A Budget for Europe: creating European added value from European Union expenditure (part 1)

So, where were we? Ah yes, the cuddly European Liberal Democrats had produced a rather fluffy preamble. However, in fairness, preambles are like bunny rabbits, they're not intended to scare you, they're intended to reassure. So, let's look at what the key issues are...

The European Liberal Democrat and Reform Party Congress convening in Palermo, Italy on 23-25 November 2011:

Notes that:

• As a result of the economic and financial crisis, EU member states are implementing a range of austerity measures in order to reduce their public debt;

• Although member states are in a period of austerity, for the majority this has involved a freezing of the current budget level, rather than a cut, in real terms, in expenditure;

• The European Commission has proposed a multiannual financial framework for the period 2014-2020 set at € 1,025 billion in commitment appropriations (1.05% of EU GNI) and at € 972,198 billion in payments appropriations (1% of EU GNI), which corresponds, respectively, to an increase by 3.16% and 3.12%, in constant prices, in comparison with the current multiannual financial framework;

So, we see that the EU doesn't spend that much (gosh, think how much money national governments have to waste by comparison...). It is ambitious though, and likely to increase its budget at a faster rate than predicted United Kingdom inflation. That increase is also rather higher than the target rate for inflation within the Eurozone. Call me quirky, but when money is tight, and governments are cutting expenditure rather than increasing it, this is unlikely to be popular.

• The 2007-2013 EU budget is dominated by two policy areas; the Common Agricultural Policy (CAP) (39,4% of the total budget) and cohesion policy (35% of the total budget);

• The ELDR Party manifesto for the 2009 European elections and resolution “Agriculture and climate change” (2009) call for ambitious reform of EU agricultural policy within a multilateral framework (World Trade Organisation) and a continuing reduction of its budget after 2013;

• The European Commission proposals for the EU multiannual financial framework 2014-2020, released on 29 June 2011, put forward a reduction in CAP support to 36.2% of the EU budget and welcomes this;

That does mean increasing expenditure relating to the Common Agricultural Policy, although it will be a smaller proportion of EU expenditure overall.

• It is worth remembering that more than 95% of the CAP is decoupled, and export subsidies are virtually gone - being less than 1% of the CAP, a fact that is often overlooked;

Good news if you're a farmer in a developing country, we won't undercut you in your own domestic market.

• Agriculture is an important part of the Union's strategic interest in order to ensure food security throughout its territory, and with public finances under serious pressure due to the economic crisis, it is important to press for better targeting and a more efficient use of this part of the EU budget;

Bad news if you're a farmer in a developing country, there will be less scope for imports from you.

• EU Agricultural policy should continue to move away from price support for farmers and export subsidies and recognise the wider role that farmers play, and have the potential to play, in the rural environment as “stewards of the environment”, including tackling climate change;

Good news for the environment, and good news for you urban types wanting to visit our pretty countryside.

• The Arab Liberation process in the Middle East and the founding of the European External Action Service has substantially increased calls for a global role for the European Union;

That'll be more money for European Union diplomats then...

• The increased streams of migration have caused severe strains on many EU member states, resulting in increasing demands for a more active role for the EU’s border agency FRONTEX. Yet the proposed increase in funding for ”the EU as a global player” remains minimal; up only by some € 20 billion over the coming seven-year period - or 1,02% compared to the current multiannual financial framework;

Keeping migrants out, the Conservatives will love that, and security costs, so this seems a bit on the low side.

• There are advantages derived from revolving funds compared to traditional subsidies and welcomes the JEREMIE (access to finance for SMEs) and JESSICA (sustainable urban development) initiatives through which the Structural Funds have provided important capital with considerable leverage effects.

Sounds clever. I confess that I'm not sure that I understand what this means, but if anyone would like to have a go at explaining it...

So, we have context, and some 'directions of travel' which point towards the proposals to come. Next time, things that have changed, and some of the key issues to be addressed...