1. The Reform of the EU budget in turbulent times – state-of-play on the EU budget review Stefan Lehner Director, European Commission, Directorate-General for Budget Meeting of Budget and Financial Committees Chairpersons, Prague, 27-28 April 2009

2. The EU budget – some facts and figures

3. Heads of Representation, Lisbon 12 June 2007 The size of the EU budget

4. Heads of Representation, Lisbon 12 June 2007 The structure of the EU budget (financial framework 2007 – 2013) Total: € 975 billion (in current prices)

5. Heads of Representation, Lisbon 12 June 2007 EU Budget expenditure trends  The profile of EU spending has changed considerably over 25 years. But has it changed enough?  For example: The Common Agricultural Policy absorbed 61% of the budget in 1988. By 2013, the share of CAP spending could almost halve (32%), though CAP will stay a major part of EU spending.

6. Heads of Representation, Lisbon 12 June 2007 Significant shift in EU budget funding The EU budget is increasingly based on the GNI contribution, from 11% of the total in 1988 to 74% in 2013.

7. Heads of Representation, Lisbon 12 June 2007 Debates on net contributions led to a rise in budgetary «corrections»  UK correction – 66% of the difference between contributions and its receipts  Lump sum payments to the Netherlands and Sweden  Reduced VAT rates and reduced UK correction payments for the Netherlands, Sweden, Germany, Austria  Retention of 25% of traditional own resources for all Member States collecting them The financing of the EU budget has become incomprehensible

8. EU budget reform

9. Heads of Representation, Lisbon 12 June 2007 Commission launches a reform of the EU budget The mandate: “In accordance with the conclusions of the European Council, the Commission has been invited to undertake a full, wide-ranging review covering all aspects of EU spending, including the Common Agricultural Policy, and of resources, including the United Kingdom rebate, and to report in 2008/2009.“ (Inter-Institutional Agreement between the European Parliament, the Council and the Commission, 17.5.2006)

10. Heads of Representation, Lisbon 12 June 2007 The Commission approach to the Review: “Reforming the Budget, changing Europe” Analyse longer-term challenges and issues facing the EU Apply European value added, subsidiarity and proportionality principles to define a more efficient European budget and a new repartition of tasks with the Member States and the regions Seek a new consensus on EU spending priorities – and posteriorities, on how the budget is managed and on how to fund it. The Review will NOT make a proposal for the next financial framework

11. Heads of Representation, Lisbon 12 June 2007 The Timetable so far  12 th September 2007  15 th June 2008  12 November 2008  Consultation Paper setting out the challenges and issues at stake  Launch of public consultation phase  Deadline for submission of contributions  Political Conference

12. Heads of Representation, Lisbon 12 June 2007  All Member States presented official contributions;  Over 2.000 citizens in 20 Member States directly debated budget reform;  300 contributions represent broad diversity of interests. Public consultation: Broad participation ©European Commission NGO 20% Private sector 14% Citizens 12% Other 7% Universities/scientists 13% Public/governmental sector 34%

13. Heads of Representation, Lisbon 12 June 2007 Consultation results: Europe’s biggest challenges At the top of the list: Climate change Two thirds of contributors consider it Europe’s big test for the future; EU competitiveness in a global economy One in two respondents put growth as Union’s main challenge; Energy supply security Just as many are concerned about energy issues. Other areas of serious concern:  Inequalities between countries, regions;  Demographic trends - shrinking/ageing population;  External pressures, security threats, migration. ©European Commission

14. Heads of Representation, Lisbon 12 June 2007 Consultation results: A new direction for EU spending /1  Competitiveness, research, innovation  Environment, climate change  Energy Contributions move spotlight to policies for future: Policies addressing growth, climate and energy are at the top of spending priorities ©European Commission

15. Heads of Representation, Lisbon 12 June 2007 Consultation results: A new direction for EU spending /2 =Cohesion – support signalled, policy change required  Agriculture – one of the hottest topics of the consultation ©European Commission

16. Heads of Representation, Lisbon 12 June 2007 Consultation results: Financing a budget for the future  Traditional Own Resources – widely supported;  GNI-based contribution – strong emphasis that this resource is working well and could be extended further;  Alternative own resources – calls to "keep the door open" or examine new possibilities linked to policy priorities ;  VAT-based contribution – urge to simplify the system by abolishing this resource;  Corrections – wide disappointment with non-transparent system of over 40 corrections, strong demand to abolish exemptions. To ensure resources match political ambitions: There is a clear link between the structure of expenditure, financing and correctionsNeed to think the budget globally

17. Heads of Representation, Lisbon 12 June 2007 Unforeseen turbulences influencing the debate  The “food crisis”: A sharp increase in price for major agricultural products revived “security of supply” concerns; since summer prices have declined, leaving the outlook for agriculture quite uncertain.  The “oil crisis”: prices for non-renewable resources have also seen a steep increase followed by a sharp decline; expectations remain pessimistic.  The no-vote in the Irish referendum: Uncertainties on future Treaty base for EU are complicating the outlook on future EU tasks and functioning.  Climate change accelerates: Recent indicators are above worst case climate scenarios.  The “financial crisis” and looming recession: Some new discussion on the role of the EU budget to react to such crises.

18. Heads of Representation, Lisbon 12 June 2007 Steps towards a result 2009 - Commission presents the Budget Reform proposal Based on: Contributions to the public consultation; Scientific studies; Meetings, debates with NGOs, academia and other interested parties; Conference on budget reform; Internal Commission debates. What’s next 2009/10 - discussion and conclusions by the EU institutions 2011 – Commission proposal for the next Financial Framework

19. Heads of Representation, Lisbon 12 June 2007 The public debate on EU budget reform continues  The Commission website to present the issues, and to document contributions and the debate also in the future: http://ec.europa.eu/budget/reform/index_en.htm

20. The Reform of the EU budget in turbulent times – state-of-play on the EU budget review Stefan Lehner Director, European Commission, Directorate-General for Budget Meeting of Budget and Financial Committees Chairpersons, Prague, 27-28 April 2009