Budget of the European Union

The purpose of the budget of the European Union is to give to the Union the means of following its policies. It is resulting from the contributions of the Member States.

Basic principles

The budget of the Union rests on five great principles :

the yearly recurrence , which means that the receipts and the expenditure are voted for a Exercice running from January 1st to the one year December 31st;

the balance , which means that the budget cannot be Déficit surface or Excédent surface. However, of the supplementary or amending budgets (Br) are possible;

the unit and the budgetary truth , which provides that the whole of the expenditure and receipts are gathered in only one budgetary document;

the universality (or principle of nonassignment ), which means that the receipts should not be affected with precise expenditure (a Member State cannot require to affect its participation in a particular policy);

the speciality which wants that each credit is used for it for what it was affected;

The European Union also respects an engagement of financial good management . That implies a management carried out with economy , effectiveness and efficiency .

NB: since 1999, the budget of the EU is established and carried out in euro .

Procedure of installation

The broad outlines of the budgetary mechanisms of current the European Union were defined by the treated of Paris in 1951 and by the the Treaty of Rome in 1957. They were however altered many times, in particular in the beginning of the year 1970, when the power of the Parliament was widened. Since 1988, the budget of the Union is established according to a multiannual financial framework. This framework is called Financial perspectives . It fixes the ceilings of the expenditure. There exists also an annual budget.

The preliminary draft is initially worked out by the European commission which then transmits it to the Conseil European Union. After discussion and correction, the preliminary draft becomes draft budget and is transmitted to the the European Parliament. This last can propose to modify the distribution of the “nonobligatory” expenditure before voting and adopting, in the majority absolute, the budget.

Budget revenues

Contribution by types

The European Union takes itself no tax. It owes its receipts with the contribution of the whole of the Member States. One distinguishes three great types of receipts:

the rough National revenue (RNB), contribution imposed in each state to the standard rate and uniform of 0,73% of the RNB . In the budget 2006, that represented a sum of 81,2 billion euros (72,1% of receipts).

the levy on VAT result from one transfer to the community of a portion of received by the Member States. In 2006, the whole of these taking away rose to 15,9 billion euros is 14,1% of the total revenues.

the customs duties are perceived at the borders external of the Union on the imports coming from third country at the community. This resource represented 12,9 billion euros in 2006 (11,5%).

A minority share of the receipts of the European Union comes from the unutilised amounts of the previous years, of the participation of third country in certain program of the Union or the agricultural levies perceived on the agricultural product imports cover by the CAP (common Agricultural policy). The sum of these some bits represents nevertheless 11,3 billion euros.

However , the share of the resource " VAT " in the receipts of the EU tendency has rather to decrease with the profit of the resource " RNB ". This tendency was wanted by the heads of state and government gathered at the Summit of Berlin in 1999. December 19th, 2005, the decision was made to continue this tendency.

In 2006, the receipts of the European Union rose to 121,3 billion

Contributions by Member States

The contribution of each State is proportional to its richness and its level of development. Thus, the sum of the contributions of Germany, of France, of Italy and the United Kingdom represent almost two thirds of the total revenues of the Union. Indeed, Germany takes part (in 2006) to a total value of 20,56%, France with 16,43%, Italy with 13,70% and the United Kingdom with 12,36%. Spain contributes as for it to a total value of 8,93%.

Let us note that the United Kingdom profits since 1984 from a reduction from its contribution. The caused losses (5,7 billion euros in 2006) are compensated by the assumption of responsibility of known as the " reduction britannique" (or " correction britannique") by the other Member States. France is moreover the first contributor of this correction, since it takes responsibility for its 1,6 billion euros. This reduction had been granted to one time when the United Kingdom received largely less common policies that it did not contribute to it.

NB: A State which pours more with the Union that it does not receive from the Community policies is called contributor Net .

The expenditure of the budget

the expenditure of the EU for the year 2006 rose to 121,2 billion euros , distributed as follows:

the agricultural expenditure of market (the CAP) represent an amount of 42,9 billion euros. They cover the assistances with the farmers and the expenditure of intervention of market carried out thanks to the Common Organizations of Market (OCM).

the expenditure of cohesion-prosperity (or " policy régionale") constitute the second expenditure of the Union with 39,8 billion euros in 2006. The purpose of they are to level the inequalities within the communities and to support regional development.

With 11,8 billion euros of credit in 2006, the expenditure of rural development try to diversify the activities in the countryside and to improve the living conditions in rural environment. They are sometimes called " second pillar of PAC".

the expenditure of competitiveness relate to the assistances with the formation (purse Erasmus and Leonardo), research and the investments in the great energy and grid systems. That represents in 2006 an expenditure of 7,9 billion euros.

the expenditure of development assistance and humanitarian aid represents as for them an envelope of 5,4 billion euros.

The remainder of the expenditure relates to the general and administration expenses, the environment, the citizenship and justice for an entire amount of 10,5 billion euros.

The debate on the budget

The debate relates at the same time to the amount of the receipts, which implies a " force frappe" more or less high of Union and on distribution of expenditure, which results from the idea that each Member State is done of what the Union must do, of what must be its strategy, of what must be its priorities.

Another aspect important is purely financial. It is a question for each Member State of calculating what he gives in contribution taking into consideration what he receives (thanks to the structural policies that are the CAP and the regional policy in particular).

The financial perspectives 2007 - 2013 were adopted.

A new debate on the future of the European budget was launched: September 12th, 2007 the European commission presented a document of discussion detailing the main subjects which structure this debate. The Commission invites the public to deliver its opinion on these subjects: Which are the challenges with which Europe will be confronted in the future and how the European budget must it help to raise them? To reform the budget, to change Europe

References

Budget of the European Union, financial perspectives 2007/2013.

See too

Economy of the European Union

Site '' All Europe

Site financial Programming and Budget of the European commission

Special folder on the European budget, site of the European Parliament

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