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EU legislators reject $1.3trn budget plan

Brussels, March 14, 2013

The European Parliament have rejected a deal reached by EU leaders on the bloc's next seven-year budget unless significant changes are made to the 960 billion euro ($1.25 trillion) plan.

The Strasbourg vote ended any hope of rapid agreement on the 2014-2020 budget - which must be approved jointly by the parliament and EU governments - instead confirming the need for tricky negotiations that might delay the new spending cycle.

EU leaders agreed at a summit last month to the first ever real-terms cut in future spending, as part of a deal designed to reflect the cuts made by governments struggling to overcome the 27-member bloc's debt crisis.

"The European Parliament cannot accept the proposal from the member states without the fulfilment of certain essential conditions," the assembly's president, German Socialist Martin Schulz, said in a statement after the vote.

The parliament did not challenge the overall spending limit agreed by governments, but did insist on a legal review of the budget deal after EU elections in 2014, which could reverse the cuts if Europe's economy were to improve in the meantime.

Members of the assembly also called for "maximum flexibility" in shifting unspent funds from one priority to another, and from one year to the next - a demand likely to be rejected out of hand by several EU members, including Britain.

Because the large amounts of unspent money from the budget are currently returned to national coffers, such a move could mean an increase in actual spending compared with now, despite the headline limit being some 3 percent lower than for 2007-13.

One demand by members of the European Parliament that could delay an agreement by months is for governments to fill an expected budget shortfall for 2013, to ensure that the deficit is not carried over into the new spending cycle.

The parliament and the European Commission have estimated the shortfall at 16 billion euros, though some governments say the figure is closer to 10 or 11 billion, and the Commission is unlikely to present a formal budget amendment until near the end of this year.-Reuters




Tags: Budget | Europe |

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