Sensibly, European Union leaders have agreed to disagree on the EU’s next multi-annual budget by postponing difficult negotiations on the final outcome until the new year. The necessary consensus was not available last week between net contributors and beneficiaries despite European Council president Herman Van Rompuy’s efforts to find a compromise. He will now co-operate with the forthcoming Irish EU presidency in an effort to complete the talks – a thankless task from which they can both gain plaudits if they handle them speedily and fairly.
Despite the differing interests at stake and the overall climate of national budgetary consolidation within which these negotiations are taking place their central purpose and value should not be lost sight of. The EU’s budget funds all its transnational programmes, regulation and development policies on about 1 per cent of its aggregate economic production, costing roughly€1 trillion from 2014 to 2020. Given the pressure to increase co-operation in a more interdependent world, this is in fact remarkably good value. Informed commentators point out the EU’s administrative apparatus comprises about 6 per cent of the total (much of it spent on translation) and its 65,000 full-time civil servants are fewer than many European cities employ. In contrast the public budgets of most member-states are more than 40 per cent of their gross domestic product.
The final horse trading pits those with special interests in existing programmes such as agricultural expenditure in Ireland and France against states such as the United Kingdom and Germany, which benefit less from that policy and want to see the total reduced. But they too have special interests, the Germans as the highest net contributors and the British in defending their special rebate.
These final budget talks coincide with continuing ones to deepen the euro zone, including proposals to create new financial resources for that purpose. It is now dawning on leaders and national publics alike that if they want the euro to survive they will need to find extra money for the more integrated financial, budgetary and economic policies involved, in addition to creating greater democratic legitimacy and accountability. Mr Van Rompuy has been tasked with making proposals on these building blocks for the euro at another summit next month, which deserves as much political and public attention as the multi-annual budgetary tussle gets.
British prime minister David Cameron avoided isolation at the budget talks by cultivating alliances with other net contributors and playing down talk of using a British veto on any increase. This is a well-advised approach given the widespread suspicion that his government is disengaging from the EU. The final stages of the talks and those on the euro zone will test that suspicion much further.