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The Budget

The Budget. Repetition. The Budget. 1. Expenditures. The size of the budget is relatively small. Around 1 % of the total Gross National Income of the EU and 2.5% of public expenditures of MS Reason: EU policies are mostly regulative and not distributive or redistributive.

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The Budget

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  1. The Budget Repetition Asst. Prof. Dr. Alexander Bürgin IUE

  2. The Budget 1. Expenditures Asst. Prof. Dr. Alexander Bürgin IUE

  3. The size of the budget is relatively small • Around 1% of the total Gross National Income of the EU and 2.5% of public expenditures of MS • Reason: EU policies are mostly regulative and not distributive or redistributive Asst. Prof. Dr. Alexander Bürgin IUE

  4. Structure and Ceiling for the period 2007-2013 Asst. Prof. Dr. Alexander Bürgin IUE http://ec.europa.eu/budget/budget_glance/what_for_en.htm

  5. http://ec.europa.eu/budget/index_en.htm Asst. Prof. Dr. Alexander Bürgin IUE

  6. CAP-expenditures are the biggest part of the EU-budget • Reasons: • Agriculture Policy with great transfer of financial responsibility from national budgets to EU budget (used for price gurantees and payment of direct income suppport) • One of the oldest EU-policy, lots of MS reluctant to downsize CAP • CAP-reforms led to a reduction from 70% (1980s) to 45 % (mid-1990s) imbalance between CAP and other (more important) policy areas still existent Asst. Prof. Dr. Alexander Bürgin IUE

  7. Stimulating growth has become an important part of the budget • Sustainable growth has become one top-priorityy of the Union. • The EU economy needs to be more competitive and less prosperous regions need to catch up with the others. • Over the period 2007–13, out of every euro spent from the EU’s annual budget, eight cents will go to make the EU more competitive. Asst. Prof. Dr. Alexander Bürgin IUE

  8. Faster funding for Europe's regions • Funding for cohesion in 2009: €48.5 billion for Europe's regions (a 2.5% rise on 2008). • Out of every euro spent, 36 cents will go to such cohesion activities. Asst. Prof. Dr. Alexander Bürgin IUE

  9. http://ec.europa.eu/budget/reform/budget_glance/how_managed_en.htmhttp://ec.europa.eu/budget/reform/budget_glance/how_managed_en.htm Asst. Prof. Dr. Alexander Bürgin IUE

  10. The Budget 2. Revenues Asst. Prof. Dr. Alexander Bürgin IUE

  11. The revenues of the EU are mainly national contributions • The revenues of the EU consists (2006) of: • Common Customs Tariff duties and other duties stemming from trade with non-members (11,5% of EU Budget) • Agriculturl levies for non-members designed to increase import prices to EU-levels (1,2%) • A percentage rate to the VAT (14%) • Contributions of the MS based on their GNI (72%) (larger states = largest gross contributors, Germany as largest net contributor) Asst. Prof. Dr. Alexander Bürgin IUE

  12. Where does the money come from? http://ec.europa.eu/budget/budget_glance/where_from_en.htm Asst. Prof. Dr. Alexander Bürgin IUE

  13. The Budget 3. Budgetary Decision Making Asst. Prof. Dr. Alexander Bürgin IUE

  14. The Financial Perspective constrains the annual budget procedure • The financial perspective was introduced 1988 after an interinstitutional agreement on Budgetary Discipline between EP, Council an Commission • Purpose of financial perspective • As a several year programm it allows the EU to use funds in a more ordered way • By specifiying ceilings on all categories of EU expenditure it imposes discipline • By restricting the annual budget procedure it helps to avoid conflict Asst. Prof. Dr. Alexander Bürgin IUE

  15. The process leading to the financial perspective is highly political • Reasons: • Decisions are taken at the highest political level at the European Council acting by unanimity • Differences reflecting the national economic neeeds and preferences • Differences are sharpened by the fact that outcomes are expressed in numerical figures • Net contributors try to reduce their share Asst. Prof. Dr. Alexander Bürgin IUE

  16. http://news.bbc.co.uk/2/hi/europe/4492714.stm Asst. Prof. Dr. Alexander Bürgin IUE

  17. The influence of EP and Commission on the financial perspective is limited • The EP is not a direct participant in the main decision-making process but its approval of the financial perspective is required • The Commission structures the negotiation with ist initial proposals Asst. Prof. Dr. Alexander Bürgin IUE

  18. In the annual budget procedure Council and EP jointly constitute the budget authority • The preliminary draft budget of the Commission has ist first reading in the Council • The EP can propose amendments to the Council draft • Before Lisbon Treaty:The Council has the last word on compulsory expenditures (can reject EP amendments) - EP has the last word on non-compulsory expenditure (in the framework set by the financial perspective) Asst. Prof. Dr. Alexander Bürgin IUE

  19. The Lisbon Treaty increased the budgetary power of the EP • Current distinction between compulsory and non-compulsory expenditure disappears • Parliament and Council decide together on whole EU budget (previously Council had last say on compulsory expenditure • Financial perspectives will be legally binding • A single reading followed by work in a conciliation committee replaces two readings in both Council and EP Asst. Prof. Dr. Alexander Bürgin IUE

  20. Assessment of EPs budgetary competences • Revenues:No influence on the revenue-side of the budget Revenues • Financial Perspective: political agreement between MS – but EP has to approve the FP • Annual budget: EP power constrained by expenditure ceilings and compulsory expenditures – but: EP can reject the budget Asst. Prof. Dr. Alexander Bürgin IUE

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