New budget sets stage for EU summit row

>>BRUSSELS: The stage was set on Friday for a fierce budget battle for this week’s extraordinary European Union summit, with a trillion-euro plan that meets no-one’s demands.

The summit’s host, European Council president Charles Michel, is seeking a compromise to clear a path to agreement on a seven-year budget framework for the bloc.

But the already fraught process has become more difficult as Brussels tries to plug the multi-billion-euro hole left in its finances by Britain’s Brexit divorce.

Initial reactions to the document in Brussels diplomatic circles suggested that this Thursday’s summit will devolve into a fierce argument between member states that will likely end without agreement. The richer northern countries that are net contributors to EU programmes want to cap spending at around 1% of the union’s total GDP.

But the main parties in the European Parliament have demanded 1.3% and have threatened to block any proposal they feel won’t cover their ambitions.

Late Friday European parliament head David Sassoli called Mr Michel’s proposal “unsatisfactory”.

“It risks leaving Europe lagging not only behind its own objectives, but also other actors on the international scene, such as China and the US,” Mr Sassoli added.

For its part, the EC has proposed a budget of 1.11% of economic output to fund EU president Ursula von der Leyen’s ambitious “Green Deal” agenda. Ms Von der Leyen has warned UK’s departure will leave the union short of 75 billion euros (2.5 trillion baht) over the seven-year budget period, and she wants a quarter of that ring-fenced for the fight against climate change. Mr Michel’s compromise proposes a budget capped at 1.07% of the bloc’s GDP, estimated at 1.1 trillion euros over seven years.

This number is close to the figure arrived at last year during the six-month Finnish presidency of the union — a figure that member states have already rejected. There will be cuts in agricultural spending, which France will not like; and in regional aid, riling newer members. Net contributors Germany, Denmark, the Netherlands, Austria and Sweden would not see their rebates abolished as they had feared, but they will be reduced over the seven-year-period.