Draft 2013 EU Budget: President Barroso Sends Letter To Heads Of State And Government

President Barroso has sent a letter on 24 July 2012 to all EU Heads of State and Government to express his concern about the Council’s position on the draft 2013 budget.

On 24 July, the Council approved without discussion the position of COREPER of 11 July 2012 to limit the increase in payments in the EU budget 2013 to 2.79%. The Commission, in its initial proposal of 25 April 2012, had proposed an increase in payments by 6.8% to take into account the legal obligations to pay beneficiaries as a result of past commitments already agreed by Member States. The Council’s position would result in EUR 5.2 billion less than the Commission has asked for in order to take into account real payment needs.

Full text of the letter of 24.07.2012

Just three weeks ago, we agreed at the European Council that we will continue to do everything necessary to put Europe back on the path of smart, sustainable and inclusive growth. All Heads of State or Government signed up to a Compact for Growth and Jobs which includes very specific commitments in relation to the financing of the economy, including through the mobilisation of the remaining structural fund allocations for the current period. These are the right messages for our citizens in these difficult times.

I am writing to you now because I am concerned that the negotiations on the 2013 budget are already compromising the spirit of our recent agreement by not making sufficient funds available to enable the European Union to pay agreed levels of support for many growth-enhancing projects.

The annual budget sets the amount of legally-binding commitments to citizens, SMEs, researchers, farmers, students and regions that the European Union will support. These commitments create obligations to be honoured later through appropriate payments according to agreed rules and the actual implementation of programmes. Without these commitments, many of these projects would never get off the ground. Putting into question the ability of the EU to honour its obligations undermines the credibility of our funding programmes and indeed of our commitment to support growth.

I recognise and welcome the courageous efforts that many of you are making to consolidate public finances. The draft budget proposed by the Commission took full account of this context by freezing new commitments in real terms. This is a clear recognition of the situation we are in and that needs to be taken into account for the contribution to the budget. The proposed increase in payment levels of 6.8% for 2013 largely stems from legal obligations. This is a question of implementing what we have all already agreed. Most of these payments are needed for areas with the greatest potential for boosting growth and competitiveness. The ‘real’ increase in 2013 would in fact look much smaller had payment appropriations in the 2012 budget been set at the level of actual needs in the first place. All of this must also be recognised when we look at the situation. After all, the budget plays a very substantial role for the stabilisation of the economies and for investment in a number of Member States, and ignoring this will have adverse effects.

Cutting the payment levels by more than EUR 5 billion in 2013, as the Council is proposing, would be a false economy. It would have serious consequences for economic recovery as these cuts would affect regions, researchers or SMEs with the risk that they would then be starved of finance.

Already in 2012, we are experiencing great difficulty in processing payment claims for research, innovation and cohesion. This puts us in the invidious position of having to choose which bills to pay and which to delay. If we do not properly address the situation in the 2012 budget and with an inadequate agreement on the 2013 budget it will only make this untenable situation worse.

I am very aware of the effort that some Member States will have to make to enable the European Union to meet its legal obligations. But I hope you can all agree that this is not the time to sacrifice pro-growth investment and that the investments co-financed by the EU budget offer real added value.

I hope you will be willing to work constructively with the European Parliament and the Commission to agree on the budget that Europe needs. I am sending a copy of this letter to the President of the European Parliament.

[signed]

José Manuel BARROSO