A quick and simple guide on current EU budget issues
Autumn and the beginning of winter are traditionally the "EU budget season" as most pending issues of the current year's budget usually are negotiated together with the following year's budget. However, the number of such pending issues couples with their technicalities may combine to make it difficult to understand what is negotiated and why. Hence this quick and (hopefully) simple guide.
First a few basic concepts…
DAB (draft amending budget): It is a proposal to amend the adopted budget. By definition a budget (be it of the EU, of a member state, a private company or a household) bases itself on forecasts, estimates of expenditures and revenues. Therefore, often budgets have to be amended according to actual developments. The European Commission is not allowed to change any budget adopted by political representatives (Council and EU Parliament), therefore when needed it presents a draft amending budget to member states and the EU Parliament for their approval. The number of DABs presented by the Commission varies from one year to another; presenting up to ten draft amending budgets is not unusual.
AL (amending letter): Sometimes, the Commission has to modify a budgetary proposal before the Council and the Parliament have settled on it. This is done via an amending letter. This year, two amending letters are on the table: one to modify the Commission's proposal for the 2015 EU budget, and one to adapt the Commission's proposal to modify the 2014 budget (details below).
Conciliation procedure: The adoptionof the EU's annual budget takes place in four stages:
- The Commission presents its estimates of expenditure for the year to come (draft annual budget).
- Then the Council adopts its position on the Commission's proposal…
- …followed by the European Parliament adopting its position on the Council's position
- A 21-day conciliation procedure follows (art. 314 of the Lisbon Treaty) to try and find a compromise between the Council's and the Parliament's positions, with the Commission in the role of the honest broker.
If there is no agreement by the end of the conciliation period, the Commission must present a new proposal.
The 2015 conciliation procedure planning
28/10 – Start of the Conciliation procedure
06/11 – 1st Conciliation opening meeting
11/11 – Trilogue
14/11 – Conciliation closure meeting: agreement in the Council (foreseen)
17/11 – Official deadline for agreement
... and now for the specifics linked to the 2014 budget
Here's the list of all draft amending budgets (DAB) and amending letters tabled by the European Commission in 2014;
DAB1 was adopted by both arms of the budgetary authority (Parliament and Council) in July. It did not affect the size of the EU budget neither its sources of income as it was about reshuffling internal resources.
DAB2 settled the surplus of the 2013 budget. A surplus occurs when the available resources in the EU budget are greater than the allocation of payment appropriations for that year. This discrepancy is rectified by returning the surplus to Member States by means of an amending budget in the following year. DAB2 amounts to €1bn, the Commission tabled it in April 2014.
DAB3 addresses the current severe lack of payment appropriations in the EU budget.It requests and additional €4.7bn to cover (mostly regional policy) bills, of which €4bn would be financed by the use of the 'contingency margin' (increasing the limit of expenditure in 2014 at the expense of limits in 2018 – 2020), 0.7 billion would be financed by the payments margin still available in 2014 and EUR 65 million financed by redeployment within the budget. It also includes a revision of the revenue forecasts for 2014 (+ EUR 1.5bn), mainly from fines and interest rates. It was tabled in May 2014.
DAB4 covers a revision of revenues to the EU budget (€2bn), mostly from fines. It was tabled in July 2014. Note that on 17 October the Commission adopted an amending letter to DAB4 as new data showed more revenue (€374M) than estimated in July.
DAB5 is the follow-up to the Commission proposal, in September, to trigger the Solidarity Fund following natural disasters in Italy, Greece, Slovenia and Croatia. It amounts to just under €47M.
DAB6 consists of an upward revision of forecasted income to the EU budget from customs duties for an amount of €420M. It also returns some €9.5bn to Member States as a result of the annual VAT & GNI balances exercise following the adjustment of Member States' GNI contributions that brought an extra €9.5bn to the treasury.
DAB7, just like DAB5, is the consequence of the Commission proposing, on 17 October, to mobilise the Solidarity Fund for the benefit of Serbia, Bulgaria and Croatia for an amount of €79M.
The 2015 EU budget
On 11 June 2014 the Commission adopted its proposal for the 2015 EU budget, amounting to€145.6bn in commitments (similar to the monthly limit on your credit card) and €142.1bn in payments (what will be needed to pay actual bills, mostly to Member States' farmers, regional authorities, SMEs, scientists, NGOs…).
On 15 October, the Commission adopted the amending letter 1 to the draft budget 2015. It reduces commitments and increases the margin under the sub-ceiling by €448M following the availability of other source of funding to finance the needs. It also redeploys an equivalent amount of payments to address urgent needs in some policy areas.
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