The Pro-Austerity Team Just Left The EU Without A Budget For Next Year

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The battle to cut back on government spending just claimed another victim — the EU’s 2011 budget.

The EU doesn’t have a new budget for next year, due to a spat between nations bent on curtailing expansion of centralized EU power and those who want to see more. Negotiations have collapsed.

Der Spiegel:

The breakdown in talks between representatives of the EU’s 27 member states and the European Parliament means the EU is left for the time being without a budget for 2011. The whole budgetary procedure will have to start again from the beginning — a process that could take months.

“This is an unfortunate failure,” said Alain Lamassoure, the chairman of the European Parliament’s budget committee and the body’s lead negotiator in the talks, in remarks to the German news agency DPA. “But there are still a few weeks until the end of the year.”

The breakdown in talks came despite agreement on the actual figures for the 2011 budget. Both sides agreed that EU spending could only increase by a maximum of 2.9 per cent, to a total of €126.5 billion ($172 billion). The parliament had dropped an earlier demand for a 5.9 per cent increase in 2011 in response to pressure from national governments, who face budget cuts at home. The lion’s share of the budget is spent on agricultural subsidies and to support disadvantaged regions of the EU.

Britain and the Netherlands led a group of countries that took a hard-line stance on the budget negotiations. Keen to be seen as cutting back on EU spending in the light of far-reaching domestic austerity measures, British Prime Minister David Cameron had called for a limited increase or even a freeze in the EU’s budget in 2011. 

With little hope of a resolution before year-end, the EU will have to operate on a monthly funding basis, using its 2010 budget. The strain of European debt levels is showing.

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