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European Commission

MEMO

Brussels, 12 December 2012

Q&A's ON EU BUDGET 2013

What are the main figures for the EU budget for 2013 as adopted today?

The level of commitment appropriations (CA, maximum value of commitments to pay future bills – mainly long-term EU funded projects) is set at EUR 151 billion whereas the total payment appropriations (PA, actual amounts to pay for previous commitments – mainly EU funded projects completed across Europe) amount to EUR 132.8 billion.

Please see Table in Annex (2).

Why does Commissioner Lewandowski state that the adopted EU budget will not be sufficient to cover all the needs in 2013?

In terms of payments, the 2013 budget as agreed by the Council and the European Parliament, is EUR 5 billion below the Commission's draft budget, itself based on estimates from the 27 EU Member States for 2013. The bulk of the EU budget (some 80% of it) is dedicated to funds that go to Member States; according to the estimates coming from those Member States, the EU would need some EUR 156 billion for next year's budget (mostly payments to farmers, EU funded projects in 27 Member States, education grants, grants to SMEs'…). As in the past those estimates have proven to be relatively accurate, one can anticipate a EUR 5 billion shortfall at some point in 2013. Furthermore, there is an extra EUR 3 billion of bills from 2012 that the Council and the European Parliament have agreed to roll over onto the 2013 budget. Finally, every year the EU receives bills worth hundreds of millions of euros towards the end of the year, too late to honour in the same year.

Altogether, in all likelihood the 2013 EU budget as adopted today will not last twelve months. A request for additional funding could be needed as early as in September 2013.

In what way is the "Draft Amending Budget 6" linked to the 2013 budget?

The "Draft Amending Budget 6" was a request from the Commission for more funds to pay EUR 9 billion worth of bills and for which the 2012 budget had no more resources. Those bills concentrated mainly on Life Long Learning programmes such as ERASMUS, on science and research, rural development and Cohesion Policy. As it was a possibility that the Council and the Parliament agreed to postpone payments of some of those bills till 2013, that draft amending budget had an impact on the negotiations on the 2013 EU Budget.

What was the outcome of the negotiations on Draft Amending Budget 6?

The European Parliament and the Council agreed to inject an extra EUR 6 billion into the 2012 budget to pay the most pressing needs, with the rest (EUR 2.9 billion) to be paid in 2013.

For most beneficiaries such as students and businesses, this means that everything that should have been paid in 2012 will be paid in 2012. The EUR 2.9 billion postponed onto 2013 cover bills to Member States for projects that still need to be checked or completed in the 2000-2006 period. Those Member States agreed to be paid later (in early 2013).

How can the EU budget run out of money?

This is due to a regular pattern. For a couple of years, the Council and the European Parliament have adopted annual EU budgets well below the Commission's estimates despite the fact that we are nearing the end of the current 2007-2013 financial period and that therefore more and more EU funded projects launched at the beginning of the period across Europe are reaching completion.

In the past, the two arms of the budgetary authority (Council and Parliament) have agreed to roll the payment of some of those bills onto the following year. This meant that the following year's budget started the year already weakened by those bills from the previous year while it was clear that even without those bills the amounts voted would not cover all the needs for the year.

In short, there is a "snowball effect" of underfed annual budgets coupled with postponement of payments of bills.

But why can't the EU budget be reduced as Europe is in crisis and Member States are forced to adopt painful austerity measures?

Mainly because unlike national budgets, the EU budget is not about future projects to fund but past projects already completed and paid for by Member States. The EU has the legal obligation to pay its share based on the bills sent in by Member States. This could be likened to a household receiving its electricity and phone bills: even in time of austerity it simply must pay them as those bills relate to past, not future, consumption.

What is the meaning of the joint declarations signed by the Presidents of the three Institutions (European parliament, Council, Commission)?

There are three joint statements relating to both the 2012 and the 2013 budgets. (Please see Annex (1)).

The first statement is on payments for 2013. In it, the Council and the Parliament "agree on a reduction of the level of payment appropriations for 2013 as compared to the Commission's Draft Budget. They ask the Commission to initiate any necessary action according to the Treaty and, in particular, to request additional payment appropriations in an amending budget if the appropriations entered in the 2013 budget prove insufficient to cover expenditure". Furthermore, it recalls article 323 of the Lisbon Treaty stating that "the European Parliament, the Council and the Commission shall ensure that the financial means are made available to allow the Union to fulfil its legal obligations in respect of third parties ".

The second statement focuses on payment needs for 2012; it refers to "Draft Amending Budget 6", the Commission's request for extra funding in 2012 to cover bills for a range of programmes including ERASMUS, science and research, rural development and Cohesion Policy. In the statement, the Council and the Parliament acknowledge that "the additional payment appropriations authorised in the Amending Budget 6/2012 were lowered by EUR 2.9 billion with respect to the amount proposed by the Commission, and are not at the level of all payment claims received". It goes stating that the European Commission will present an amending budget in early 2013 to cover the suspended payments once the suspensions are lifted.

The third statements relates to administration costs in 2013.

Please see MEMO/12/980.

Annex 1

Full text of the three joint statements

1 Joint statement on payment appropriations for 2013

Taking into account the on-going fiscal consolidation efforts in Member States, the Council and the European Parliament, taking note of the level of payments proposed by the Commission for 2013, agree on a reduction of the level of payment appropriations for 2013 as compared to the Commission's Draft Budget. They ask the Commission to initiate any necessary action according to the Treaty and, in particular, to request additional payment appropriations in an amending budget if the appropriations entered in the 2013 budget prove insufficient to cover expenditure under sub-heading 1a (Competitiveness for growth and employment), sub-heading 1b (Cohesion for growth and employment), heading 2 (Preservation and management of natural resources), heading 3 (Citizenship, freedom, security and justice) and heading 4 (EU as a global player).

Moreover, the Council and the European Parliament urge the Commission to present by mid-October 2013 at the latest updated figures concerning the state of play and estimates regarding payment appropriations under sub-heading 1b (Cohesion for growth and employment) and rural development under heading 2 Preservation and Management of Natural Resources, and, if necessary, to present a draft amending budget. The Council and the European Parliament are aware that a draft amending budget may possibly be required as early as mid-2013. With a view to facilitate the decision on the level of payments appropriations in the context of the annual budgetary procedure, the three institutions agree to explore how to better match payment appropriations estimates under shared management with the corresponding needs.

The Council and the European Parliament will take position on any draft amending budget as quickly as possible in order to avoid any shortfall in payment appropriations. In addition, the Council and the European Parliament undertake to process swiftly any possible transfer of payment appropriations, including across financial framework headings, in order to make the best possible use of payment appropriations entered in the budget and align them to actual execution and needs.

In accordance with point 18 of the Interinstitutional Agreement on budgetary discipline and sound financial management, the Council and the European Parliament recall the need to ensure, in the light of implementation, an orderly progression of the total appropriations for payments in relation to the appropriations for commitments, so as to avoid any abnormal evolution of outstanding commitments ("RAL").

The Council, the European Parliament and the Commission will actively monitor the state of implementation of the 2013 budget, throughout the year, focussing on payment implementation, reimbursement claims received and revised forecasts, on the basis of detailed information provided by the Commission.

In any event, the Council, the European Parliament and the Commission recall their shared responsibility, as laid down in Article 323 TFEU, that "the European Parliament, the Council and the Commission shall ensure that the financial means are made available to allow the Union to fulfil its legal obligation in respect of third parties".

2 Joint statement on payment needs for 2012

The Council and the European Parliament note that the level of payments, proposed by the Commission in its 2013 draft budget, was based on the assumption that payment needs in 2012 would have been addressed with appropriations available in the 2012 budget. However, the additional payment appropriations authorised in the Amending Budget 6/2012 were lowered by EUR 2.9 billion with respect to the amount proposed by the Commission, and are not at the level of all payment claims received.

Therefore, the Commission undertakes to present at an early stage in the year 2013 a draft amending budget devoted to the sole purpose of covering the 2012 suspended claims as soon as the suspensions are lifted, and the other pending legal obligations without prejudice to the proper implementation of the 2013 budget.

To ensure sound and accurate EU budgeting, the Council and the European Parliament will take position on this draft amending budget as quickly as possible in order to cover any outstanding gap.

3 Joint statement on Heading 5 and the salary and pension adjustment

The Council and the European Parliament agree not to include at this stage the budgetary impact of the 2011 salary adjustment in the 2013 Budget. Without prejudice to Council's position in cases c-66/12, c-63/12, c-196/12 and c-453/12, they jointly request the Commission, should the Court rule in favour of the Commission and as soon as it does, to submit a draft amending budget devoted to finance, as needed, the impact of the 2011 adjustment for the institutions, including its retroactive effect on previous years and possible late interest.

The Council and the European Parliament thus commit to approve such draft amending budget as soon as possible and to provide the necessary additional appropriations without jeopardising political priorities.

Annex 2

EU Budget 2012 and 2013 per heading in EUR million

(CA = Commitment appropriations: PA = Payment appropriations)


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