Monday, 8 October 2012

An Emergency EU Budget

The Commission will table an emergency EU budget - a "supplementary amending budget" - to plug an estimated €10 billion funding gap across several EU projects, including Erasmus and the European Social Fund. Erasmus is probably one of the EU's most famous projects, funding the exchange of European students across the continent, but the European Social Fund is meant to deal with employment, and is linked with the Lisbon Strategy:

"In order to support the Lisbon Strategy the ESF adopted the following priorities in the 2000-2006 period:
  • active labour market policies to combat and prevent unemployment
  • equal opportunities for all in accessing the labour market
  • improved training and education, as part of a lifelong learning policy to improve access to the labour market, maintain employability, and promote job mobility;
  • a skilled, trained and adaptable workforce and new forms of work organisation
  • entrepreneurship and conditions facilitating job creation"

The ESF takes up around 10% of the EU's budget, so to have such a key area "insolvent since the beginning of the month" is clearly a big problem.

The European Parliament has also backed the Commission's budget proposals for a 6.8% increase for the next 5 year budget, compared to the Council's position of an increase of 2.8%. It's been argued that the Lisbon Treaty and the projects voted for by the Council has added to the expense, while the Member States are unwilling to pay for the policies they bring in on a European level. The Member States have argued that the EU shouldn't increase its budget at a time of austerity.

It should be noted that the 6.8% increase in the budget would be an extra €9 billion - and if the EU's struggling to cover a gap of €10 billion in the budget, it's hard to see how programmes on employment and regional development won't be affected. The regional funds and funds aimed at aiding employment - like the European Globalisation Adjustment Fund - help the poorer and more crisis-hit countries in the EU. EU budget austerity will end up hurting those countries and regions that need it most, as modest as the help can be when the budget is only 1% of the EU's GDP.

Whether or not you agree with EU austerity, I think there is a good argument for adapting the timing of the EU's 5 year budget plan ("Multi-annual Financial Framework") to bring it closer to the European Parliament election cycle. Passing the budget is a main task of the Parliament, and if cuts or increases are to be made, then making it a more prominent part of the election campaign would bring more legitimacy to the process.

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