The EU budget

Slide1 : EU Budget Financial perspective Main characteristics of EU budget Budget revenue Budget expenditure Budgetary procedure EU budget and Czech republic


Financial perspective : Financial perspective = forms the framework for Community expenditure over a period of six years indicates the maximum volume and the composition of the foreseeable Community expenditure is established by the European Parliament, the Council and the Commission is not a multiannual budget the aim of financial perspective: to stabilise the annual budget to strenghen budgetary discipline to keep the total increase in expenditure under control


Slide3 : Financial framework 2000 – 2006


Budget : Budget = financial plan which shows sources of revenue and areas of expenditure in the coming year The EU budget is not allowed to be in deficit ceiling of the budget - 1.24% of the Union's gross national income can not be compared to a national budget redistributive function


Slide5 : Main principles of EU budget: Unity Universality Equilibrium Annuality Specification A common unit of account


BUDGET REVENUE : BUDGET REVENUE System of OWN RESOURCES: = These are transfers made by the Member States to the Community budget to cover EU expenditure. The fact that the Community budget is funded from own resources makes the EU financially independent. The total of all own resources may not currently exceed 1.24% of the aggregate gross national income (GNI) of the Member States.


Own resources : Own resources Traditional own resources: Customs duties Agricultural levies Contributions based on value tax added (VAT) GNP – related contributions


Traditional own resources : Traditional own resources Agricultural duties and sugar levies: these consist mainly of the customs duties on imports of agricultural products from non-member countries introduced in 1962 Customs duties: are collected on imports from third countries at the external borders. introduced in 1968


The VAT resource : The VAT resource introduced in 1970, came into use in 1980 calculated on the VAT base of each member state (= the value of the total consumption of goods and services in a country) the importance of this resource has declined and is set do decline further


The fourth resource : The fourth resource introduced in 1988 an "additional" resource – it is used to top up any revenue shortfall based on a forecast of each member state´s gross national income


Slide12 : The structure of revenue budget 2006


Revenue by members (2005) : Revenue by members (2005)


Net contributors x net beneficiers : Net contributors x net beneficiers Net contributors – they pay more to the budget than they receive from the budget Germany, France, UK, the Netherlands, Sweden, Austria, Italy, Finland,… Net beneficiers – they pay less than they receive from the budget all new member countries, Spain, Portugal, Greece, …


UK rebate : UK rebate UK joined in 1973 – poor country imbalances: small agricultural sector large share of import from non-member countries large net contributor resolution – 1984 Fontainebleau – rebate around two-thirds of its net contribution


Slide16 : Budget expenditure Agriculture Structural operations Internal policies External actions Administration Pre-accession aid Reserves


1. Agriculture : 1. Agriculture historically the most resource-consuming of Community policies It consumed about 42 % of the European Union´s expenditure in 2006 (51,05 billion euro) Objectives of Common Agricultural Policy: agricultural´s competitiveness guarantee the agricultural population a fair standard of living ensure reasonable prices for consumers


2. Structural policy : 2. Structural policy has become a major objective in the building of Europe. EUR 44 billion of its budget for 2006 (more than 35 %) the aim of structural policy is to: reduce inequalities in wealth distribution across the regions improve the employment situation foster the harmonious development of the various regions of Europe protect and improve the environment


Slide19 : Financial instruments to narrow the development disparities among regions and Member states Structural funds European Regional Development Fund (ERDF) European Social Fund (ESF), European Agricultural Guidance and Guarantee Fund (EAGGF) Financial Instrument for Fisheries Guidance (FIFG) Cohesion fund


Objectives of structural policy : Objectives of structural policy Objective 1 - to promote the development of the poorest regions and support the modernisation of their economic structures Objective 2 - to support the economic and social conversion of areas in difficulty Objective 3 - to support the adaptation and modernisation of education, training and employment policies and systems


Internal policies : Internal policies 7 % of the budget. The amount is 9,3 billion eur in 2006


External Policies : External Policies 5 per cent of budget 5,5 billion euro in 2006 humanitarian aid, food aid, development assistance in non-member countries throughout the world. Middle East peace process, the reconstruction of Kosovo, the European initiative for democracy and human right worldwide, international fisheries agreements Common Foreign and Security Policy


Pre-accession aid : Pre-accession aid 3 per cent of budget The aid for nations on the road to membership SAPARD - to modernise agriculture ISPA – to establish transport and environmental structures PHARE – to adapt and modernise Community standards and administrations.


Administration : Administration 6 per cent of budget – 6,6 billion euro in 2006 cost of running the European Commission and all other European institutions = salaries, buildings and equipment Taken together, they employ about 39 000 people


New structure of the financial framework 2007-2013 (million euro, 2004 prices) : New structure of the financial framework 2007-2013 (million euro, 2004 prices)


Budgetary procedure : Budgetary procedure = legislative process with the three main EU institutions – Commission, Parliament, Council Commission prepares a preliminary draft budget Parliament and Council take a main decisions: Parliament can amend non-compulsory expenditure Council can amend compulsory expenditure involves several phases – each with precise timing to ensure that the new budget is adopted before 1st January


Slide29 : Budgetary procedure Commission - preliminary draft budget (by 15 June) First reading by the Council (july), adoption of the draft budget by qualified majority First reading by the EP (october). The EP can: Approve the budget or remain silet: budget stands as finally adopted: end of procedure Propose modifications to compulsory expenditure or amend non-compulsory expenditure Second reading by the Council (late Oct-Nov): Council reacts to changes introduced by EP. If no agreement in non-compulsory expenditure, modification of EP´s proposal by qualified majority and budget sent back to EP Second reading by the EUP (late Nov-Dec) and either: Adoption of the budget by a majority of Members and three-fifths of the votes cast Rejection by an absolute majority of Members and two-thirds of votes cast


EU budget and Czech Republic2004 – 2006million euro : EU budget and Czech Republic 2004 – 2006 million euro Czech Republic received from EU budget:


EU budget and Czech Republic2004 – 2006milion euro : EU budget and Czech Republic 2004 – 2006 milion euro


Czech Republic : Czech Republic = net beneficier


Slide33 : The end Thank you for your attention !