By Martin Banks - 7th February 2013
“Europe’s leaders are once again wrangling over the EU’s inflated budget
A new report says the EU's long-term budget could be cut by as much as 50 per cent.
As European leaders gathered in Brussels on Thursday for a second attempt at agreeing the EU's budget for the next seven years, the report's author said the EU's proposals "have failed to respond adequately to the economic crisis".
The report, published by the New Direction think tank and authored by Lithuanian economist Kaetana Leontjeva, proposes a radical alternative budget cutting overall costs by 52 per cent.
According to Leontjeva, the EU should be funded by a simplified revenue stream based on member states' economic output, while shifting the focus of spending to trans-European infrastructure and energy networks.
Tom Miers, director of New Direction, said, "Europe's leaders are once again wrangling over the EU's inflated budget. What they really need is to think big - or rather small - and work out what the EU budget is really for.
"A lot of the money is spent on vested interests and actually harms the EU and its citizens. This study brings some clear thinking on where the budget works, where it doesn't, and how we could save a lot of money."
Meanwhile, the Party of European Socialists president Sergei Stanishev said he "cautiously welcomed" the announcement by EU council president Herman Van Rompuy that Thursday's summit will "dedicate billions to tackling youth unemployment, particularly in the hardest hit regions".
With speculation mounting on the likely outcome of the meeting, various groups and NGOs have been quick to line up to highlight the spending priorities they believe should be considered at the two-day summit.
Jürgen Thumann, of BusinessEurope, which represents business groups at pan-EU level, urged the summit to "focus on enhancing Europe's long-term growth and competitiveness".
He said, "Europe needs a budget which puts proper emphasis on research and innovation, new programmes for trans-European infrastructures and gives visible support for SMEs."
Meanwhile, the leading charity Oxfam said it expects the summit to reach a "compromise" on the EU long-term budget at the second time of asking. A similar attempt to broker a deal last autumn broke up without agreement.
But Oxfam fears that failure to increase the budget, as is being demanded by some member states, such as France, as well as the commission and parliament, will "put millions of people on the line".
Oxfam estimates that the proposed €6.1bn cuts to EU development aid "could be enough" to have lifted more than 4.6 million people in the poorest countries out of extreme poverty.
"The proposed cuts to humanitarian aid alone would mean the EU is turning a blind eye on the plight of 150 million people affected by disasters or conflicts," it said.
Oxfam is calling on EU leaders to protect EU aid from the hard bargaining over the next seven-year budget and reverse the proposed cuts that are disproportionately targeting aid.
Similar concerns were echoed by the UK-based overseas development institute.
Its spokesman Mikaela Gavas said, "If EU leaders were serious about getting value for money they would rethink the current proposals which disproportionately cut spending on aid."
She said EU leaders "continue to protect the [common agricultural policy] (CAP) at the expense of aid despite the fact CAP represents less of a return for taxpayers. Everybody accepts the need to balance the books, but people are less likely to accept an agreement that is senseless and unsustainable."
Elsewhere, organisations representing European sea and inland ports have urged EU leaders not to cut the €31.7bn foreseen for Europe's transport infrastructure investments under the connecting Europe facility.
The European platform on the potential of cultural and creative industries, a group of more than 40 organisations representing a wide range of cultural and creative sectors, also wants the summit to adopt a "strong budget" for what it calls 'Creative Europe'.