EU 400bn Budget Fight

EU €400bn Budget Fight.

EU leaders continue today the heated two day summit on agreeing the EU’s budget for the next 6 years.

The yearly budget is just under €400bn per year, of which around 40% of this goes to agricultural policy, the main benefactors being France and the southern Euro nations that are in financial difficulty such as Spain and Greece.

The technology budget, the main benefactors being the UK and Germany is just around 20% of the budget.

Both the UK and Germany are united in looking for the EU to cut its overall budget instead of the 6% increase demanded as both suggest austerity in Europe should reflect austerity in many nations such as UK.

Angela Merkel, the German Chancellor, suggest negotiations are “very difficult” and the UK is looking for a rebalanced budget to increase technology development spending from around 10% of the budget to 15%.  

Our view
With 27 nations all wanting 'a piece of the pie', negotiations will be difficult as countries have their own interests.  France will want the common agricultural policy protected, UK will want technology as we lead in this side.

Eastern Europe, with the potential for being the cheaper industrial revolution powerhouse behind us will clearly want a reasonable share to develop the potential for local cheap goods rather than the huge imports we take from China.

The original budget negotiations failed in November 2012.  We expect these discussions for the EU budget for 2014-20 to be difficult and protracted although a conclusion should be reached today.