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EU Budget

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There are 3 main priorities for spending the 2007-13 EU budget:
  • Harnessing European economic integration (the 'single market') to the broader goal of sustainable growth, by mobilising economic, social, and environmental policies.
  • Strengthening the concept of European citizenship by creating an area of freedom, justice, security and access to basic public goods and services.
  • Establishing a coherent role for Europeon the global stage – inspired by its core values – in the way it assumes its regional responsibilities, promotes sustainable development and contributes to civilian and strategic security.

 

New priorities were launched for the 2014-2020 budget: 'A budget for Europe 2020this external link will open in a new window' on 29th June 2011.  The Commission proposes to allocate €376 billion for the 2014-2020 period for spending under cohesion policy instruments.

Europe Direct Cumbria is involved in national and regional groups having a say for how this new budget will work best for Cumbria.

Where does the money come from?this external link will open in a new window  The EU budget is paid for by the 27 member countries.  Each country's payment is divided into three parts:

  • A fixed percentage of gross national income (GNI)
  • Customs duties collected on behalf of the EU (known as 'traditional own resources')
  • A percentage of VAT income

The budget is a yearly exercise based on a seven year 'financial framework' or 'multi-annual financial framework' and covers every euro spent by the EU, either directly or, most often, through governments.

The European Commission puts forward a budget which is approved by the European Parliament before the start of each year.  At the end of the year a report on budget spending is released and an audit takes place.  When the EU Council and the European Parliament approve the annual EU budget, total revenue must equal total expenditure.

In practice, however, actual revenue and expenditure often differ from the estimates.  There is usually a surplus, which is used to reduce EU countries' contributions to the budget for the following year.

In the past, some countries felt that they were paying too much towards the budget, compared to other countries.  Measures were taken to correct (compensate) these imbalances, including:

  • The 'UK rebate' – the UK is reimbursed by 66% of the difference between its contribution and what it receives back from the budget (worth about €4bn in 2010). The calculation is based on its GNI and VAT
  • Lump-sum payments to the Netherlands and Sweden
  • Reduced VAT call rates for the Netherlands, Sweden, Germany and Austria.

The cost of the UK rebate is divided among EU member countries in proportion to the share they contribute to the EU's GNI.  However, since 2002 this has been limited to 25% of its normal value for Germany, the Netherlands, Austria and Sweden, who considered their relative contributions to the budget to be too high.  This cost is shared by the other 22 EU members.

The European Court of Auditors is the fifth institution of the European Union a system that allows longer term planning and year by year flexibility and accountability.  It was established in 1975 in Luxembourg to audit the accounts of EU institutions.

For further information on the EU budget, including myths and facts, visit the Europa websitethis external link will open in a new window.