EU budget: National interests trump solidarity

Angela Merkel and Francois Hollande at an international football friendly in France (6 February 2013) French President Francois Hollande has been unable to convince German leader Angela Merkel that his direction was the one to follow

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Europe - after marathon hours of negotiating - has agreed a long-term budget.

For the first time in the EU's history there will be a real-terms cut in the budget. The total of 960bn euros (£812bn; $1.3tn) represents a 3% reduction from the previous seven-year deal.

This will be claimed as a significant victory by UK Prime Minister David Cameron, whose demand was "at worst a freeze, at best a cut".

The deal, however, has exposed some uncomfortable truths.

There is clearly a significant divide between northern European countries and those of the south and those in eastern Europe. The leaders of Britain, Sweden, the Netherlands, Denmark and to an extent Germany were mindful of their taxpayers in a time of austerity.

Value for money trumped the glue of solidarity.

The southern bloc - and eastern Europe - still look to the EU funds to boost jobs and growth.

This summit demonstrated once again that national politics still dominates. Countries went into negotiations fighting for national interests. The European interest took second place.

Compromise, not reform

The agreement also saw German Chancellor Angela Merkel siding with David Cameron and not Francois Hollande of France.

The key relationship that underpins the EU is usually the Franco-German alliance.

On this occasion the Germans stood with the British and other northern European countries.

It leaves Francois Hollande appearing as if he is the leader of the southern "Club-Med" bloc.

The French president tried to define this battle as less about efficiency and more about promoting growth - but even with strong support from the Italians, he did not not get his way.

The French were prepared to compromise because back in November they had won the crucial argument to leave farm subsidies largely untouched.

So Europe's leaders have agreed numbers. They have been far less successful in reforming and modernising the EU budget.

Take the Common Agricultural Policy and rural development. The funding, at 373bn euros, is lower than during the previous seven-year budget but - at around 37% - it remains the largest item in the budget, although due to fall further in the years ahead.

Less controversially, funding for Cohesion funds - money used to help newer EU members bridge the wealth gap - have emerged largely unscathed. These funds will account for 36% of the budget.

There are new funds for youth unemployment and growth projects, but the signal from the budget is that change comes slowly, incrementally in the EU.

One area that has been sacrificed is spending on cross-border energy, transport and digital networks. Funding has been cut by a quarter and has sparked strong criticism.

Administrative costs which make up 6% of the budget have gone up since the last budget, although they have come down by 1 billion since the figures proposed in November. Some had expected a stronger assault on perks and privileges.

The consensus, then, is that this is a compromise, not a reforming budget.

It is worth noting that what the heads of government agreed is not the final chapter in this story.

The European Parliament has to give its consent. Many MEPs are very unhappy. Hans Swoboda, the socialist leader, said "the agreement of the European Parliament for the figures discussed is not imaginable".

Others are talking of MEPs voting in a secret ballot to avoid them being influenced by their national governments.

Fixing European budgets remains a messy, bare-knuckled fight, but Herman Van Rompuy, the President of the European Council, will argue that he delivered a deal.

EU budget changes - graphic
Gavin Hewitt Article written by Gavin Hewitt Gavin Hewitt Europe editor

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  • Comment number 171.

    This comment was removed because the moderators found it broke the house rules. Explain.

  • rate this

    Comment number 170.

    #169 austriscus

    -- Cameron is not the problem --its what he represents within Britain.

    This sounds similar ?

  • rate this

    Comment number 169.

    The true problem between continentals and British is in the gut feeling:

    continentals tend to think "we are inside the EU and together we are stronger"

    british people tend to think "the EU is something outside the UK and membership weakens Britain"

  • rate this

    Comment number 168.

    147. WolfiePeters
    "UK in the EZ equals another Spain, but with an economy the size of France
    That's a good reason for the EZ & the UK to keep the UK out of the EZ!"

    Don't agree with Your argument, but I agree with the result of Your considerations.

  • rate this

    Comment number 167.

    148. Bob Roberts
    "What problem do they have with women?"

    Ask Marta Andreasen

    "Does being a right wing party = racist and sexist to you lefties?"

    What makes You so sure I am a lefty?
    The fact that I do not like Mr. Farage?
    I am in good conservative company in this respect.

  • rate this

    Comment number 166.


    Imagine a world: 2 countries A & B & one central bank C that lends cash to both

    If A exports more that it imports, then, of necessity, B must import more than it exports

    As time goes on, B has less money and A more

    Eventually, B has zero and then goes into deeper & deeper debt

    Try drawing it; it's a simple conservation principle

  • rate this

    Comment number 165.

    The UK will do well to leave this never ending drama that is the EU.

    As the US and EU are working on a free trade agreement, the UK should leave the EU asap, and work on its own free trade agreements, recover its sovereignty and put the billions of pounds it throws into the EU to better use strengthening its economy.

  • rate this

    Comment number 164.

    162.margaret howard
    "Yet all we get are elections every few years in what is basically a two party system and hardly representative of society as a whole"
    I'm dumbfounded. With a coalition government and an opposition you might as well have written and told us 2 and 2 makes 5.

  • rate this

    Comment number 163.

    But that's still no argument against an EU referendum, and also why we need proportional representation and a separately elected executive.
    If the EU hadn't changed from a free trade group to an undemocratic superstate, there would be less of a demand or reason to hold a referendum, but it has, and we wouldn't be stuck in the stone age if it hadn't.

  • rate this

    Comment number 162.

    159 Bob

    All things evolve. The power of our church, police, judicial system etc and our society as a whole have changed beyond all recognition in the last 100 years just as they did throughout our history or we would still be in the stone age.

    Yet all we get are elections every few years in what is basically a two party system and hardly representative of society as a whole

  • rate this

    Comment number 161.

    Which is why we need to de-regulate and invest in infrastructure, to make our economy more productive and encourage foreign investment so we can stop relying on imports and actually start exporting. The problem is that the EU makes Germany's BMWs and Mercs as cheap as a British made Jaguar for example, thus contributing to our large trade deficit we have with them.

  • rate this

    Comment number 160.

    158 Wolfie

    "Contrary to what you (and M Thatcher!) say"

    You're wrong. Mrs Thatcher instinctively knew that money has to be earned before it can be spent whether family or country and you have to cut your coat

    She managed to drag this country out of a mess into prosperity.

    Had her advice been followed, we wouldn't be in the state we are in now

    And I never voted for her!

  • rate this

    Comment number 159.

    If you give a coherent argument against renewing a mandate that has not been voted on by anyone under the age of 55, and one that has changed so unrecognisably from the one anyone over that age voted for, perhaps I will listen to you.

  • rate this

    Comment number 158.


    Contrary to what you (and M Thatcher!) say, a country is not the same as a business or a family. Some import more than they export (of necessity as other do the opposite). Those countries have a net flow of cash out. They have to make it up from somewhere

    If you keep taking water out of one bucket and putting it in another ... Please try & think hard about it. It's worth the effort

  • rate this

    Comment number 157.

    I know. Do you really think that the lack of an EU caused WW2? Besides, there was a league of nations at the time, which was useless in the face of Hitler.
    The point I made was that there would not have been a WW3 anyway, with or without the EU, thus it is a fallacy that it has kept peace over the past 60 years. The other skirmishes I mentioned just added to that point.

  • rate this

    Comment number 156.

    155"So could you now give us a more coherent reason ...?"

    I can. The EU leadership has made it clear Cameron's plan to renegotiate UK terms of membership are not acceptable, membership is offered as it is now on a take it or leave it basis.The only reason to delay is for debate or to improve Tory chances to win the next election.Brits don't seem eager for a debate.

  • rate this

    Comment number 155.

    151 EU





    I think we can now safely assume that we all know about your wish for a referendum.

    So could you now give us a more coherent reason rather than just shouting in CAPITAL LETTERS?

  • rate this

    Comment number 154.

    Cameron must've made it clear there would be budget cut or there wasn't going to be a budget. That's one way to use your influence as an insider in the EU, bludgeon them with the only weapon you've got, a veto.They gave it to you because it was the only way to trick people into thinking they weren't giving up their national sovereignty. Barroso has already made it clear he aims to change that

  • rate this

    Comment number 153.

    Austrian economics expert Stephan Schulmeister states "EU" still on course for crisis. i.e. the deal is rubbish.

  • rate this

    Comment number 152.

    149 Bob

    What we all mean are 2 destructive world wars and vicious empire building wars of previous centuries, not localised wars or riots. The EU has certainly played a part and so have the hideous weapons we have invented.

    From bows and arrows, axes to cannon, machine guns, air attacks, drones and nuclear weapons in just 500 years!


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