EU Parliament Members Threaten to Reject Budget Accord

Leading members of the European Parliament threatened to veto the seven-year budget agreement reached by government heads 10 days ago, seeking more money for Europe as they prepare for negotiations on a final deal.

The European Union’s national leaders set the bloc’s budget for 2014-2020 at 960 billion euros ($1.3 trillion) during a Feb. 7-8 meeting. The sum, down from an original proposal of 1.047 trillion euros and less than the 994 billion euros committed in the current budget cycle, would mark the first shrinking of the EU’s “Multiannual Financial Framework.”

“I am disappointed,” Joseph Daul, floor leader of the European People’s Party, the 27-nation EU assembly’s biggest political group, said during a budget debate today in Brussels. Guy Verhofstadt, floor leader of the pro-business Liberals, the third-biggest faction, said: “This is not an MFF that the Parliament can accept.”

The EU’s seven-year budget guidelines, traditionally a tussle between richer nations that are net contributors and poorer countries mainly in eastern and southern Europe, are a gauge of the bloc’s political mood and coherence. Regional and agricultural aid soaks up around four-fifths of EU expenditure, funding everything from transport networks to farmers’ incomes.

European spending is about 1 percent of EU gross domestic product compared with national spending in the bloc that is around 50 percent of domestic GDP. The debate over 2014-2020 EU spending has taken on added significance as the bloc seeks to contain the three-year-old debt crisis that has threatened to break up the 17-nation euro.

Deficit Goals

The accord struck by EU government leaders came at a gathering that lasted 25 1/2 hours and followed a failed attempt in November. The richest EU countries including Germany and the U.K. insisted on a reduction, saying it would be consistent with efforts by national governments to narrow their budget deficits.

EU Parliament members have argued that European expenditure is a collective investment tool that becomes more important during a time of national austerity. The assembly must approve the 2014-2020 spending plan along with national governments, which finance 70 percent of the EU budget.

EU President Herman Van Rompuy, who chaired the meeting at which national leaders reached their accord and attended today’s debate in the Parliament, urged the 754-seat assembly to give its support “swiftly.” A failure to endorse a 2014-2020 spending program would lead to a rollover of the 2013 budget.

‘Major Setback’

“That would be a major setback,” Van Rompuy said. “Big projects depend on a longer-term perspective.”

Verhofstadt, who like Van Rompuy is a former Belgian prime minister, raised the prospect of the EU Parliament withholding any approval until after the assembly holds elections in May or June 2014.

“The only solution is to renegotiate everything,” Verhofstadt said. “Try to reach an agreement within two years on a new financial framework for the EU that is truly future-oriented.”

Jose Barroso, president of the European Commission, the EU’s executive arm, which made the initial proposal for higher spending by the bloc in 2014-2020, predicted tough talks for a deal that the Parliament will endorse.

“It’s going to be a difficult negotiation, I am sure,” Barroso said while sitting beside Van Rompuy during today’s debate.

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