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The Reform of the EU budget in turbulent times – state-of-play on the EU budget review Stefan Lehner Director, European Commission, Directorate-General.

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Presentation on theme: "The Reform of the EU budget in turbulent times – state-of-play on the EU budget review Stefan Lehner Director, European Commission, Directorate-General."— Presentation transcript:

1 The Reform of the EU budget in turbulent times – state-of-play on the EU budget review Stefan Lehner Director, European Commission, Directorate-General for Budget Meeting of Budget and Financial Committees Chairpersons, Prague, April 2009

2 The EU budget – some facts and figures

3 Heads of Representation, Lisbon 12 June 2007 The size of the EU budget

4 Heads of Representation, Lisbon 12 June 2007 The structure of the EU budget (financial framework 2007 – 2013) Total: € 975 billion (in current prices)

5 Heads of Representation, Lisbon 12 June 2007 EU Budget expenditure trends  The profile of EU spending has changed considerably over 25 years. But has it changed enough?  For example: The Common Agricultural Policy absorbed 61% of the budget in By 2013, the share of CAP spending could almost halve (32%), though CAP will stay a major part of EU spending.

6 Heads of Representation, Lisbon 12 June 2007 Significant shift in EU budget funding The EU budget is increasingly based on the GNI contribution, from 11% of the total in 1988 to 74% in 2013.

7 Heads of Representation, Lisbon 12 June 2007 Debates on net contributions led to a rise in budgetary «corrections»  UK correction – 66% of the difference between contributions and its receipts  Lump sum payments to the Netherlands and Sweden  Reduced VAT rates and reduced UK correction payments for the Netherlands, Sweden, Germany, Austria  Retention of 25% of traditional own resources for all Member States collecting them The financing of the EU budget has become incomprehensible

8 EU budget reform

9 Heads of Representation, Lisbon 12 June 2007 Commission launches a reform of the EU budget The mandate: “In accordance with the conclusions of the European Council, the Commission has been invited to undertake a full, wide-ranging review covering all aspects of EU spending, including the Common Agricultural Policy, and of resources, including the United Kingdom rebate, and to report in 2008/2009.“ (Inter-Institutional Agreement between the European Parliament, the Council and the Commission, )

10 Heads of Representation, Lisbon 12 June 2007 The Commission approach to the Review: “Reforming the Budget, changing Europe” Analyse longer-term challenges and issues facing the EU Apply European value added, subsidiarity and proportionality principles to define a more efficient European budget and a new repartition of tasks with the Member States and the regions Seek a new consensus on EU spending priorities – and posteriorities, on how the budget is managed and on how to fund it. The Review will NOT make a proposal for the next financial framework

11 Heads of Representation, Lisbon 12 June 2007 The Timetable so far  12 th September 2007  15 th June 2008  12 November 2008  Consultation Paper setting out the challenges and issues at stake  Launch of public consultation phase  Deadline for submission of contributions  Political Conference

12 Heads of Representation, Lisbon 12 June 2007  All Member States presented official contributions;  Over citizens in 20 Member States directly debated budget reform;  300 contributions represent broad diversity of interests. Public consultation: Broad participation ©European Commission NGO 20% Private sector 14% Citizens 12% Other 7% Universities/scientists 13% Public/governmental sector 34%

13 Heads of Representation, Lisbon 12 June 2007 Consultation results: Europe’s biggest challenges At the top of the list: Climate change Two thirds of contributors consider it Europe’s big test for the future; EU competitiveness in a global economy One in two respondents put growth as Union’s main challenge; Energy supply security Just as many are concerned about energy issues. Other areas of serious concern:  Inequalities between countries, regions;  Demographic trends - shrinking/ageing population;  External pressures, security threats, migration. ©European Commission

14 Heads of Representation, Lisbon 12 June 2007 Consultation results: A new direction for EU spending /1  Competitiveness, research, innovation  Environment, climate change  Energy Contributions move spotlight to policies for future: Policies addressing growth, climate and energy are at the top of spending priorities ©European Commission

15 Heads of Representation, Lisbon 12 June 2007 Consultation results: A new direction for EU spending /2 =Cohesion – support signalled, policy change required  Agriculture – one of the hottest topics of the consultation ©European Commission

16 Heads of Representation, Lisbon 12 June 2007 Consultation results: Financing a budget for the future  Traditional Own Resources – widely supported;  GNI-based contribution – strong emphasis that this resource is working well and could be extended further;  Alternative own resources – calls to "keep the door open" or examine new possibilities linked to policy priorities ;  VAT-based contribution – urge to simplify the system by abolishing this resource;  Corrections – wide disappointment with non-transparent system of over 40 corrections, strong demand to abolish exemptions. To ensure resources match political ambitions: There is a clear link between the structure of expenditure, financing and correctionsNeed to think the budget globally

17 Heads of Representation, Lisbon 12 June 2007 Unforeseen turbulences influencing the debate  The “food crisis”: A sharp increase in price for major agricultural products revived “security of supply” concerns; since summer prices have declined, leaving the outlook for agriculture quite uncertain.  The “oil crisis”: prices for non-renewable resources have also seen a steep increase followed by a sharp decline; expectations remain pessimistic.  The no-vote in the Irish referendum: Uncertainties on future Treaty base for EU are complicating the outlook on future EU tasks and functioning.  Climate change accelerates: Recent indicators are above worst case climate scenarios.  The “financial crisis” and looming recession: Some new discussion on the role of the EU budget to react to such crises.

18 Heads of Representation, Lisbon 12 June 2007 Steps towards a result Commission presents the Budget Reform proposal Based on: Contributions to the public consultation; Scientific studies; Meetings, debates with NGOs, academia and other interested parties; Conference on budget reform; Internal Commission debates. What’s next 2009/10 - discussion and conclusions by the EU institutions 2011 – Commission proposal for the next Financial Framework

19 Heads of Representation, Lisbon 12 June 2007 The public debate on EU budget reform continues  The Commission website to present the issues, and to document contributions and the debate also in the future:

20 The Reform of the EU budget in turbulent times – state-of-play on the EU budget review Stefan Lehner Director, European Commission, Directorate-General for Budget Meeting of Budget and Financial Committees Chairpersons, Prague, April 2009


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