EU commission defends 4.9-per-cent hike in 2012 budget

Apr 20, 2011, 13:45 GMT

Brussels - The European Union's executive Wednesday proposed a 4.9-per-cent rise in the bloc's budget for 2012, defying calls by the EU's biggest states to peg spending to inflation levels.

Britain, France and Germany, backed by the Netherlands and Finland, insisted in December that the EU's annual budget should increase by no more than the annual rate at inflation, which stood at 3.1 per cent in March.

But the European Commission claimed that as the current EU multi- annual spending plans, running from 2007 to 2013, draw to a close, a 4-9-per-cent increase to 132.7 billion euros (192.8 billion dollars) was needed in 2012 to pay for projects reaching completion stage.

'Some ask why we would increase the EU budget when member states face severe austerity measures at home,' EU budget commissioner Janusz Lewandowski said in a statement.

'The main reason for this increase is that we must pay the bills coming from projects across Europe,' he explained.

Taking on Britain's conservative government, which has been the most vocal against EU budget largesse, Lewandowski pointed out that public spending in that country was still increasing in 2011, despite the austerity policies being pursued by its authorities.

He also listed an electricity interconnection being built between Britain and Ireland with EU support as an example of the benefits Britain receives from the bloc's spending.

Unsurprisingly, British reactions were less than welcoming.

'We want the best deal for the British taxpayer and a 4.9-per-cent increase in the annual EU budget is not acceptable,' a government spokesman said.

But Lewandowski said that an effort was already being made to curb EU spending, as he announced the extension of a hiring freeze in EU staff and the 'freezing' of administrative expenditure.

Tables supplied by the commission showed that spending on administration would in fact rise by 1.4 per cent, compared to a proposed 8.3-per-cent hike in regional funding.

Figures suggested by the EU executive will now have to be ran past EU governments and the European Parliament, which have the final call on the bloc's spending plans.

Francesca Balzani, an Italian centre-left deputy who is the EU assembly's chief negotiator, challenged the calls for austerity by arguing that increases in EU spending should make up for cuts being implemented at the national level.

'In these difficult times, we need more than ever an EU budget that encourages and backs up member states' efforts to promote growth and investment as part of improved economic governance,' she said.

In last year's negotiations for the 2011 budget, parliament backed the commission's initial call for a 5.9-per-cent increase. But governments successfully whittled down that figure to 2.9 per cent.

EU countries are expected to make their offer on the 2012 budget in July, with the parliament set to react in October.

'We can expect tough negotiations,' Lewandowski predicted, hoping that compared to the fraught talks on the 2011 budget, on which a deal was reached only at the last minute, 'this time it can go in a smoother and less politicised way.'

Lewandowski also said that the commission would make proposals on June 29 on the EU's spending plans for 2014-2020, on which EU governments are expected to conduct even fiercer negotiations.

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