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Budget

Official Journal of the European Union (Photo: www.ec.europa.eu/budget)

The budget is a set of proposals to allow the spending of public money and to  tax citizens and companies to provide the requisite resources. 

The EU budget is drafted by the European Commission and then decided by the Council of Ministers and the European Parliament.

The ministers in the Council have the last word on so-called compulsory expenditures or obligatory spending, which is mainly spent on the agricultural budget.

The European Parliament has the last word on non-obligatory or non-compulsory expenditures, covering most other purposes.

The income side of the budget is decided solely by the Council through customs duties, agricultural levels, fines, 1% of the VAT base, plus a GNP-related contribution.

There is a ceiling on total EU income (own resources) which must be below 1.24 % of the total GNP. The budget can only go beyond 1.24 % by unanimous agreement among member states.  

In 2007 the EU budget of expenditures reached € 114 billions.  Of this 45 % went to agriculture and 37 % to the structural funds. 63 % of the budget came from member state contributions, 16 % from VAT and 13 % from customs duties. The accounts are audited by the European Court of Auditors. For 13 years in a row the Court  has declined to give a general endorsement approving the validity of the underlying transactions. Then as regards the accounts from 2007 it has been reported to have given that endorsement.

Still, 54 % of the accounts were not specifically approved. It looks as if the Court of Auditors  has been under political pressure to give a general endorsement of the accounts even if its concrete criticism of the different chapters look  like previous years where the Court refused to give a  general endorsement.The Court  of Auditors raised most queries  in relation  to the structural funds, where they did this in relation  to 54 % of the projects they investigated.  

The Court estimated that that 11% of aggregate expenditure should not have been made. This amounted to €4.6 billion in 2008.  In April 2009 the European Parliament approved the accounts with their many omissions and mistakes. The Council of Ministers always approves the accounts,s eemingly with little or no  question,  while there is at least some critical discussion of them  in the European Parliament before their approval. 

The Lisbon Treaty from 2009 abolished the distinction between compulsory and non-compulsory spending and has given the European Parliament the last word on all spending, apart from that on agriculture. The Council will have the last word on the size of EU income and its sources. 

Notes

- Commitments are the amounts which can be spent (authorised) in any one year. Here we have only shown the main commitment categories as presented in the official EU Budget 2007.

- Payments are the amounts which may actually be paid in the year.

- The budget always has these two different columns.

Links

http://ec.europa.eu/budget/index_en.htm

See also pdf file on Budget, budgetary control and fraud: http://www.euabc.com/upload/pdf/budget.pdf

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