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EU budget hike for 2013 draws angry reaction

EU proposals to increase budgets in 2013 have met with angry reactions from European leaders, who say now is not the time to think about more spending.

European Commission President Jose Manuel Barroso

EU Gipfel Europäische Kommission Barroso Ministerrat

European governments reacted angrily on Wednesday to European Union proposals for a 6.8 percent budget rise in 2013.

The European Commission said the increase in spending next year to 138 billion euros ($182 billion) was needed to meet legal funding commitments approved by member states in previous years.

The announcement caused outrage in many national capitals, where governments have been cutting their own budgets to appease financial markets and comply with the EU's tough new fiscal rules.

Germany's Finance Ministry said in a statement the proposed rise was inappropriate "given the extraordinary challenges of the sovereign debt crisis."

The Dutch government collapsed this week after it failed to agree budget cuts to bring its deficit within EU limits. Jan Kees de Jager, the country's finance minister said he could not accept the proposed 9-billion-euro EU increase. "That is too high a rate, which is inconceivable."

Britainand Germany said they would work with other net contributors to the EU budget to cut the proposed 2013 figure.

"It's important to get an alliance of member states together to make sure that the Commission and the (European) Parliament see sense," British junior finance minister Mark Hoban told reporters in Brussels.

José Manuel Barroso, European Commission president, defended the plan as "an investment in Europe" and promised that the vast majority of the funds would flow back to member states to support growth-enhancing programs, such as cross-border infrastructure projects.

At the end of 2010, France, Britain, Germany and the Netherlands called for a freeze in all future European Union spending and last year led efforts to cut the European Commission's proposed 5 percent budget increase for 2012 to 2 percent, in line with inflation.

Also on Wednesday, Spain's tightest budget since the 1970s passed its first hurdle in parliament after disappointing first quarter figures fuelled concerns the government would miss targets for reining in its deficit.

Debt markets reacted nervously last month when Spain unilaterally announced a more modest budget deficit target. It has since agreed with the European Union to target 5.3 percent of gross domestic product this year and 3 percent by 2013, down from 8.5 percent of GDP last year.

Many economists fear the goals, which have also prompted reforms to health and education to slice a further 10 billion euros a year from spending, are too ambitious for an economy in its second recession since 2009.

jm/mz (Reuters, dpa)