Was everyone a winner?

If the soundbites from the European Union’s national leaders reproduced across these pages are to be believed, everyone – or almost everyone – left last week’s budget summit a winner. There were degrees of satisfaction: while Friday was “one of the happiest days of my life” for Donald Tusk, Poland’s prime minister, Werner Faymann, Austria’s chancellor, found the result merely “presentable”. 

The biggest winner was clearly Angela Merkel, Germany’s chancellor. By playing the broker between the budget hawks and the member states eager to protect agriculture and regional aid, she got precisely what she had demanded: an overall budget of 1% of gross national income that shifts spending away from agriculture and regional development – but not too drastically.

The discordant note in this chorus of content came from the European Parliament. Martin Schulz, its president, warned that the deal “will find no consent” from MEPs. The leaders of the four main political groups said in a joint statement: “The European Parliament cannot accept today’s deal in the European Council as it is.”

But EU leaders, in anticipation of resistance from MEPs, had left as vague as possible provisions about flexibility and a possible revision of the long-term budget, so that these clauses can be shaped in negotiations with the Parliament. The real question is whether the negotiations between the member states (represented by Ireland, the holder of the rotating presidency of the Council of Ministers) and MEPs will result in a long-term budget that can gain the Parliament’s consent, as required by the Lisbon treaty.

The deal is by no means a take-it-or-leave-it proposition, but a political agreement that now needs to be made binding in negotiations. This also applies to particular budget items. Most of these are not contained in the conclusions from the European Council.

Androulla Vassiliou, the European commissioner for education, culture, multilingualism and youth, says that she secured a 50% funding increase for Erasmus, the Commission’ study-abroad scheme, and related programmes. In doing so she points to a rough understanding among the EU leaders that has not been recorded in the Council conclusions and may therefore still shift in negotiations with MEPs. (Indeed, Vassiliou acknowledged this, adding that she was hoping the figure would rise.)

Despite these uncertainties, the broad lines of where the EU’s spending is going are clearly visible. Of the six headings into which the EU’s budget is divided, just two saw cuts from the current long-term spending plan – but they are the biggest headings by far. Direct payments from the Common Agricultural Policy go down €58.8 billion, or 17.5%, although a loophole allows funds to shift to direct payments from other agriculture spending (see pages 6 and 7). Regional spending goes down €29.7bn, or 8.4%. (Farm subsidies are a sub-heading of the ‘sustainable growth: natural resources’ heading, which decreases by 11.3%, but that decrease is a consequence of the cut in farm aid.)

The biggest increase has been to competitiveness spending, which is up €34.1bn (37.3%). Spending on ‘security and citizenship’ rises by 26.8%, although that translates into just €3.3bn in absolute terms. Administrative spending increases by €4.5bn (8%), much of it owing to increases in pension costs (which are outside the EU’s control). ‘Global Europe’ – the heading for foreign policy – rises by €1.9bn (3.3%).

These headline figures for the seven-year budget mask interesting dynamics, according to calculations from the office of Herman Van Rompuy, the president of the European Council. Mapped out over the years of the budget cycle, the downward trend in direct farm subsidies accelerates so that by the last year – 2020 – they will represent just 27% of the overall budget. The same, in reverse direction, goes for the increase in growth spending.

These trends allow Van Rompuy, and the leaders, to claim that they have put the EU on the right path.

What the headline figure on farm subsidies also masks, however, is the shift within farm spending away from anything that could credibly be described as reform.