UK House of Lords reviews 2010 EU draft budget

In a recent report, the UK House of Lords European Committee criticised the European Commission’s proposals for the 2010 European Communities budget for maintaining a very high level of spending on agriculture, and failing to shift adequate resources to stimulus measures to aid economic recovery. It expressed frustration that, in the middle of an economic crisis, the proportion of the budget going to agriculture remained so large.

It identified a particular problem for the funding of the second tranche of the European Economic Recovery Programme. This was the stimulus package of €5 billion agreed in March 2009, of which €2.6 billion was to be funded from the 2009 budget and €2.4 billion from the 2010 budget. Because of the limited margin between the Financial Perspective ceiling and proposed appropriations for Heading 1 of the budget Sustainable Growth, last year it was agreed to fund the energy infrastructure projects by transferring some of the unused margin under Heading 2 (mainly agriculture) to Heading 1. The tortuous route to reaching agreement on this budget reallocation is well described in a blog post on the European Journal site.

The same problem arises with the 2010 draft budget, in that there is not enough of a margin in Heading 1 to fund the second tranche of the EERP. Apparently, in the political agreement last year, it was agreed that the remaining €2 400m would be funded through a “compensation Mechanism” to be defined. At the conciliation of the 2010 and 2011 budgetary procedures, the European Parliament, the Council and the Commission will examine all available sources that could provide for the compensation of funds. Presumably the most likely source is a further transfer of the margin in the agricultural budget to Heading 1.

The EERP, along with the Food Facility, highlight the inherent tension between agreeing a medium-term financial framework for budget spending with identified ceiling amounts for major expenditure categories, and the need to maintain flexibility to respond to particular needs or crises as they emerge. One of the ways to maintain flexibility is to insist on margins of a sufficient size, although there are a number of member states who argue that unused funding should be returned to them rather than reallocated to other headings. This is likely to be one issue touched on in the Commission’s response to the budget review expected later in the year.

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1 Reply to “UK House of Lords reviews 2010 EU draft budget”

  1. Here is a terrible story/scandal that has been hushed up in Sweden, it´s concerning Authorities in Kronoberg, Växjö and

    Ljungby, and swedish Media is hushed up too.

    In July 2009 took Sweden over the chairmanship of the European Union, and in September 2009 a large
    conference is planned in Kronoberg and Växjö with over 500 delegates representing most of the member states.

    With regard to the fact that the “investigation” was instigated in Växjö and the whole story revolving around

    authorities in Kronoberg it would be inappropriate that this horrible and shameful account should be drawn to the

    attention of the Public in all of the EU member states, and especially embarrassing for The Swedish State, Kronoberg,

    Växjö Council and others directly involved.

    Here is the shameful story:

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