual budgets. One sets the maximum amount of money authorised for reaching the targets member states have agreed upon, the other is the credit limit, which determines how much money the EU can actually spend on working towards these aims. It's usual for there to be a slight difference between the two as targets get adjusted, but in recent years the difference has been significant, resulting in structural deficits. This is not only shoddy accounting but also illegal as under the treaties the EU is not allowed to run a deficit. It has led to major EU programmes grinding to a halt before the year is over. This includes the popular Erasmus student exchange programme, for which member states pledged to increase funding, and the Research Framework Programme, which plays a key role in boosting innovation.

The Council approach has been to simply patch the budget each time it comes spluttering to a standstill, but Parliament wants to put an end to the annual scramble for money. Before MEPs even start discussions on the long-term budget, they want last year's bills to be covered and they also want a commitment that future funding gaps will be plugged in the same period instead of being dumped onto the following year's budget.

The gap between what member states are asking the EU to do and what they are willing to pay for is unsustainable. Either they dial down their demands or provide the institutions with realistic means.

Parliament is also looking to inject common sense into the budget in the form of more flexibility. In a rapidly changing world, it is more important than ever that the EU is able to respond quickly to new developments. This is why MEPs are proposing a review of the long-term budget to check if any amendments are needed. They also ask for the possibility to shift funding between programmes so that money is invested where it will create the most benefit.

Finally, it is not only about how much you spend, but how you spend it. Parliament wants a budget designed for growth, which is why MEPs are dedicated to investment in innovation, research and development, infrastructure, improving education and employment for young people.

The budget for 2014-2020 is not an exercise in accounting, it is about determining what challenges the EU should be tackling in this period.

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