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European Commission - Fact Sheet

Guide to EU Budget 2016 – Questions and Answers

Brussels, 29 October 2015

Guide to EU Budget 2016 – Questions and Answers

How is the annual budget procedure organised?

Every year the European Commission tables a draft EU budget. It proposes how to distribute the amounts under the different areas of spending (headings) according to the political priorities of the European Union and within the limits (ceilings) set by the 2014-2020 Multiannual Financial Framework, the seven-year budget cycle of the EU.

This year, the Commission tabled its initial proposal on 27 May 2015.

On that basis, the European Parliament and the Council each take a position. This year, the Council prepared its position in July and formally adopted it on 4 September 2015, while the European Parliament adopted its position in plenary on 28 October 2015.

Usually, there are differences between the positions of the European Parliament and the Council, and they engage in a negotiation process. It is known as the 'conciliation procedure'.

The negotiations are conducted by a specially convened Conciliation Committee, to which the European Parliament and the Council each send 28 representatives. The European Commission - the Vice-President in charge of the budget as well as experts from the Directorate-General for Budget - is also present. The Commission acts as honest broker, and strives to facilitate an agreement between the European Parliament and the Council.

The Conciliation Committee has 21 calendar days to agree on a budget, which both institutions should afterwards formally approve. If the Council rejects the budget, the Parliament can approves it on its own, but this requires that three-fifths of the Members of Parliament (MEPs) present vote in favour, and that these three-fifths are at least 50% of all MEPs.

This year, negotiations start on 29 October and will last until 18 November.

Within this period, the full, formal Conciliation Committee will meet twice – on 9 and 13 November. The first of these meetings takes place in the European Parliament, the second in the Council. In the meantime, the different parties exchange views informally. If the meeting of 13 November cannot arrive at an agreement, negotiations can continue until midnight on 18 November.

The Conciliation Committee was convened every year since the adoption of the Lisbon treaty in 2010. It reached an agreement in 2011 and 2013 on the 2012 and 2014 budgets respectively. It failed to reach an agreement, within the 21-days in 2010, 2012 and 2014. However, in all these cases negotiations continued and finally a deal was reached to ensure that a budget was in place for 1 January.

If the European Parliament and the Council do not find a compromise within the conciliation period, the Commission has to propose a new draft budget. The European Parliament and the Council then have to quickly find a compromise in time for the Parliament's last plenary session before the end of the year.

What happens if the European Parliament and the Council do not reach an agreement by the end of the year?

If the European Parliament and the Council do not agreeon a budget by the end of the calendar year, negotiations continue. In the meantime, the system of 'provisional twelfths' applies. This means that the costs under each chapter of the budget would be funded monthly, by one twelfth of the previous year's budget or by the relevant amount in the draft budget, whichever is less.

Although this system makes it possible for the EU to continue working, it does not allow for long-term commitments nor for funding of programmes whose implementation goes beyond a single month. So far, this system has been applied in 1980, 1985, 1986 and 1988 for up to 6 months.

What are the 'trilogues' and when do they start?

The budget 'trilogues' are meetings of the European Commission, the European Parliament and the Council, where the three institutions discuss budgetary matters.

Representatives of the three institutions take part in the meetings, which are chaired by the institution hosting the meeting. The European Commission is represented by the Commissioner in charge of budget – in the case of the Juncker Commission, Vice-President Kristalina Georgieva. The Parliament is represented by chair of the Committee for Budgets (BUDG) together with the two rapporteurs following the subject – the one in charge of the budget of the Commission and the one responsible for the budget of the other institutions and agencies. In the case of draft budget 2016, the three names are Mr Jean Arthuis (FR, ALDE), Mr José Manuel Fernandes (PT, EPP) and Mr Gérard Deprez (BE, ALDE). The finance minister (and/or the ambassador) of the country exercising the rotating presidency of the Council of the European Union is also present (currently Luxembourg, whose finance minister is Mr Pierre Gramegna. Their associates and assistants also take part in the meeting.

The trilogues usually take place three times before the start of the conciliation procedure: once, before the European Commission presents its first budget proposal; once just before the Council presents its position and once just before the Parliament votes on its position. This year, the three meetings took place in March, in July and earlier in October.

A fourth trilogue usually takes place between the two Conciliation meetings. This year, it is planned for 11 November. Additional trilogues can be called if necessary.

What is in the Draft EU budget 2016?

The draft EU budget for 2016, as amended by amending letters 1 and 2, includes commitment appropriations of EUR 154.9 billion and payment appropriations of EUR 144.5 billion. 'Commitments' refer to the funding that can be agreed in contracts in a given year (with some of the money only being paid in subsequent years), while 'payments' to the money actually paid out in that year.

The table below shows the biggest increases (well above inflation) in political priority areas such as competitiveness for growth and jobs, security and citizenship (including migration) and global action (including humanitarian aid and crisis management and European neighbourhood policy).

APPROPRIATIONS BY HEADING

DB 2016 (nominal change in % vs 2015 budget)

Commitments

Payments

1. Smart and inclusive growth:

69 748.1 (-10.5%)

66 583.2 (-0.4%)

Competitiveness for growth and jobs

18 926.4 (7.8%)

17 523.1 (11.4%)

Economic, social and territorial cohesion

50 821.7 (-15.9%)

49 060.1 (-4.0%)

2. Sustainable Growth: natural resources

62 616.1 (-2.0%)

55 377.6 (-1.1%)

Market related expenditure and direct aids

42 360.3 (-2.5%)

42 352.0 (-2.5%)

3. Security and Citizenship

4 050.0 (60.6%)

3 017.8 (56.6%)

4. Global Europe

9 031.7 (3.7%)

10 154.2 (35.8%)

5. Administration

8 932.6 (3.1%)

8 934.1 (3.2%)

Other special Instruments*

524.6 (-4.3%)

389.0 (1.2%)

Total appropriations

154 903.1 (-4.5%)

144 455.9 (2.2%)

In % of EU-28 GNI

1.04%

0.98%

Note: Other special instruments include the Emergency Aid Reserve (EAR), the European Globalisation Adjustment Fund (EGF) and the European Union Solidarity Fund (EUSF). The corresponding appropriations are considered outside the MFF ceilings for the purpose of the calculation of the margins under the ceilings for appropriations.

The draft EU budget for 2016 supports the key initiatives of the Juncker Commission, such as the Energy Union, the Digital Single Market and the European Agenda for Migration. An example is the EUR 2.5 billion of commitments for the Asylum, Migration and Integration Fund (AMIF) and the Internal Security Fund (ISF), the two main sources of funding for the measures under the EU policy on migration and security.

Is the draft EU budget for 2016 actually increasing compared to 2015?

In real terms (i.e. taking account of the impact of inflation), payments are remaining roughly constant, while commitments are going down.

Can the Commission change its proposal and do the positions of the Parliament and the Council take into account these changes?

After the Commission has tabled its initial proposal, events may occur that could prompt the Commission to change its proposal to align it with the most pressing needs. To do this, the Commission prepares a so-called "amending letter". This year, the Commission adopted two amending letters, one to reflect the outcome from the successful negotiations on the European Fund for Strategic Investments in June and a second one, to respond to the needs for more funds to address the refugee crisis and to support European farmers.

The Amending Letter 1/2016, concerning EFSI was presented in June, and so both the European Parliament and the Council were able to take account of it in their positions. The Amending Letter 2/2016, concerning agriculture and migration was presented by the Commission on 14 October, after the Council had already adopted its position on the draft budget, and when work in the European Parliament to prepare its position was already quite far advanced. These new elements will be part of the discussions during the conciliation.

MEMO/15/5942

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