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  • Jul 10, 2014
  • Updated: 11:10am
BusinessEconomy

EU nears deal on budget cuts at marathon summit

PUBLISHED : Friday, 08 February, 2013, 3:34pm
UPDATED : Friday, 08 February, 2013, 3:34pm

EU leaders edged on Friday towards a compromise on the bloc’s budget for the rest of the decade at an all-night summit, Britain pushing big spending cuts while France fought for funds to slash record European unemployment.

Fifteen hours after the meeting began formally in Brussels, European Union president and summit chair Herman Van Rompuy put new figures to the leaders of the 27 member states that would mean a 908.4-billion-euro (HK$9.5 trillion) ceiling for actual payments, several EU sources said.

There were still hours of hard bargaining expected, with a bid to add a “flexibility” margin worth another 12 billion euros (HK$125.5 billion) potentially -- and an absolute ceiling of 960 billion (HK$10.0 trillion) for spending “commitments” between next year and 2020.

The contours of the deal, designed to satisfy cash and presentational needs, were thrashed out during multiple mini-meetings, but leaders still had to settle final arguments about exactly where tens of billions slashed from figures drawn up in November would be found.

The leaders were “working for a deal,” Van Rompuy said, with Italy too battling hard to mitigate cuts as Prime Minister Mario Monti fights an election this month -- and yet another comeback bid by Silvio Berlusconi -- on a pledge to kickstart job creation and growth.

German Chancellor Angela Merkel remained largely above the fray, with the dispute narrowing to a handful of billions of euros -- and how to spend them.

Britain and France, whose leaders only met face-to-face in the early hours, were the main protagonists in a battle over spending priorities allowing the axe to be taken to a budget initially proposed at more than one trillion euros.

The new figures would mean a first-ever fall in the EU’s budget with the previous seven-year tallies higher in absolute terms.

The talks dragged due to a North-South split on the point of the EU budget, with Mediterranean leaders tending to want Brussels to support long-term moves to stimulate economic growth and so bring down joblessness, currently above 26 million.

Cameron, for all he has risked isolating himself with a decision to hold a referendum on Britain’s membership of the EU, had placed his cards on the table immediately.

He said: “When we were last here in November, the numbers that were put forward were much too high. They need to come down -- and if they don’t come down, there won’t be a deal.”

The president of the European Parliament, Martin Schulz, nonetheless said lawmakers would have the final say -- arguing before the breakfast bid to break the deadlock that “backward looking” figures offered “the worst of all worlds”.

Schulz has said lawmakers are ready to throw out any agreement they think stunts Europe’s ambitions for the next decade.

According to one well-placed diplomat, Monti also questioned how far EU leaders should bow to London’s demands.

“We cannot accept a deal dictated by Great Britain -- a country we can’t even say with certainty will still be in the EU in 2017,” the Italian said at the negotiating table.

Before the summit began, Merkel had spoken in ultra-cautious terms about a deal, while Hollande said cuts that did not protect support for farmers and investment for growth would not win his backing.

The European Commission initially wanted a 5.0 per cent increase in EU commitments to 1.04 trillion euros (HK$10.9 trillion), about one per cent of the EU’s total gross domestic product, a modest proportion compared with national spending levels.

Most of the EU’s budget goes to the Common Agricultural Policy to support farmers, and to Cohesion Funds, money spent to help new members catch up economically with richer partners.

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