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Europe

Brussels Set To Launch Bitter Budget Battle

The battle over the EU's future spending limits begins in earnest on Tuesday when the European Commission publishes its proposals for the budgetary period from 2007 onwards.

The first shot in the battle was fired in December by some of the richer member states who signed a joint letter to Commission President Romano Prodi calling for a cut in the spending ceiling. Currently, the EU may spend no more than 1.24 percent of the combined Gross National Income (GNI) of its member states -- about €124 billion. The infamous "letter of the six" signed by France, Germany, the UK, Sweden, the Netherlands and Austria called for that level to be capped to one percent of GNI from 2007 onwards. They argue that they cannot afford to shift funds to Brussels at a time of economic slowdown. Furthermore, in the case of France and Germany, they are indignant that they are being asked to contribute to the EU when, at the same time, the Commission is taking them to court for spending too much at home. But, according to Commission sources, Brussels believes that the member states have got their priorities wrong. Rather than set the amount they are prepared to spend and then decide what to spend it on, the Commission feels that spending priorities should be worked out first and then member states should see how much these priorities cost. On Tuesday the Commission will set out three spending priorities: creating better jobs and higher growth; fulfilling the Lisbon strategy, which aims to make the EU the most competitive economy in the world by 2010; and on increasing the presence of the EU on the world stage. The Commission argues that, since the member states set such difficult challenges for the EU they should be prepared to spend money to achieve them. They also claim that three months before the completion of enlargement is not the time to be reducing spending. (EUobserver.com)

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