EU inflation-busting budget criticised


The Government launched a new assault on euro-spending today as Brussels called for an inflation-busting budget for next year.

The European Commission said a rise of nearly 7% for 2013 was needed to pay bills for EU projects already signed off by member states.

One official said: "It's the difference between the commitments made on the EU budget, and the payments needed to honour them.

"Member states have been using the credit card and have left the Commission to pay the bill."

But a UK spokesman said: "The UK has been consistent that at a time when member states are tightening their belts, the EU must show budgetary restraint."

The UK, Germany and France have led a months-long fightback to force Brussels to apply national-style belt-tightening to the euro-budget.

Prime Minister David Cameron has been calling for an effective freeze on EU spending during the economic crisis.

That means nothing more than inflation-linked annual rises in the amount of cash the 27 EU counties between them provide to run the EU's financial programmes, from farm subsidies and regional grants to development aid spending.

A similar battle last year saw the Commission's plans pegged back to an inflation-only rise, but Brussels says it cannot act as budget paymaster if member states do not provide enough cash this year to pay for spending commitments already made and now due for payment.

The Commission's plans would increase the EU budget to about £130 billion next year, of which the UK's share is nearly 12.5%.

In forthcoming haggling over the final budget figure, the Commission will argue that the EU budget cannot be equated with national budgets.

Officials point out that euro-spending is fed back to governments to finance major projects including road and rail networks across Europe, social regeneration of poor areas and to tackle "pan-European societal challenges" such as climate change, or the ageing society.

These are long-term issues for which financing by the Brussels purse replaces cash lost at home through austerity measures.

A Commission statement said Brussels was "fully aware" of the current economic situation, insisting the budget plan was "fully-geared to use its funding potential for growth and jobs in line with the Europe 2020 strategy".

The euro-budget is equivalent to about 1% of combined EU member state national wealth.

It said: "Though relatively small in size, it is an important tool in furthering the goals of European integration. Directly or indirectly, all European citizens benefit from some activity funded from the EU budget, be it in the form of safer food on our plates, better roads, or the guaranteeing of our fundamental rights."

Apart from anything else, says the Commission, failure to agree a rise of 6.8% next year will leave Brussels about £160 billion short of meeting all the financial commitments already made to recipients of EU funds next year.

But former EU chief accountant Marta Andreasen - now a UK Independence Party MEP - said a 6.8% increase was "cloud-cuckoo land stuff".

She said: "Has the European Commission finally completely lost its grip on reality?

"The Commission has the gall to ask EU citizens for more money, assuring them that the new 2020 Agenda will lead them to the promised land."

She added: "The budget rise demand is selfish, unrealistic and deeply insulting to taxpayers who have not seen a single return on their investment. Instead they are subjected to huge waste, dodgy accounting and vanity projects."