EU Parliament reverses 2013 budget cuts

AFP , Tuesday 23 Oct 2012

EU rejects cuts demanded by some member states, saying it aims to protect programmes and boost growth and jobs

The European Parliament rejected Tuesday cuts demanded by some member states in the 2013 EU budget, setting up a new confrontation ahead of a summit on the bloc's hugely contentious 2014-20 spending plans.

Parliament said in a statement that the aim was to protect popular EU programmes against shortfalls which disrupted them in 2012 and so help boost growth and jobs, under pressure in the eurozone debt crisis.

"To boost growth and jobs, Parliament reversed (cuts) ... in areas that MEPs believe are vital to boost the economy, such as research, entrepreneurship and employment measures," it added.

"We saw this coming and we want to avoid further patchwork in next year's budget ... We hope (member states) recognise this and follow up on the growth pact agreed by their heads of state and government at the summit in June," said the parliament rapporteur on the budget, Giovanni La Via.

The resolution passed with 492 in favour, 123 against and 82 abstentions.

The European Commission said earlier that it was seeking an extra 8.9 billion euros ($11.5 billion) to cover 2012 shortfalls, after Britain led efforts to trim this year's planned spending by four billion euros to 129 billion euros, for an overall increase of just under 2.0 percent.

Parliament and the European Council, which groups the member states' political leaders, will now have to take up the 2013 budget again to reconcile their differences.

The European Commission set the 2013 budget at 138 billion euros but the increase of some 6.8 percent was too much for many member states at a time when governments are cutting spending to balance their strained public finances.

France, Finland and Germany wanted the 2013 budget to be cut by 5.0 billion euros while London suggested even more. The Commission, the EU's executive arm, said this would seriously undercut any chances for economic growth.

Last week, Britain threatened to veto the 2014-20 budget if Brussels insisted on an increase of 5.0 percent to around 1.0 trillion euros at a November 22-23 summit on the 2014-20 budget.

The comments by British Prime Minister David Cameron sparked a fierce response from German Chancellor Angela Merkel who reportedly took the veto threat to mean the November summit would be pointless and should be scrapped.

The Financial Times reported Tuesday, however, that Cameron had signalled that he was interested in a compromise, which might be possible around Merkel's proposal for an EU budget equal to 1.0 percent of EU gross domestic product or a little under 1.0 trillion euros.

Earlier Tuesday, European Council president Herman Van Rompuy called for EU states to show a willingness to compromise on the 2014-20 budget at the November summit.

"I hope we can reach an accord in November on the multi-year budget," Van Rompuy told the European Parliament.

"For that, we need something without which nothing is possible -- a sense of compromise, alongside the political will to find an accord. If there is no willingness, then we will never get there," he said.

Britain has called for at least 100 billion euros to be cut from the proposed seven-year budget, to match in part the cuts many states have adopted to balance their finances and face up to the eurozone debt crisis.

"We can't have EU spending going up and up," Cameron said last week. "It would not be acceptable to see a huge increase in spending when budgets are being cut."

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