Friday 28 June 2013

EU Budget Deal: Progress, from a Psychological point of View?

The EU institutions (Commission, Council and Parliament) reached a deal on the Multi-annual Financial Framework (MFF) that plans EU budget spending for 2014-2020. The MFF is not absolutely final since it has to pass a Parliamentary vote in September, but the deal does mark the end of the parliamentary revolt against the deal cut by national leaders. Politically, it's been a very charged budget, with arguments for cuts in a time of austerity, the European Parliament flexing its muscles over the budget, and the resignation of the parliamentary rapporteur on the MFF after the Irish Presidency mistakenly announced a deal last week.

So what's in the deal?

The cuts agreed by the Council remain: for the first time, the EU Budget will face a real terms cut of €85 billion, reducing the budget over the next 7 years to €960 billion. The focus on cuts meant that the parts of the budget prized by national governments were protected at the expense of more discretionary spending. The deal softens this by:

- Permitting the front loading of up to €2,543 million in 2014-15 for youth employment, research and Erasmus and apprenticeships and pro-SME policies, to be split as:
            - €2,143 million for youth unemployment;
            - €200 million for Horizon 2020, the EU Framework Programme for Research and Innovation;
            - €150 million for Erasmus; and
            - €50 million for COSME, a programme for the competitiveness of SMEs;
- Allowing for voluntary contributions by Member States by up to €1 billion to the €2.5 billion pot for aid for the most deprived;
- Unspent money will in an annual budget will be retained by the EU for spending on other projects, rather than being returned to the Member States;
- There is a concession to the idea of the MFF being subject to review and revision, but it seems very vague.
Is this, in the words of EP President Martin Schulz, progress "from a psychological point of view"?

The deal has shown that the EP has made some progress in shifting the MFF back towards some spending that is not the preserve of a national carve-up. There are national vetoes behind agricultural spending, cohesion spending and rebates, but no single Member State has a defining interest in EU projects that tackle unemployment, research or competitiveness. Can you imagine a British Prime Minister saying that they've cut some of the rebate in order to protect spending on unemployment programmes? The EP has demonstrated some value in trying to balance the budget more in the direction of spending for programmes that all of Europe benefits from, but that don't deliver specific national receipts of money.

That said, the concessions aren't a major victory for the Parliament - particularly on the aid for the most deprived and on MFF review, where the concessions appear so vague and woolly as to be practically meaningless. However, it is notable that a right-leaning European Parliament has not held out for reducing or eliminating the cuts to the EU budget. Despite the unprecedented level of power over the budget, the Parliament hasn't been as pushy as it might have been. From my point of view on the left, the deal is a defeat: it doesn't really deliver that much in terms of research and employment projects, and it buys into the idea of austerity despite the EU Budget not being in deficit. Cutting from common programmes to symbolically satisfy austerity is daft, and it undercuts further the ability of common European spending to offset, at least to some extent, the economic damage caused by national austerity.

Still, the fact that a right-wing EP largely endorsed the budget direction set by the European People's Party-dominated Council is not surprising, though it's another sign that the Parliament does act along ideological and party lines, which is important for the upcoming elections next year. Party and policy do matter in the EP.

Party Positions

The EP still has to vote in the MFF in September if the Framework is to be passed, so the positions of the European political groups matter. What are they?


The European People's Party (EPP; centre-right) probably support the deal, though they do not have a specific press release at the time of writing. Since they are the largest group in the Parliament and dominate the Council and national governments, they will probably support the deal. EPP parliamentary leader Joseph Daul supports current Eurozone/EU economic policy, but also insists on flexibility and a review clause in the MFF. I think EPP support can be assumed.

The European Conservatives and Reformists group (ECR; centre-right, but further right than the EPP), have welcomed the deal, and have complained that the European Parliament tried to obstruct it. Since they have got the cut in the budget they wanted, and the cut is a big win for David Cameron, they're not likely to vote against.

Qualified Supporters:

The Alliance of Liberals and Democrats (ALDE; centrist, and economically centre-right) have welcomed the deal, but want to secure some of the details before giving support, such as on the legal basis of the MFF (to secure the Parliament's power), on money for the Digital Agenda and on the review clause.

The Socialists and Democrats group (S&D; centre-left) have welcomed the deal as an improvement for youth unemployment schemes and Erasmus, but will discuss their position next week.

Though only qualified support has been given, I imagine that now that the EP has finished its negotiations as a whole and that there have been some concessions, these groups will largely support the MFF.


The European Greens (Green) have condemned the deal as only consisting of cosmetic changes when the overall budget is still being cut.

United Left (GUE-NGL; left-wing) also condemned the cuts to the budget, and hit out against EP President Schulz for only seeking agreement with the two biggest political groups in the Parliament (EPP and S&D), keeping the rest of the groups in the dark.

While these aren't firm voting stances by the political groups, it looks like there will probably be a majority for the MFF, failing any last minute revivals of Parliament-wide opposition.

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