European Union cuts spending in historic deal

BruSSeLS • The European Union is to cut spending for the first time in its 56-year history after agreeing a landmark budget deal.

Spending will fall by almost 6% in 2014, compared with this year, as the continent faces an era of unprecedented austerity. The cut equates to a saving of nearly €10-billion.

The deal was struck by José Manuel Barroso, the European Commission president, following talks with MEPs. They agreed to back down from blocking or delaying its passage.

It represents a victory of sorts for U.K. prime minister David Cameron, who secured an initial agreement to cut EU spending at a summit in Brussels in February.

“This is a good deal for Europe, this is a good deal for European citizens, this is a good deal for the European economy,” Mr Barroso said.

Although the EU’s overall spending will fall, the cost of bureaucracy in Brussels will continue to grow.

Spending on the EU’s “civil service” will rise by 1.5% next year, with the cost of final-salary pensions for European officials to blame for much of the increase.

That stands in stark contrast to the deep cuts announced for Britain’s civil service. Member states had argued that it made no sense to raise EU spending when most countries were having to impose unprecedented austerity measures.

The Prime Minister said Thursday: “What this council should be about, is doing in Brussels what we are doing in Britain, getting control of spending, making sure we live within our means and making ourselves more competitive.”

The agreement covers the EU’s budget from 2014 until 2020. Spending will be reduced from €144.5-billion — in 2013 to €135.9-billion next year, a cut of 5.8%.

Martin Callanan, the leader of the European Conservatives, said: “This is a historic cut, but we still have enormous amounts of fat that can be trimmed.

“Administration is normally the first thing to be cut in any government’s budget. Only in the EU would it increase at a time of belttightening.”

Among the increases is a 3.2% rise in the cost of Baroness Ashton’s

This is a historic cut, but we still have enormous amounts of fat

External Action Service, despite her promise to run it as “budget neutral”. Britain’s Foreign Office, by contrast, faces an 8% cut.

MEPs will also get a 1.7% increase in their budget and there is a 3.8% rise in spending on the EU’s 54 quangos.

Peter MUHLY / AFP / GETTY IMAGES A sign outside a café in Dublin makes humorous reference to last year’s budget. With new figures showing that the economy is contracting, Dublin’s boom is one of the few bright spots for Ireland.