In Focus: Financial Perspectives 2007-2013 adopted, May 2006

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Series Details May 2006
Publication Date May 2006
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2006 is the last year of the European Union's current Financial Perspectives and there has been mounting pressure to finalise the framework for the next spending round in time for 2007. Negotiations involved bitter controversies between Member States as well as between the EU institutions on the overall level, individual Member States' contributions and the allocation of money to particular EU policies.

The original proposal for the Financial Perspectives was adopted by the European Commission in July 2004 [COM(2004) 487] along with detailed drafts of the Union's financial instruments within this budgetary framework.

Talks on the proposal failed when EU leaders met in June 2005 under the Luxembourg Presidency. It was not until the European Council on 15-16 December 2005, chaired by the UK Presidency, that political agreement was reached on a EUR862 billion budget. Sticking points had been in particular the level of CAP and regional policy spending and the United Kingdom's budget rebate.

Enjoying shared authority - and the final say - in the budgetary procedure the European Parliament on 18 January 2006 rejected the European Council deal, criticising it, among other things, as unacceptably low. Parliament itself had proposed a EUR975 billion budget in June 2005.

Following this, representatives of the Council (Austrian Presidency), the European Parliament and the European Commission met in a number of interinstitutional trialogue meetings. After a marathon session on 4 April 2006 the Parliament's delegates reached a compromise with the Austrian Presidency of the Council agreeing on a EUR4 billion-increase of the financial framework compared to the December 2005 deal.

The budget framework for 2007-2013 will not see any radical changes compared to the 2000-2006 period. Spending, set at EUR866.4 billion, will be on average at around 1% of Member States' accumulated gross national income (payment appropriations). The Common Agricultural Policy and structural measures under the EU's regional policy will continue to make up more than 80% of the EU's annual budgets, but a gradual decrease in agricultural spending will be matched by an increase in structural funding (especially education, research and trans-European networks). Although insignificant in comparison, the allocations for both external and internal EU policies will see substantial annual increases over the seven years.

On 17 May 2006 the Financial Perspectives were formally adopted by the European Parliament along with a new Interinstitutional Agreement on budgetary discipline and sustainable budgetary management (IAA). The Financial Perspectives were signed on the same day by the President of the European Parliament, Josep Borrell, by the Austrian Federal Chancellor, Wofgang Schüssel, for the EU Presidency of the Council and by the European Commissioner for Financial Programming and Budget, Dalia Grybauskaite, for the European Commission.

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Thomas Pritzkow
Deputy Editor, European Sources Online
May 2006

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