The budget

In 1970: 3.600 M ecu (19 euros per capita) mostly CAP

In 2005: 117.500 M € (250 euros per capita) CAP+Structural funds

1,1% of EU’s GNP

The budget

The budget¿How is the EU budget established?

Pressure in the 1980s when growing tension between the two arms of the budgetary authority

(the European Parliament and the Council) increasingly disrupted the annual budgetary

procedure and led to a growing mismatch between resources and the Community’s

requirements. The succession of budget crises prompted the Community institutions to agree on a method designed to improve the operation of the budgetary procedure while at the same

time guaranteeing budgetary discipline

The budget¿How is the EU budget established?

The first financial perspective took effect in 1988. It was so successful as a means of

maintaining budgetary discipline and projecting future spending that the Convention on the

Future of the Union and the Intergovernmental Conference, which ended in June 2004,

enshrined it in the draft Treaty establishing a Constitution for Europe under the title of the

European Union’s multiannual financial framework.

The budget

The financial perspective is a multi-annual financial planning framework which sets limits on European Union expenditure. It is compulsory in the sense that the financial

perspective ceilings must be respected in the annual budgetary procedure.

The European Council (Heads of State and government of the EU member states) decides by unanimity on the figures,

on the basis of a Commission proposal. The European Parliament must give its consent. Parliament approved the

current FP by simple majority.

¿How is the EU budget established?

The budget

It translates into financial terms the priorities set for the Union's policies and is at the same time an

instrument of budgetary discipline and planning, and determines the limits on the financing of the

EU budget.

¿How is the EU budget established?

The budget

The financial framework differs from indicative financial programming in that the ceilings on expenditure are binding on the parties to the

Interinstitutional Agreement. However, the financial framework cannot be regarded as a multiannual

budget since the annual budgetary procedure is still essential for determining the actual level of

expenditure under the ceilings for the year in question and, above all, for allocating appropriations

between the various budget headings..

¿How is the EU budget established?

The budget

The classification of Union expenditure in the headings of the financial framework reflects the various policy options. The breakdown of total

expenditure by heading must therefore reflect the main political priorities adopted for the relevant period. Since 1988 the summary budget tables have been systematically organised by financial framework

heading in order to make it easier to assess the funds provided for implementing these political priorities

¿How is the EU budget established?

The budget

Each heading carries an amount of commitment appropriations for each year. The financial framework

table also indicates the maximum amount of appropriations for commitments and appropriations for

payments, expressed in millions of euros. The amount of appropriations for payments is also expressed as a

percentage of the Community’s GNI (gross national income), on the basis of forecast GNI growth.

In this way, it can be compared with the ceiling on own resources, which is also fixed as a percentage of the Community’s GNI by the own resources Decision.

¿How is the EU budget established?

The budget

The Commission laid before the Council on 30 January 2002 a

common financial framework for 2004-2006, updated to take account of the needs of enlargement. The

adjustment was approved jointly by the two arms of the budgetary authority and published in the Official Journal on 14 June 2003. The new framework came

into force in 2004, the first budgetary year affected by enlargement.

¿How is the EU budget established?

The budget

  1988 Delors I

1994 Delors

II

1995 (UE-15)

Agenda 2000

2001 2002 20032004

(UE-25) 2005 2006

Financial perspective ceiling

45 30373 486 80 943 93 792 97 189

100 672

102 145

115 434 119 419 123 515

% of EU GNP/GNI 1.11% 1,27% 1,26% 1,12% 1,12% 1,10% 1,10% 1.13% 1.13% 1.12%

EU budget

45 303 71 789 79 843 93 323 96 999 99 434 99 812 109 569 116 554 121 273

% of EU GNP/GNI 1,11% 1,24% 1,24% 1,11% 1,12% 1,09% 1,08% 1,08% 1,10% 1,10%

Historical data show that actual annual budgets have stayed well below the ceiling.

The budget

The budget

Headings 2004-2006 (%)

1) Agriculture 43

2) Structural actions 36

3) Internal policies 8

4) External action 4

5) Administration 5

6) Reserves 0,4

7) Pre-accession strategy 3

8) Compensationes 1

Commitments

The budgetFinancial perspectives for 25 ( M € y técnically adjusted for

evolution of gross national product and prices)

Headings 2004 2005 20061) Agriculture 49.305 50.431 50.5752) Structural actions 41.035 41.685 42.9323) Internal policies 8.722 8.967 9.0934) External action 5.082 5.093 5.1045) Administration 5.983 6.154 6.3256) Reserves 442 442 4427) Pre-accession strategy

3.455 3.455 3.455

8) Compensationes 1.410 1.299 1.041

115.434 117.526 118.967

The budget

2004 (%)Miscellaneous revenue 1.1Surplus available from the preceding financial year 5.4Surplus of own resources resulting from the repayment of the surplus of the Guarantee Fund for external actions

0.2

Net amount of customs duties, agricultural duties and sugar levies 12.2VAT own resources at the uniform rate 13.3

Remainder to be financed by the additional resource (GNI own resources)

67.8

Total revenue 100

Revenue

The budget

The Commission proposals relating to the next financial framework 2007–2013, including also the own resources system, are currently being discussed by Council and the European Parliament. The Commission hoped for an agreement in spring 2005.

However, the European Council failed to reach an agreement at its meeting in June 2005 and the objective now is that the European Council reaches an agreement in December 2005, which will subsequently need to be approved also by the European Parliament. on the multi-annual financial framework for 2007-2013

On the multi-annual financial framework for 2007-2013

The budget

• Integrating the single market into the broader objective of sustainable development, mobilising economic, social, and environmental policies to that end. The goals under this priority, which corresponds to new headings 1 and 2, are competitiveness, cohesion and the preservation and management of natural resources.

The Commission proposes that the Union concentrate its action over the next seven year-period on three main priorities:

On the multi-annual financial framework for 2007-2013

The budget

• Giving a real meaning to the concept of European citizenship by completing the area of freedom, justice, security and access to basic public goods and services – a priority embodied in new heading 3.

The Commission proposes that the Union concentrate its action over the next seven year-period on three main priorities:

On the multi-annual financial framework for 2007-2013

The budget

• Establishing a coherent role for Europe as a global partner – inspired by its core values – in assuming its regional responsibilities, promoting sustainable development and contributing to civilian and strategic security. This corresponds to heading 4.

The Commission proposes that the Union concentrate its action over the next seven year-period on three main priorities:

On the multi-annual financial framework for 2007-2013

The budget

Headings 2000-2006 Headings 2007-2013

1) Agriculture 1) Sustainable growth

1a) Competitiveness for growth and employment

1b) Cohesion for growth and employment

2) Structural actions 2) Preservation and management of natural resources

3) Internal policies 3) Citizenship, freedom, security and justice

4) External action 4) The European Union as a global partner

5) Administration 5) Administration

6) Reserves

7) Pre-accession strategy

8) Compensations 6) Compensations

On the multi-annual financial framework for 2007-2013

The budgetOn the multi-annual financial framework for 2007-2013

The budget

Headings in % 2006 2007 20132007 - 2013

2013/2007

1) Sustainable growth 40 45 48 46 129

1a) Competitiveness for growth and employment

7 9 16 13 213

1b) Cohesion for growth and employment 32 36 32 33 107

2) Preservation and management of natural resources

47 44 36 40 101

CAP 37 33 27 29 97

3) Citizenship, freedom, security and justice

2 2 3 2 173

4) The European Union as a global partner 7 6 10 9 190

5) Administration 3 3 3 3 122

6) Compensations 1 0 .3 - 0 .1 -

Total commitments 100 100 100 100 121

The budget

The budgetNew strategy

Priorities

Actually:

Agriculture Agriculture Cohesion Cohesion

In the future:

Cohesion Cohesion Competitiveness Competitiveness

New priority:

Defense policyDefense policy