European Union governments got a taste today of the bitter battle to come on the region's next long-term budget, as talks between EU negotiators on spending for this year and next came to a head.
The dispute over the 2013 budget and extra spending needs for 2012 is seen as a litmus test for a tricky EU summit on November 22nd-23rd, when leaders will try to agree the region's next long-term budget for 2014-2020, worth almost €1 trillion.
The budget talks broke up tonight without agreement — leaving a deadline of the end of November 13th for a final deal.
The UK, France, Germany, Sweden and the Netherlands stuck firm on refusing to offer a euro above a 2.79 per cent increase for next year.
And a last minute Commission declaration that it could get by on an extra €8 billion from the member states for this year instead of €9 billion only worsened the mood.
"The Commission suddenly decided it needed €1 billion less than it had previously insisted was the required amount to
meet a shortfall this year... and that soured things." said one EU official.
"The ministers decided to leave it for now and there'll be more consultations by phone over the next few days." The issue is now likely to end up on the table for talks between EU finance ministers in Brussels on Tuesday, with just hours before the deadline expires.
If no deal can be done, this year's spending level is "rolled over" into next year, with no increase at all.
Earlier Cyprus's deputy minister for EU affairs, Andreas Mavroyiannis said: "If we succeed in these negotiations now, we will create a better atmosphere for convergence and agreement in the (summit) negotiations."
"If not, I suppose this will poison a little bit the atmosphere. It's never the end of the world, but let's hope for the best," he told Reuters ahead of the meeting.
In both sets of talks, top budget contributors, including Germany, France and Britain, want to limit proposed increases in EU spending to better reflect austerity policies at home.
The EU's executive, the European Commission, and EU politicians have demanded a budget of €138 billion in 2013, representing a way-above-inflation 6.8 per cent rise compared to this year.
Most national governments want to limit any increase to 2.8 per cent, and have identified about €5 billion in cuts to proposed regional development aid and overseas spending in areas such as development assistance and trade promotion.
Britain warned that failure to limit next year's budget rise would make it harder to agree on the region's next multi-annual financial framework (MFF).
"From our point of view, the higher any increase in the annual budget, the less prospect there is for agreement on the seven-year MFF," Britain's junior finance minister, Greg Clark, told his EU colleagues.
One major incentive for net budget contributors to limit next year's spending is the fact that if agreement on the 2014-2020 framework is delayed, the budget ceiling for 2013 will be automatically rolled over with an annual increase for inflation.
Reuters
