EU budget discussions continue

8 November 2019

On Tuesday in Brussels the European Commission set out its proposed contributions for member states as part of the Multiannual Financial Framework (MFF) for the year 2021-2027. So far the discussions have been difficult and little progress has been made. Member states are under pressure to find an agreement but divisions remain over the size of the overall budget and its allocations. Ireland is set to put an extra €760 million per year into the budget as current proposals stand.

Northern countries such as Germany and Denmark want to see spending limited to 1 percent of the bloc’s gross national income, short of the 1.11 percent proposed by the Commission. On the other hand, less developed countries in Eastern and Southern Europe favour maintaining a higher level of spending. The ‘Friends of Cohesion’ group is made up of 17 countries with a strong interest in defending resources for regional development but views within the group are not necessarily cohesive. A large majority of countries are anxious about their farming industries and want to see resources for the CAP maintained. Agriculture makes up around 35 percent of the EU spending and the Commission has proposed reducing this to around 28 percent in the next MFF.

The UK’s impending exit and the hole this will leave in the EU budget compounds the discussions. One European official has called it a “long drawn bloody fight”. Additionally, several countries have indicated they would not approve an EU budget if allocations are not tied to respect for the rule of law, following concerns over developments in Hungary and Poland.

Budget Commissioner Günther Oettinger has said there will be progress before the end of the year but does not expect an agreement in December. The Commission has been keen to emphasise the indirect benefits for EU countries which are not reflected in their net payments into the budget, such as security, and free trading across the EU single market.

Meanwhile, on Thursday the Commission released its quarterly economic forecasts, with Ireland’s growth forecast for 2019 the highest in the EU at 5.6%, with the EU average at 1.4%. The institution warned that considerable uncertainty exists with Brexit and potential changes to international tax rules which could impact Ireland’s corporate tax revenues.

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