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European Economic Integration European Economic Integration

IV EU‘s Budget

Prof. Dr. Günter S. Heiduk

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Top 5 EU’s Member States by % on EU-27 GDP at current prices, 2012

Key for contribution to EU’s budget?

Source: EUROSTAT

Number of votes for each country in the Council Germany, France, Italy and the United Kingdom 29Spain and Poland 27

Romania 14Netherlands 13Belgium, Czech Republic, Greece, Hungary and Portugal

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Austria, Bulgaria and Sweden 10

Denmark, Ireland, Lithuania, Slovakia and Finland 7

Estonia, Cyprus, Latvia, Luxembourg and Slovenia 4

Malta 3

Total: 345A minimum of 255 votes out of 345 (73.9 %) is required to reach a qualified majority. In addition:•a majority of member states (in some cases two thirds) must approve the decision, and •any member state may ask for confirmation that the votes cast in favour represent at least 62 % of the EU’s total population

Number of seats in the European Parliament per country 2007–09

Austria 18Belgium 24Bulgaria 18Cyprus 6Czech Republic 24Denmark 14Estonia 6Finland 14France 78Germany 99Greece 24Hungary 24Ireland 13Italy 78Latvia 9Lithuania 13Luxembourg 6Malta 5Netherlands 27Poland 54Portugal 24Romania 35Slovakia 14Slovenia 7Spain 54Sweden 19United Kingdom 78Total 785

Number of people requiredto run the EU:-European Commission

32000

- European Union approx. 170000 (includes all institutions)

The decision-making triangle

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Political groups in the European Parliament

265Group of the European People's Party (Christian Democrats)

184Group of the Progressive Alliance of Socialists and Democrats in the European Parliament

84 Group of the Alliance of Liberals and Democrats for Europe

55 Group of the Greens/European Free Alliance

55 European Conservatives and Reformists Group

35 Confederal Group of the European United Left - Nordic Green Left

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Europe of Freedom and Democracy Group

Non-Inscrits

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Deciding the budgetThe annual budgetary procedure as established by the Treaty of Lisbon lasts from 1 September to 31 December. All EU institutions and bodies draw up their estimates for the draft budget according to their internal procedures before 1 July.Commission’s draft budgetThe Commission consolidates these estimates and establishes the annual 'draft budget', which is submitted to the Council and the European Parliament by 1 September. In practice, the Commission endeavours to present the draft budget before the end of April/beginning of May.Council's readingThe Council adopts its position on the draft budget including amendments, if any, and passes it to the European Parliament before 1 October. The Council informs the European Parliament of the reasons which led it to adopt its position.Parliament’s reading The Parliament has then 42 days to either adopt the budget at its first reading in October or hand its amendments back to the Council. The Council may accept the amendments within 10 days and adopt the draft budget.Conciliation CommitteeIf the Council does not accept the Parliament's amendments, a Conciliation Committee is set up, composed of the members of the Council or their representatives and an equal number of members representing the European Parliament. The Conciliation Committee is assigned to come up with a joint text within 21 days. If the conciliatory procedure fails, the Commission has to come up with a new draft budget.

Once a joint text is agreed upon by the Conciliation Committee in early November, the Council and the Parliament have 14 days to approve or reject it. The Parliament may adopt the budget even if the Council rejects the joint text. In case the Council and the Parliament both reject the joint draft or fail to decide, the budget is rejected and the Commission has to submit a new draft budget.If, at the beginning of a financial year, the budget has not yet been definitively adopted, a sum equivalent to not more than 1/12 of the budget appropriations for the preceding financial year may be spent each month.Detailed description of the annual budget procedure : Treaty of Lisbon, Art. 310.Budget may be amended after adoptionIn the event of unavoidable, exceptional or unforeseen circumstances, the Commission may propose during the year, that the budget as adopted be amended; it does this by submitting draft amending budgets. Amending budgets are also used to enter the balance from the previous year in the budget for the current year.

Similarly, the Commission may, on its own initiative or at the request of the other institutions with their own budget section, present a letter of amendment to the draft budget in the light of information which was not available when the draft was established.

Both amending budgets and letters of amendment are subject to the same procedural rules as the general budget.

European Integration IV EU‘s Budget

http://ec.europa.eu/budget/budget_detail/deciding_en.htm

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Overview of the own resources system The basic rules on the system of own resources are laid down in a Council Decision adopted by unanimity in the Council and ratified by all Member States.The overall amount of own resources needed to finance the budget is determined by total expenditure less other revenue. The total amount of own resources cannot exceed 1.23 % of the gross national income (GNI) of the EU.Own resources can be divided into the following categories (the figures below refer to the 2011 budget):

Traditional own resources (TOR) consist of customs duties and sugar levies. These own resources are levied on economic operators and collected by Member States on behalf of the EU. However, Member States keep 25 % as a compensation for their collection costs.Customs duties are levied on imports of products coming from third countries, at rates based on the Common Customs Tariff.Sugar levies are paid by sugar producers to finance the export refunds for sugar. These levies only amount to around 1 % of total TOR.

TOR account for around 13 % of total EU revenue.

The own resource based on value added tax (VAT) is levied on Member States' VAT bases, which are harmonised for this purpose in accordance with Community rules. The same percentage (0.30%) is levied on the harmonised base of each Member State. This rate is for the period 2007-2013 reduced for 4 Member States (Austria 0.225%, Germany 0.15%, the Netherlands and Sweden 0.10%). However, the VAT base to take into account is capped at 50 % of each Member State’s GNI. This rule is intended to avoid that the less prosperous Member States pay out of proportion to their contributive capacity, since consumption and hence VAT tend to account for a higher percentage of a country's national income at relatively lower levels of prosperity.

The VAT-based resource accounts for around 11 % of total EU revenue.

The resource based on gross national income (GNI) is used to balance budget revenue and expenditure, i.e. to finance the part of the budget not covered by any other sources of revenue. The same percentage rate is levied on each Member States' GNI, which is established in accordance with Community rules. For the period 2007-2013 Sweden and the Netherlands are granted gross reductions in their annual GNI payments. The reductions are EUR 605 million for the Netherlands and EUR 150 million for Sweden in 2004 prices. These amounts are financed by all Member States including those two benefiting from them.

The GNI-based resource accounts for around 75 % of total EU revenue.

European Integration IV EU‘s Budget Financing (1)

http://ec.europa.eu/budget/budget_detail/overview_en.htm

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The UK correction

A specific mechanism for correcting the budgetary imbalance of the United Kingdom (the UK correction or UK rebate) is also part of the own resources system.The current UK correction mechanism was introduced in 1985 to correct the imbalance between the United Kingdom's share in payments to the Community budget and its share in Community expenditure allocated to the Member States. This mechanism has been modified on several occasions to compensate for changes in the system of EU budget financing, but the basic principles remain the same.

This imbalance is calculated as the difference between the percentage share of the UK in EU expenditure paid in the Member States ("allocated expenditure") and the UK share in total VAT-based and GNI-based own resources payments. The difference in percentage points is multiplied by the total amount of EU expenditure allocated to the Member States. The UK is reimbursed by 66 % of this budgetary imbalance. Total allocated expenditure is gradually adjusted downward by deducting certain elements of expenditure in countries that joined the EU after 2003.The cost of the correction is borne by the other 26 Member States. The distribution of the financing is first calculated on the basis of each country's share in total EU GNI. The financing share of Germany, the Netherlands, Austria and Sweden is, however, restricted to one fourth of its normal value. This cost is redistributed across the remaining 22 Member States.

The UK correction in the 2010 budget amounts to around EUR 4.0 billion. 

European Integration IV EU‘s Budget Financing (2)

EU‘s Budget, 1989-2013 Financial Framework

Source: European Union (2008), Public Finance, 4th ed.

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European Integration IV EU‘s Budget 1958-2008

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European Integration IV EU‘s Budget

Expenditures in multi-annual financial frameworks

Santos, I. and Neheider, S. (2009). Reframing the EU Budget Decision-Making Process. Bruegel Working Paper 2009/3, p. 13.

European Integration IV EU‘s Budget - Revenue 2013

http://ec.europa.eu/budget/library/biblio/publications/2013/budget_folder/KV3012856ENC_web.pdf

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European Integration IV EU‘s Budget – Expenditures, 2013 (Euro billion)

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EU Budget, Expenditures, Commitment Appropriations 2014 (Euro millions)

Total Budget 2014: Euro 142640,48 million

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European Integration IV Member States Contribution to EU’s Budget

Source: European Commission

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Gross Contributions to the EU Budget, 2012 (Euro millions)

Source: Open Europe Calculations

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Net Receipts from the EU Budget, 2012 (Euro millions)

Source: Open Europe Calculations

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Open Europe estimates for EU-27 budget for 2007-2013 in euros (€)

Member stateMoneyto EU

(billions)

Moneyfrom EU(billions)

Netbenefit

(billions) Ratio of money (Out/In)

Population(2007)

Net benefit per capita

Austria 19 10 -8.5 0.526 8,298,923 -1024

Belgium 33 39 +6.4 1.182 10,584,534 605

Bulgaria 2.3 12 +9.7 5.218 7,679,290 1263

Cyprus 1.1 1 -0.1 0.909 778,684 -128

Czech Republic 9.2 31 +22 3.370 10,287,189 2139

Denmark 17 10 -7.2 0.588 5,444,242 -1322

Estonia 0.8 4 +3.2 5.0 1,342,409 2384

Finland 13 9 -3.7 0.692 5,276,955 -701

France 140 89 -51 0.636 63,392,140 -805

Germany 164 78 -86 0.476 82,314,906 -1045

Greece 15 40 +25 2.667 11,171,740 2238

Hungary 8.4 32 +24 3.810 10,066,158 2384

Republic of Ireland 11 12 +0.6 1.091 4,312,526 139

Italy 116 70 -46 0.603 59,131,287 -778

Latvia 1.4 6 +4.6 4.286 2,281,305 2016

Lithuania 1.7 9 +7.3 5.294 3,384,879 2157

Luxemburg 2.3 10 +7.7 4.348 476,187 16170

Malta 0.5 1 +0.5 2.0 407,810 1226

Netherlands 37 13 -24 0.351 16,357,992 -1467

Poland 22 87 +65 3.955 38,125,479 1705

Portugal 12 29 +17 2.417 10,599,095 1604

Romania 7.2 32 +25 4.444 21,565,119 1159

Slovakia 3.5 14 +11 4.00 5,393,637 2039

Slovenia 3.1 6 +2.9 1.9354 2,010,377 1443

Spain 76 78 +2.2 1.026 44,474,631 49

Sweden 20 9 -11 0.450 9,113,257 -1207

United Kingdom 103 46 -57 0.447 60,816,701 -937

Sources

19Santos, I. and Neheider, S. (2009). Reframing the EU Budget Decision-Making Process. Bruegel Working Paper 2009/3, p. 1.

European Integration IV EU‘s Budget The Need for Reforms

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European Commission Proposal for the Budget 2014-2020

Source: European Commission, A Budget for 2020, COM (2 11 ) 500 final, Brussels 29.06.2011.

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The Controversy on the Budget 2014-2020: Reduction + Structural Changes

Proposals (beginning February 2013

February 13, 2013: ”EU leaders reach historic budget deal - Deal cuts Euro 34 billion (The Guardian)

March 12, 2013: European Parliament rejected EU budget proposal

Commitment Euro 960 blnActual payments Euro 908 bln

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HORIZON 2020 – EU‘s biggest research and innovation programme 2014-2020

Examples of the role of Social Sciences and Humanities (SSH) are:

Health, Demographic Change and Wellbeing, SSH research could provide the economic and socialanalysis necessary for reforming public health systems;

Smart, green and integrated transport, SSH research analyses the socio-economic aspects of transport, prospective studies and technology foresight;

Climate action and resource efficiency, SSH research tackles the cultural, behavioural, socio-economic and institutional change in order to move to a more self-reliant and resource efficient economy;

Europe in a changing world, there will be a range of topics covering areas like new ideas, strategies and governance structures for overcoming the crisis in Europe innovation in the public sector, ICT government, business model innovation, social innovation, European cultural heritage, history, culture and identity;

Leadership in enabling and industrial technologies, the arts and humanities might be an essential source for creativity in development of services and product design.

Information: http://ec.europa.eu/programmes/horizon2020/en