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European Council

A viable EU budget for the future

Chancellor Angela Merkel has arrived in Brussels for the meeting of the European Council. Deliberations are to focus on the seven-year financial framework for the European Union. The Chancellor declared she would do everything to achieve an agreement.

Angela Merkel gives a statement on her arrival in Brussels Chancellor Angela Merkel was calmly confident at the start of the EU summit Photo: Bundesregierung/Denzel

The 27 heads of state and government of the European Union are meeting to deliberate the EU’s multiannual financial framework (MFF). When the European Council met in November 2012 no agreement was reached, but this meeting was an important milestone on the way to achieving a viable EU budget.

Germany wants an agreement

On her arrival in Brussels, Chancellor Angela Merkel pointed out that Germany would be doing everything possible to ensure that the meeting is a success. The Chancellor said she was prepared to "work hard" for a unanimous decision.

"I cannot say at this stage whether or not we will manage. The positions are still very divergent." Germany would be doing all it could, "to achieve an agreement of this sort," said the Chancellor. "Today, as we face economic uncertainty and high unemployment, it is vitally important to have a sound framework for planning." It is important to make good use of the funds available and to ensure solidarity between net contributors and recipient states, she continued.

Signal of consolidation

For the German side it is important that not only the budgets of member states but also the multiannual financial framework of the European Union itself make it quite clear that budget consolidation is taken seriously. This applies especially to administrative costs. It must also be seen that the economically weak member states depend on EU financial commitments, and that they need certainty on this point to allow them to plan realistically.

The framework of reference is the current multiannual financial framework of the European Union. The German government considers that one per cent of member states’ gross domestic product would be an appropriate contribution level, subject to negotiations.

Europe must become more competitive

The multiannual financial framework for the coming seven years should also be geared more specifically to generating competitiveness, growth and employment.

In her video podcast the Chancellor explained that, "Germany is one of the major net contributors within the European Union. And that is why it is of paramount importance to us that the available funds are used so that they generate a genuinely more competitive and more effective European Union, within which the economic levels of all member states gradually converge of course."

The President of the European Council, Herman Van Rompuy, announced shortly before the meeting, that a billion-euro programme to tackle youth unemployment in Europe would be on the table for discussion at the Council meeting.

Impetus for trade

The European Council will also be looking at trade. The European Union is very much interested in free and fair world trade, especially with strategic partners including the USA. This is important for economic growth and for jobs within the EU.

In terms of foreign policy the European Council will be looking at developments in the Arab world and at the partnership between the EU and these states. The situation in Syria and in Mali will be particularly important points on the agenda.

At the start of the meeting, the heads of state and government will meet with the President of the European Parliament, Martin Schulz, for talks. After the “family photo” the first working session will commence, to be followed by a working dinner.

Deliberations will continue on Friday 8 February with a second working session.

The multiannual financial framework of the European Union (MFF) is the central planning instrument for the use of EU funds. This makes it the foundation for realising the medium-term goals of the European Union. Since 1992 it has been drawn up for a seven-year period, and is the basis on which the EU’s annual budget is produced. The MFF places a ceiling on spending over the period covered and puts a cap on spending in each major expenditure category. It thus provides the political and budgetary framework within which resources and investments can be targeted and used as required. The current multiannual financial framework for the period 2007 to 2013 is worth almost 1,000 billion euros, of which Germany pays about 20 per cent.

 

Feb 07, 2013

Further Information

Federal Ministry of Finance

Meeting 7-8 February 2013