Budget cap call came from ‘nowhere’

National governments demanding EU spending cuts are going back on an agreement made four years ago, Brussels budget chief Michaele Schreyer said on Tuesday.

The German budget commissioner has hit out at national capitals demanding a one per cent of EU Gross National Income (GNI) cap to European expenditure.

The EU’s six biggest cash contributors are demanding the limit, a move, Schreyer argues, that overturns guidelines agreed in 2000.

Austria, Britain, France, Germany, Sweden and the Netherlands then agreed a 1.15 spending limit, a cap above one per cent and topping the average 1.14 per cent set by the European Commission in budget proposals for 2007 to 2013.

“In 2000 there was nowhere this figure of one per cent. So I am surprised to see it now,” Schreyer told the European Policy Centre.

A Brussels seven year budgetary framework published last week is set for a savaging by EU finance ministers ahead of eventual agreement in mid 2005.

But Schreyer argues that the outcry from national treasuries is unreasonable.

“Did the commission’s proposals go up to these [2000] ceilings? No,” the commissioner told the EPC.

“We made proposals far below these ceilings.”

Commissioners are angry that national capitals seem to be taking 2004 figures - a “historically low budget”, says Schreyer – where spending is set for a spend of 0.98 per cent of GNI, €11 billion under a 1.1 per cent ceiling set in 2000.

“Some member states have taken this figure for 2004 as the benchmark for the future,” she said.

Calls for a one per cent GNI budget cap would lead to cuts and may, warned the commissioner, be a sign that some governments are reneging on agreement to fund EU enlargement as Europe prepares to expand to ten, poorer, new countries in May.

“At the moment I see the risk that with some member states this consensus is no longer valid,” she said.

Schreyer also cautions against mixing EU rifts over a constitution with plans for future spending.

The “letter of six” demanding a one per cent cap emerged in the days following the breakdown of constitution talks, prompting concern that budgets were to become caught up in the heated negotiations.

“We are facing difficult decisions with the constitution and financial perspectives but it is important not to link the two,” Schreyer stressed.

“We should avoid that debate on the constitution becomes horse-trading [on the financial perspectives].”

Ahead of what is set to be a bitter budget battle, Schreyer and her colleagues are appealing for governments not to focus on “the cost of everything but the value of nothing”.

“The financial perspectives should be the mirror to the goals and tasks of the union,” she said.

“There is a risk that the discussion is only on figures.”

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