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European Economic Integration

European Economic Integration. IV EU‘s Budget. Prof . Dr. Günter S. Heiduk. Top 5 EU’s Member States by % on EU-27 GDP at current prices , 2012. Key for contribution to EU’s budget?. Source: EUROSTAT. The decision-making triangle. Number of people required to run the EU:

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European Economic Integration

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  1. European Economic Integration IVEU‘s Budget Prof. Dr. Günter S. Heiduk

  2. Top 5 EU’s Member States by % on EU-27 GDP at current prices, 2012 Key for contribution to EU’s budget? Source: EUROSTAT

  3. The decision-making triangle • Number of people required • to run the EU: • European Commission • 32000 • European Union • approx. 170000 (includes • all institutions)

  4. Political groups in the European Parliament

  5. European Integration IV EU‘s Budget Deciding the budget The annual budgetary procedure as established by the Treaty of Lisbon lasts from 1 September to 31 December. All EU institutions and bodies draw up their estimates for the draft budget according to their internal procedures before 1 July. Commission’s draft budget The Commission consolidates these estimates and establishes the annual 'draft budget', which is submitted to the Council and the European Parliament by 1 September. In practice, the Commission endeavours to present the draft budget before the end of April/beginning of May. Council's reading The Counciladopts its position on the draft budget including amendments, if any, and passes it to the European Parliament before 1 October. The Council informs the European Parliament of the reasons which led it to adopt its position. Parliament’s reading The Parliament has then 42 days to either adopt the budget at its first reading in October or hand its amendments back to the Council. The Council may accept the amendments within 10 days and adopt the draft budget. Conciliation Committee If the Council does not accept the Parliament's amendments, a Conciliation Committee is set up, composed of the members of the Council or their representatives and an equal number of members representing the European Parliament. The Conciliation Committee is assigned to come up with a joint text within 21 days. If the conciliatory procedure fails, the Commission has to come up with a new draft budget.Once a joint text is agreed upon by the Conciliation Committee in early November, the Council and the Parliament have 14 days to approve or reject it. The Parliament may adopt the budget even if the Council rejects the joint text. In case the Council and the Parliament both reject the joint draft or fail to decide, the budget is rejected and the Commission has to submit a new draft budget. If, at the beginning of a financial year, the budget has not yet been definitively adopted, a sum equivalent to not more than 1/12 of the budget appropriations for the preceding financial year may be spent each month. Detailed description of the annual budget procedure : Treaty of Lisbon, Art. 310. Budget may be amended after adoption In the event of unavoidable, exceptional or unforeseen circumstances, the Commission may propose during the year, that the budget as adopted be amended; it does this by submitting draft amending budgets. Amending budgets are also used to enter the balance from the previous year in the budget for the current year.Similarly, the Commission may, on its own initiative or at the request of the other institutions with their own budget section, present a letter of amendment to the draft budget in the light of information which was not available when the draft was established. Both amending budgets and letters of amendment are subject to the same procedural rules as the general budget. http://ec.europa.eu/budget/budget_detail/deciding_en.htm

  6. European Integration IVEU‘s Budget Financing (1) Overview of the own resources system The basic rules on the system of own resources are laid down in a Council Decision adopted by unanimity in the Council and ratified by all Member States. The overall amount of own resources needed to finance the budget is determined by total expenditure less other revenue. The total amount of own resources cannot exceed 1.23 % of the gross national income (GNI) of the EU. Own resources can be divided into the following categories (the figures below refer to the 2011 budget): Traditional own resources (TOR) consist of customs duties and sugar levies. These own resources are levied on economic operators and collected by Member States on behalf of the EU. However, Member States keep 25 % as a compensation for their collection costs.Customs duties are levied on imports of products coming from third countries, at rates based on the Common Customs Tariff.Sugar levies are paid by sugar producers to finance the export refunds for sugar. These levies only amount to around 1 % of total TOR.TOR account for around 13 % of total EU revenue. The own resource based on value added tax (VAT) is levied on Member States' VAT bases, which are harmonised for this purpose in accordance with Community rules. The same percentage (0.30%) is levied on the harmonised base of each Member State. This rate is for the period 2007-2013 reduced for 4 Member States (Austria 0.225%, Germany 0.15%, the Netherlands and Sweden 0.10%). However, the VAT base to take into account is capped at 50 % of each Member State’s GNI. This rule is intended to avoid that the less prosperous Member States pay out of proportion to their contributive capacity, since consumption and hence VAT tend to account for a higher percentage of a country's national income at relatively lower levels of prosperity.The VAT-based resource accounts for around 11 % of total EU revenue. The resource based on gross national income (GNI) is used to balance budget revenue and expenditure, i.e. to finance the part of the budget not covered by any other sources of revenue. The same percentage rate is levied on each Member States' GNI, which is established in accordance with Community rules. For the period 2007-2013 Sweden and the Netherlands are granted gross reductions in their annual GNI payments. The reductions are EUR 605 million for the Netherlands and EUR 150 million for Sweden in 2004 prices. These amounts are financed by all Member States including those two benefiting from them.The GNI-based resource accounts for around 75 % of total EU revenue. http://ec.europa.eu/budget/budget_detail/overview_en.htm

  7. European Integration IVEU‘s Budget Financing (2) The UK correction A specific mechanism for correcting the budgetary imbalance of the United Kingdom (the UK correction or UK rebate) is also part of the own resources system. The current UK correction mechanism was introduced in 1985 to correct the imbalance between the United Kingdom's share in payments to the Community budget and its share in Community expenditure allocated to the Member States. This mechanism has been modified on several occasions to compensate for changes in the system of EU budget financing, but the basic principles remain the same. This imbalance is calculated as the difference between the percentage share of the UK in EU expenditure paid in the Member States ("allocated expenditure") and the UK share in total VAT-based and GNI-based own resources payments. The difference in percentage points is multiplied by the total amount of EU expenditure allocated to the Member States. The UK is reimbursed by 66 % of this budgetary imbalance. Total allocated expenditure is gradually adjusted downward by deducting certain elements of expenditure in countries that joined the EU after 2003. The cost of the correction is borne by the other 26 Member States. The distribution of the financing is first calculated on the basis of each country's share in total EU GNI. The financing share of Germany, the Netherlands, Austria and Sweden is, however, restricted to one fourth of its normal value. This cost is redistributed across the remaining 22 Member States. The UK correction in the 2010 budget amounts to around EUR 4.0 billion.

  8. EU‘s Budget, 1989-2013 Financial Framework Source: European Union (2008), Public Finance, 4th ed.

  9. European Integration IVEU‘s Budget 1958-2008

  10. European Integration IVEU‘s Budget Expenditures in multi-annual financial frameworks Santos, I. and Neheider, S. (2009). Reframing the EU Budget Decision-Making Process. Bruegel Working Paper 2009/3, p. 13.

  11. European Integration IVEU‘s Budget - Revenue 2013 http://ec.europa.eu/budget/library/biblio/publications/2013/budget_folder/KV3012856ENC_web.pdf

  12. European Integration IVEU‘s Budget – Expenditures, 2013 (Euro billion)

  13. EU Budget, Expenditures, Commitment Appropriations 2014(Euro millions) Total Budget 2014: Euro 142640,48 million

  14. European Integration IV Member States Contribution to EU’s Budget Source: European Commission

  15. Gross Contributions to the EU Budget, 2012 (Euro millions) Source: Open Europe Calculations

  16. Net Receipts from the EU Budget, 2012 (Euro millions) Source: Open Europe Calculations

  17. Open Europe estimates for EU-27 budget for 2007-2013 in euros (€)

  18. European Integration IVEU‘s Budget The Need for Reforms Santos, I. and Neheider, S. (2009). Reframing the EU Budget Decision-Making Process. Bruegel Working Paper 2009/3, p. 1.

  19. European Commission Proposal for the Budget 2014-2020 Source: European Commission, A Budget for 2020, COM (2 11 ) 500 final, Brussels 29.06.2011.

  20. The Controversy on the Budget 2014-2020: Reduction + Structural Changes Proposals (beginning February 2013 February 13, 2013: ”EU leaders reach historic budget deal - Deal cuts Euro 34 billion (The Guardian) Commitment Euro 960 bln Actual payments Euro 908 bln March 12, 2013: European Parliament rejected EU budget proposal

  21. HORIZON 2020 – EU‘s biggest research and innovation programme 2014-2020 Examples of the role of Social Sciences and Humanities (SSH) are: Health, Demographic Change and Wellbeing, SSH research could provide the economic and social analysis necessary for reforming public health systems; Smart, green and integrated transport, SSH research analyses the socio-economic aspects of transport, prospective studies and technology foresight; Climate action and resource efficiency, SSH research tackles the cultural, behavioural, socio-economic and institutional change in order to move to a more self-reliant and resource efficient economy; Europe in a changing world, there will be a range of topics covering areas like new ideas, strategies and governance structures for overcoming the crisis in Europe innovation in the public sector, ICT government, business model innovation, social innovation, European cultural heritage, history, culture and identity; Leadership in enabling and industrial technologies, the arts and humanities might be an essential source for creativity in development of services and product design. Information: http://ec.europa.eu/programmes/horizon2020/en

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