EU leaders agree to long-term budget
Deal made after nearly two days of around-the-clock negotiation
The Associated Press
Posted: Feb 8, 2013 1:07 PM ET
Last Updated: Feb 8, 2013 3:31 PM ET
European Union leaders agreed Friday to a drastically reduced 7-year budget worth €959 billion ($1.28 trillion) – the first cut in spending in the 27-country group's history.
European Council President Herman Van Rompuy said Friday the agreement had been reached after two days of nearly round-the-clock negotiations.
"We simply could not ignore the extremely difficult economic realities across Europe," Van Rompuy told reporters. "It had to be a leaner budget."
He said it would amount to 1 percent of the European Union's gross national income.
The final number was far less than the €1.03 trillion ($1.38 trillion) the EU's executive arm, the EU Commission, had originally proposed.
The two-day fight over what the EU pledged to spend on everything from infrastructure to development aid laid bare divisions over what the role of the union should be.
"The effort was worth it," said German Chancellor Angela Merkel. "The agreement is good and important," saying it would show solidarity and ensure predictability.
The EU Parliament must still approve the deal – and lawmakers there suggested that drastic cuts would be unacceptable.
"This agreement will not strengthen the competitiveness of the European economy but weaken it," said a statement by the leaders of the four largest political groups in the Parliament. "It is not in the prime interest of our European citizens."
The proposed budget has also been criticized for cutting too deeply into aid for poor countries or other areas critical for Europe.
Europe's identity crisis
At its heart, the hard-fought summit in Brussels was a tussle about what the 27-nation European Union stands for: some leaders argued that it was a drag on national budgets in tough economic times, while others said the economic crisis highlighted the need for closer and deeper ties.
The deal that emerged leaned more toward the position of countries led by Britain, which insisted that the EU couldn't look for more money at a time of belt-tightening across Europe.
But it seemed a loss for many of the newer – and generally poorer – members, who see Europe as a club that is only as strong as its weakest member. That group, led by Poland and France, argued that Europe meant nothing if the budget were not used to bridge the wealth gap between rich and poor members and help restart growth.
Both sides had threatened to walk away from the table – again – if they didn't get what they wanted. The first summit to negotiate a budget collapsed in November.
Tackling youth unemployment
Van Rompuy noted, however, that the budget did put aside €6 billion ($8.02 billion) to help alleviate youth unemployment, which has skyrocketed because of the economic crisis over the past few years, notably in Greece and Spain.
The EU, with a population of more than 500 million people and an annual gross domestic product of €12 trillion ($16.05 trillion), is the world's largest economy.
But the EU's budget for 2012 is €147.2 billion ($196.87 billion) – less than one-fifth the size of the budget of the U.K. alone.
Separate from the national budgets, it is designed in part to balance out the economic development of the region by injecting funding into poorer countries. The EU has funded hundreds of thousands of infrastructure and capital projects over the years, from the installation of a broadband network to upgrading parts of the road network.
The budget also includes items meant to generate economic growth in the future, such as research and development, increasing digitalization and creating a new, more accurate satellite navigation system. It also funds regulation and administration in such areas as mergers and competition, the review of national budgets to ensure they do not include excessive deficits and banking supervision.
Top News Headlines
- Most groups don't want return of Trudeau speaking fees
- Most of the 17 charitable and other organizations that have paid speaking fees to Liberal Leader Justin Trudeau during his time as an MP say they aren't interested in having their fees returned, despite Trudeau's offer on the weekend to reimburse any organization unhappy with his services. more »
- Are e-cigarettes safe to puff?
- As electronic or e-cigarettes grow in popularity, some health advocates want them to be regulated. more »
- Canada to send peacekeeping troops to Haiti
- A handful of Canadian troops are about to take part in peacekeeping operation in Haiti, under the command of Brazilian forces, in a long-delayed mission that has been kept inexplicably low on the political radar. more »
- Google asks secret court to lift gag on surveillance
- Google is asking the secretive Foreign Intelligence Surveillance Court to lift its long-standing gag order on how often the company is asked to turn over data about its customers to the U.S. government. more »
Latest Business Headlines
- Tim Hortons being circled by Wall Street hedge funds
- At least two groups of American hedge funds have bought large chunks of Tim Hortons shares recently, a sign the activist investors want to push the company to make major changes to its business, or possibly give up some control over the company. more »
- Chrysler agrees to recall 2.9 million Jeep SUVs in U.S., Canada
- Chrysler avoided a showdown with U.S. government safety regulators Tuesday, agreeing to recall 2.7 million older Jeep Grand Cherokee and Liberty SUVs in the U.S. and 256,000 in Canada that could be at risk of a fuel tank fire. more »
- Leaders downplay reports of stalled Canada-EU trade talks
- Both Prime Minister Stephen Harper and his British counterpart, David Cameron, downplayed signs of trouble in the Canada-EU trade negotiations Tuesday, even as the European Union's spokesman suggested Canada hasn't shown enough "pragmatism and flexibility" at the table. more »
- Business jets dominate Bombardier's $2B in sales at air show
- Business jets dominated the aircraft orders announced by Bombardier on Tuesday, the second day of the Paris Air Show, accounting for most of the nearly $2 billion US worth of business that the Montreal-based company has done at the show — if all options are exercised. more »
- Crowdfunding websites trying to cash in on crowded field
- Success stories make it seem like crowdfunding websites drop cash from the heavens on to any deserving idea. But regulators and big banks are now taking a closer look at the controversial new field, Dianne Buckner writes. more »
Lang & O'Leary Exchange
The data on this site is informational only and may be delayed; it is not intended as trading or investment advice and you should not rely on it as such.
- Canadians in Dominican wedding fight freed from jail
- TV chef Nigella Lawson's husband cautioned by police for assault
- Huge ancient city at Angkor Wat revealed by lasers
- Disabled woman's care before dying on bus still a mystery
- Montreal mayor resigns amid corruption charges
- Student with bullied past, 'The Doorman,' graduates
- 'Standing man' inspires new, silent protests in Turkey
- G8 leaders agree to 7-point plan on Syria as summit wraps
- Parents of son 'brutally beaten' playing hockey want charges