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IP/04/189

Brussels, 10 February 2004

Building our common future: Financial and political outlook for the enlarged Union 2007-2013

The European Commission today adopted a Communication setting out the vision for the European Union and its future budget plans for the period 2007-2013. With a view to reaping the full benefits of enlargement and helping Europe prosper, three main priorities are proposed: sustainable development, the interests of the citizens and strengthening the Union's voice as a global partner. These objectives can be reached for a Union of 27 Member States without increasing the current ceiling for expenditure. The total annual amounts in payment terms needed could reach € 143.1 billion in 2013, which - even for the enlarged Union - corresponds to only 1.15 % of EU Gross National Income. On average the amounts will 1.14 % of GNI over the period

President Romano Prodi stated: "In the coming years the European Union needs to improve growth and competitiveness, provide for more and better jobs, protect the rights of citizens, and offer them more protection against crime and illegal immigration. The Union must also strive to protect the environment and possess a stronger voice in the world. At the same time, we must continue to maintain full support for internal solidarity, cohesion and for agriculture. The proposed budget for the next period seeks to create the means to realise these ambitions while remaining under the current ceilings - even after the arrival of 12 new Member States. The legitimate demands on the Union have to be matched by an optimal use of the resources at its disposal."

The future financial framework must support the political objectives of the Union. It must be targeted to deliver concrete, carefully selected priorities that benefit Member States and citizens.

In the view of the Commission, the gap between ambitious, high-level political commitments, on the one hand, and the failure to implement, on the other, must not be allowed to widen further. In many of the new priority areas the ability of the Union to deliver on the promises of the Member States is crippled by insufficient resources. The political aims and expectations set out for the Union must be matched by a credible targeting matched by adequate means, including financial resources.

The political priorities, as proposed by the Commission, are as follows:

Sustainable development: growth, cohesion and employment

At the Lisbon European Council in 2000, the Heads of States and of Government agreed a programme to bring the Union to the leading edge in the knowledge economy and society. We have to reinvigorate this process giving it credible and operational targets, both at national and at EU level. Emphasis must be placed on investment for the future such as promoting the competitiveness of enterprises in an internal market, research and development, connecting Europe through networks, improving the quality of education and training in the EU, helping society to anticipate and manage social change. These are true examples of matters that concern citizens and businesses across the whole of Europe. Common policies and EU budget must be clearly reoriented towards these goals.

The objectives of growth and competitiveness would also be the main priorities of the next generation of regional and cohesion policies with particular emphasis on aid for the regions lagging behind. Growth and cohesion must complement each other even more than they did in the past. On 1 May 2004, the Union will take in 10 new Member States creating an unprecedented challenge for the competitiveness and internal cohesion of the Union.

Cohesion policy in the future must address systematically the problem of lack of competitiveness so that more of the Union's regions can contribute to growth and employment. The regions must become partners for prosperity. In present Member States, transitional measures are proposed notably for regions that continue to face serious difficulties but no longer are eligible for the highest intensity of support because of the statistical effect.

The Commission's proposals also effectively endorse the Council's decisions of 2003 to reform the Common Agriculture Policy and to set the agriculture spending for market measures and direct payments until 2013.The reform will radically re-direct the EU's farm policy towards sustainable development by breaking the link between support and production. The future rural development policy, re-organised into one single instrument will help to increase competitiveness in agriculture, enhance the environment and the diversity of the countryside. Additonal funds will be released by shifting amounts from direct payments to farmers in order to reinforce rural development programmes.

The new, reformed common fisheries policy will continue to focus on sustainable exploitation of resources. Environmental policy is there to meet expectations from citizens for a better life and solidarity between generations, as well as international commitments and to promote efficiency and competitiveness. Its instruments will also be reorganised to increase flexibility and effectiveness.

Citizenship including freedom, security and justice

Freedom, security and justice constitute key components of the European model of society. At the 1999 European Council of Tampere the Heads of State and Government agreed on a detailed roadmap to establish an area of Freedom, Security and Justice.

Since Tampere most of the policies on this field have been transferred to the Community competence. Today, everyone recognises that the challenges posed by immigration, asylum, and the fight against crime and terrorism can no longer be adequately met by measures taken at national level only.

The same holds true for protection from natural disasters, health and environmental crisis, access to public services, consumer and health aspects.

The framework for dialogue and exchange between citizens involves supporting European cultural co-operation to help overcome the obstacles to cross-border exchanges.

Improved instruments and adequate funding will help make that possible.

The EU in the world

The Enlarged Union must play a greater role, as regional leader as well as a global partner. To meet these expectations implies developing the EU into a politically responsible actor capable of punching its weight.

As a regional leader, the EU will bear a critical responsibility not only for itself but also for the stability of its neighbouring area. Liberalising trade and investment, promoting regulatory convergence, connecting transport, energy and communication networks with neighbouring countries will benefit everyone in the Union as well. To create a Ring of Friends means to invest in this friendship.

The Union should also play its full role in global political governance and strategic security. This concerns the protection against threats (terrorism, the proliferation of weapons of mass destruction, failed states, internal and regional conflicts) as well as ensuing civil security and the protection of citizens against risks (natural disasters, health and environmental crises, organised crime).

Financial needs (see table)

Taking into account the challenge described above to build a credible political project implies to get resources to implement it. The Commission has calculated an average spending level of 1.14 % over the years. A significant shift in the balance of the EU budget to support the new priorities would be achieved. Expenditure levels will increase initially due to the effect of enlargement, but, will at the end of the period be close to the initial level. Payments would lie below the current ceiling of 1.24% of GNI.

The Commission's administrative expenditure would be attached to the policies they refer to, following the logic of activity-based management, which is already the basis for the annual budget. A residual Administration heading will remain to include expenditure for institutions other than the Commission, pensions and some interinstitutional expenditure.

Fair treatment for all Member States

The Commission proposes that for the future a generalized correction mechanism should be considered, establishing a transparent and objective method to correct a budgetary burden deemed excessive in relation to a country's relative prosperity.

As for the revenue side of budget and possible new revenue sources, the Commission will study the issue in more detail in the context of an 'Own Resources' Report, which will be submitted to the Council by summer 2004.

The roadmap

The Commission will prepare by mid-2004 appropriate legislative proposals and a concrete roadmap to reach the objectives. This would leave Council and European Parliament time in the interim to react to today's blueprint. The legislative decisions would then be taken by the enlarged Commission.

In order to allow sufficient time for preparing the next generation of programmes to implement the different policies, the financial perspectives would need to be adopted during the first half of 2005.

OVERVIEW OF THE FINANCIAL FRAMEWORK 2007-2013

(Million € at 2004 prices)

COMMITMENT APPROPRIATIONS

2006 (a)

2007

2008

2009

2010

201120122013
1. Sustainable growth 47.58259.67562.79565.80068.23570.660 73.715 76.785
1a. Competitiveness for growth and employment8.79112.10514.39016.68018.96521.250 23.540 25.825
1b. Cohesion for growth and employment (b)38.79147.57048.40549.12049.27049.410 50.175 50.960
2. Preservation and management of natural resources56.01557.18057.90058.11557.98057.850 57.825 57.805
of which : Agriculture - Market related expenditure and direct payments43.73543.50043.67343.35443.03442.714 42.506 42.293
3. Citizenship, freedom, security and justice1.3811.6302.0152.3302.6452.970 3.295 3.620
4. The EU as a global partner (c)11.23211.40012.17512.94513.72014.495 15.115 15.740
5. Administration (d)3.4363.6753.8153.9504.0904.225 4.365 4.500
Compensations1.041
Total appropriations for commitments120.688133.560138.700143.140146.670150.200154.315158.450
Total appropriations for payments (b)(c)114.740124.600136.500127.700126.000132.400138.400143.100
Appropriations for payments as a percentage of GNI 1,09%1,15%1,23%1,12%1,08%1,11%1,14%1,15%
Margin available0,15%0,09%0,01%0,12%0,16%0,13%0,10%0,09%
Own resources ceiling as a percentage of GNI1,24%1,24%1,24%1,24%1,24%1,24%1,24%1,24%

(a) 2006 expenditure under the current financial perspective has been broken down according to the proposed new nomenclature for reference and to facilitate comparisons

(b) Includes expenditure for the Solidarity Fund (€ 1 billion in 2004 at current prices) as from 2006. However, corresponding payments are calculated only as from 2007

(c) The integration of EDF in the EU budget is assumed to take effect in 2008. Commitments for 2006 and 2007 are included only for comparison purposes. Payments on commitments before 2008 are not taken into account in the payment figures

(d) Includes administrative expenditure for institutions other than the Commission, pensions and European schools. Commission administrative expenditure is integrated in the first four expenditure headings


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