EU budget negotiations suspended over dispute on paying this year’s bills

Negotiations on next year's EU budget were suspended on Friday evening due to disagreement between Parliament and Council over possible solutions to counter the lack of remaining funds in the 2012 budget. Parliament and Council have until midnight on Tuesday to reach an agreement.

"The differences between the positions of Council and Parliament were too far apart to continue talks overnight", regretted Parliament's lead negotiator Alain Lamassoure (EPP, FR). He hoped that there would be sufficient basis to have further discussions on Tuesday, which is formally the last day of the conciliation period.

No money to pay bills in 2012

The 2013 budget was not the only subject of discussion. Parliament also insisted on finding a solution for the budget shortfall to make payments in 2012. These concern bills – which are not disputed - presented by member states authorities that manage EU funds and for funds managed by the Commission.

Parliament fears that these bills will be pushed back to 2013, which would jeopardise implementing EU policies next year and contradict the declaration signed by the member states in November last year. Therefore, Parliament supported the Commission's proposal to add €8.9 billion to the 2012 budget to allow the Commission to reimburse member states authorities for funds they advanced to beneficiaries in their countries. A blocking minority of member states insisted the Commission should reimburse from the current budget but Parliament and Budgets Commissioner Lewandowski agreed that the few remaining 2012 funds will by far not cover these payments.

Earthquake victims and Erasmus

The only outcome of Friday's meeting was a declaration of political will to finance so-called ‘solidarity support’ to earthquake victims in Italy (€670 million), but without an agreement on how to finance it.

Programmes needing a solution include Lifelong Learning (including Erasmus), Rural Development, the European Social Fund, the Cohesion Fund and the 7th Framework programme for Research and Development.

The countries most hit by the deadlock over payments in 2012 are Italy, Spain, Poland, Germany, Greece, Czech Republic and Bulgaria. These countries have all pre-financed EU expenditure with amounts varying from €400 million to €1.9 billion.

What next?

If there is no agreement within 21 days, trilateral talks continue and set the basis of a new draft budget for 2013 to be presented by the Commission. This would need to be approved in Parliament’s Budgets Committee and plenary - as well as by the Council - before the end of 2012.