EU Clash Over Unpaid Bills Delays Pact on Bloc’s Budget

European Union governments and the bloc’s Parliament failed to agree on spending increases for next year as they wrangled over unpaid bills, raising the prospect of a drawn-out battle over the 2015 EU budget.

The European Commission, the EU’s executive arm, must now present a new draft spending plan for 2015 and push for agreement before year end to avoid the introduction of emergency spending restrictions.

The 28-nation European Parliament is pushing for an 8.1 percent increase in EU payments in 2015, in the face of sluggish growth around the bloc, including in Germany, the region’s largest economy and a net contributor to the EU budget. Governments want a 3.7 percent increase, to bring spending “in line with budgetary constraints of the member states,” they said in a statement after a midnight deadline passed without an agreement.

The EU executive will make a revised budget proposal “in the coming days,” Kristalina Georgieva, commission vice president for budget, said in a statement today. “A lot of progress had been made but there are still some issues to resolve.”

2014 Bills

Negotiations on the 2015 budget have been complicated by being linked to bills for 2014 that the EU has not yet paid and over which the two sides must reach agreement.

“We have a snowball of unpaid bills” Jean Arthuis, a French lawmaker leading the Parliament’s negotiations with national governments, told reporters. “This is increasing year after year and we can’t continue this way because it provides arguments for Euroskeptics and Europhobes.”

Demands from the U.K. to get extra time to pay a 2.1 billion-euro ($2.6 billion) surcharge also have clouded the discussions, with some lawmakers saying that dispute should be treated as part of the wider budget debate.

While the Brussels-based commission last week put forward legislation to move back a deadline from the end of this month until Sept. 1, 2015, for Britain and eight other countries to transfer unusually high sums to the EU without being charged interest, it still requires formal approval by governments and an opinion by the Parliament.

The talks on the 2014 bills and the 2015 budget have so far been “constructive and proved to be useful for looking for a common ground,” the EU said in a statement.

The directly-elected EU assembly and the governments must reach a settlement before the 2015 spending plan can be enacted. If that doesn’t happen before the end of the year, the EU would be subject to emergency measures limiting it to using one twelfth of the 2014 budget each month.

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