European Union leaders agree on new budget

5 April 2006

BRUSSELS/STRASBOURG – European Union leaders on Wednesday expressed relief over a deal ending months of bitter budget bickering by increasing the bloc’s spending through 2013.

The EU’s new seven-year budget was approved after the European Parliament succeeded in adding an extra 4 billion euros (4.9 billion dollars) to the 2007-2013 spending plan.

The deal follows a breakthrough agreement on a 862.4 billion euros seven-year EU budget clinched by the bloc’s leaders at a hard-fought summit in Brussels last December.

But members of the European Parliament – who must endorse the spending blueprint – balked at cutbacks agreed by EU leaders in areas such as education and foreign policy and demanded governments inject an extra 12 billion euros into the budget.

Parliament had threatened a return to an awkward system of setting annual spending rounds unless national governments agreed to spend more and reform current budgetary procedure.

Under a compromise hammered out in late-night talks in Strasbourg on Tuesday, however, all parties agreed that an extra 4 billion euros should be added on to the budget.

“It is good news that we now have the funds to match our ambitions,” said European Commission President Jose Manuel Barroso.

“No-one is completely happy, but this is a good demonstration on the spirit of partnership,” Barroso said, adding money was available for development in the EU’s ten new member states in central Europe as well as for Romania and Bulgaria which are expected to join the bloc in 2007.

In Berlin, German Chancellor Angela Merkel welcomed the deal while saying she still wanted to read the fine print.

“Germany can accept this compromise,” said Merkel at a news briefing, adding that long-term financial planning security provided by the budget was vital for new central European EU member states.

Josep Borrell, European Parliament President, said the additional funds were fresh money which would go to education, innovation and for small and medium-sized businesses in Europe.

As part of the deal, the EU will also boost over the next seven years its emergency reserve used to cope with floods and other disasters by 1.4 billion euros. An extra 487 million euros will be set aside for pensions of EU civil servants and other administrative tasks.

Agreement on the seven-year spending plan represents a difficult compromise between rich EU nations Germany, France and Britain which wanted to slash contributions to the common coffers and others, including new EU states, which say they need more money to boost domestic development.

More than 40 per cent of the EU’s budget is spent on agriculture, about one-third on regional aid and projects to promote growth, and the rest on administration, security and foreign aid.

DPA

Subject: German news