The EU's budgetary system has developed over several decades in pace with the evolution of the Union itself. It has a number of distinct features and follows several principles. The three main parts of the EU's budgetary system are:
  1. the multiannual financial framework
  2. EU's long-term budget the EU's annual budget
  3. the EU's revenue - mostly own resources.
The multiannual financial framework (MFF) is the EU's long-term budget. It sets the limits for EU spending - as a whole and also for different areas of activity - over a period of at least five years. Recent MFFs usually covered seven years.


On 17 November 2016, the Council and European Parliament reached agreement on a 2017 EU budget which strongly reflects the EU's main policy priorities. Total commitments are set at €157.88 billion and payments at €134.49 billion.  "The strength of the 2017 EU budget lies in its focus on priority measures such as addressing migration, including by tackling its root causes, and encouraging investment as a way to help stimulate growth and create jobs. This maximises the budget's impact to the benefit of EU taxpayers, European citizens and companies. And it respects member states' continued efforts to consolidate their public finance", said Ivan Lesay, state secretary for finance of Slovakia and President of the Council.  

More money for migration and security 

Agreed commitments of almost €6 billion mean that around 11.3% more money will be available for tackling the migration crisis and reinforcing security than in 2016. The money will be used to help member states in the resettlement of refugees, the creation of reception centres, the support for integration measures and the returns of those who have no right to stay. It will also help to enhance border protection, crime prevention, counter terrorism activities and protect critical infrastructure. 

Investing in growth and jobs 

Commitments of €21.3 billion were agreed to boost economic growth and create new jobs under sub-heading 1a (competitiveness for growth and jobs). This is an increase of around 12% compared to 2016. This part of the budget covers instruments such as Erasmus + which increases by 19% to €2.1 billion and the European fund for strategic investments which raises by 25% to €2.7 billion. The 2017 EU budget also includes €500.00 million in commitments for the youth employment initiative to help young people to find a job. Further €500.00 million were agreed for supporting milk and other livestock farmers with additional support measures announced in July. 

With a view to matching member states' consolidation efforts at national level the Council and the Parliament reminded all EU institutions to complete the 5% staff reduction by 2017 as agreed in 2013.   

   Headings 2017 EU budget (in mln €)
    Commitments Payments
  1. Smart and inclusive growth 74,898 56,522
  - 1a. Competitiveness for growth and jobs 21,312 19,321
  - 1b. Economic, social and territorial cohesion 53,587 37,201
  2. Sustainable growth 58,584 54,914
  3. Security and citizenship 4,284 3,787
  4. Global Europe 10,187 9,483
  5. Administration 9,395 9,395
  Special instruments 534 390
  TOTAL 157,883 134,490

The 2017 EU budget is expected to be formally adopted by the Council on 29 November and the Parliament on 1 December.

The attached table gives an overview, comparing the new MFF 2014-2020 to the previous one
8 February 2013, a deal was reached on the new EU budget. While the focus has been on the overall level of expenditure (which,frankly, was never going to change either upwards or downwards by more than a few percent, in a decision-taking procedure in which every single Member State has a veto), there are some significant changes in the content of spending. Some key points on the deal are:

CAP spending will fall by 17.5% compared to the last MFF, but as it is in continual steady deline, it will have fallen by over 20% by the last year of the seven year period (2020), which will leave CAP spending at about 27% of the overall budget  - a long way below the 75% it was in the 1970s! 
Spending on the growth items (heading 1a, which includes research & innovation, connecting Europe, Erasmus student exchanges, etc)  rises by 37.3% compared to the previous MFF, again on a steady trend so that by the final year it will have risen by  over 40%. Granted, this is not as much as the Commission had initially proposed, but compared to the current situation, it is a significant improvement.

The discrepancy between commitments and payments (the latter are always lower, as commitments can be paid out over several years, for example for big infrastructure projects) is larger than usual, but this is compensated for by flexibility in transferring unused payments from one year to the next, so that there will be adequate payment appropriations to cater for legal commitment.

The final deal is seen as victory for those that wanted an austerity-driven budget. With the focus on spending moderation, it reflects strained times. However many warn that the reduced budget could result in an EU with fewer resources at its disposal, limiting its ability to deliver better results for EU citizens. The Summit is declared by EU circles to be a victory for co-operation and consensus since none of the 27 member countries did use their veto. For most countries their national interests were met and as a result leaders could return to their home countries able to claim a victory.
Article 310 of the Lisbon Treaty calls for a balanced budget.

Commentaries by institutions of the EU:

European Council President, European Council President, Herman Van Rompuy, emphasised in his statement that the budget is ‘future oriented’. Van Rompuy insists it is a budget ‘driven by pressing concerns’. The proposed budget, 3% less than the current EU budget, focuses on balanced growth, the encouragement of new investment and a youth employment programme. The €6 billion allocated for generating youth employment is ‘a powerful incentive’, Van Rompuy says, and has been met with enthusiasm all over the EU. Yet investment in education and regional infrastructure that could help youth employment are among the areas where cuts will be made. Here is the full text of the speech 18-02-2013 from Van Rompuy to the EP.

European Commission President, José Manuel Barosso, praised the budget and said it was a “catalyst for growth” but sees the deal reached as a “basis for negotiations with
the Parliament”. He did argue though that “The levels agreed today by the heads of state and government are below what the Commission considers desirable, given the challenge of promoting growth and jobs across the EU in the coming years”. Mr Barroso express the desire for “maximum flexibility” that could allow the EU to move spending from one year to another for example. David Cameron, UK Prime Minister, said that the EU budget is a “good deal for Britain” and added that Britain could be “proud we’ve cut the seven-year credit card limit for the first time ever”. “It shows that, working with our allies, it is possible to take real steps towards reform for the European Union” Mr Cameron asserted.

Martin Schulz, European Parliament President, has openly criticised the budget saying, “the EU budget is for investment”, therefore savings made there are savings made in the wrong place. “The EU budget is money not for Brussels but for ordinary European citizens”. The budget deficit concerns him as there are “more and more tasks and less and less money”. He emphatically declared, “I will not sign a deficit budget, Europe like the US a few weeks ago, is heading for a fiscal cliff”. Other MEPs have also expressed concern. Joseph Daul (EPP), Hannes Swoboda (S&D), Guy Verhofstadt ( ALDE), Rebecca Harms and Daniel Cohn-Bendit (Greens/EFA) attacked the agreed EU budget, saying it may lead to a structural deficit. “Large gaps between payments and commitments will only store up trouble for the future and not solve existing problems,” the leaders of the four European Parliament political groups stated.

Joseph Daul, leader of the right-wing European Peoples Party, added that he would vote no to the deal because it is a bad deal for Europeans and said, “To those I can already hear declaring us irresponsible; I say to them simply that what is irresponsible is providing payment appropriations that are lower than commitment appropriations”. The EPP believe this budget will lead to deficit and therefore they will remain firm on this point and as such not endorse it.

Brief commentaries by HoSG's:

Chancellor Merkel declared that “the effort was worth it” and ensured that the budget would deliver predictability and solidarity, which in troubled times is what the people want to hear after all. “It gives us the ability to plan for important projects and with a view to growth and employment, that's decisive because the security to plan for investors is the precondition for us to even reach growth and employment again”. The Dutch PM Mark Rutte said that “The Netherlands can be content with this result, we kept our rebate”.

The French media are clearly not so enamoured. Le Figaro ran the headlineCameron et Merkel imposent l’austérité à Hollande’. Francois Hollande, the French President admitted it was not his dream budget, calling it a ‘good compromise’ but the best he could get under the circumstances. An Anglo-German co-operation for once making France the outsider in negotiations and making Hollande somewhat unpopular with his own voters who were expecting a better EU stimulus package. With regards to the all important CAP, Mr Hollande said that “The relative share of agricultural spending in the European budget will decrease, but I made sure to preserve the funding destined for our farmers”. Italy who had previously sided with France in their desire to curtail cuts seemed content with the budget. Prime Minister Mario Monti said it was, “satisfying” and in terms of Italy’s contributions proved to represent a “very significant improvement”.

The Czechs had previously stated that the reduced budget benefited two countries and helped their economies stay afloat at the cost of the rest of the EU. Prime Minister Necas’ threat of veto at the summit meant that although the funds they receive from the EU through cohesion policy will decrease, the Czech Republic will not see as severe cuts as anticipated. The Polish Prime Minister Donald Tusk stated that the day the budget deal was reached was “the happiest day of my life” and added that “Poland is the biggest beneficiary of the EU”.

Although Spain under the new budget will receive slightly less money, Prime Minister Rajoy was pleased by the deal, which will see Spanish workers benefit from a new fund to create jobs for young workers.

Brief commentaries by other institutions:

The OECD is concerned and stated that the ‘economic crisis should not be used as an excuse to cut flows to poor countries’. The EU spokesman for Oxfam stated “The consensus reached could have potentially negative consequences on the ability to achieve global anti-poverty goals, especially in Africa, It comes short of what’s needed to tackle pressing global issues, from sustainable development and increasing disasters, to food security and social justice. It will undoubtedly also impact negatively on the ambitions of Europe as a global player”.

Euro commissioner for Budget
29 March 2011, H.E. Mr. Janusz Lewandowski, Eurocommissioner for Budget, lectured on 'Ambition vs. Realism: the European Financial Framework post 2013'. The long-range budget 2014_2020 will be dealt with in June next. ´Young´ EU member states wants to let grow expenditures. That strikes against countries, which hand over more net amount than they will receive (Germany, France, The Netherlands). But Germany and France are being tenacious of the enormous agriculture budget. All blocks are in the all-round defense position. Dragging a rebate on short term is difficult.
European expenditures 2012 are higher than expected. The same happened with the budget 2011. That delivered a severe fight between European Parliament, that wanted to spend 6% more, and the UK and the Netherlands, who both wants to freeze the budget.

Finally there was a compromise of 2,9%. There is an increase in European expenditure. How much exactly is hard to say. The reason is simple. This budget is part of the long range budget 2007_2013. Projects that started in 2007 or 2008, are now making progress and bills are coming in. One cannot promise projects to countries and when they are in effect, suddenly say: sorry, we don´t pay.
" I make the logic behind the increase in a country that is a net payer to the EU understandable. Explaining it is not a choice of ´Brussels´, but a juridicial obligation, committed in 2007 and that we have to fulfil".

40% is for agriculture. The distribution is tied up every 7 years. One country wants this and another something else. In June negotations will start again. In the mean time we all can make some cuts. There is a letter to all European institutions (50.000 employees) to inform that we have to deliver an example and permit a rise of 1% maximum. That means less expenditure than last year, for inflation is higher.

We are cutting on travelling, meetings. Not well functioning programs will be deducted. The total budget for administration costs are only 6%. 8 à 9 miljard from out total 140 miljard. That is a small part.

Member states are constantly asking for more European cooperation: immigration, energy, milieu, financial supervision, a diplomatic service. At the same time it is wanted that we will do that with less people and less money. The European government is even as big as the one of Paris. It cannot become smaller. Many cities are expending 20 till 25% on administration. The EU 6%.

The EU has to cut in the remaining part, but the 94% that are expenditures, which are to decide by the member-states. That is not 'Brussels', that are the member-states by themselves. Brussel only take care that their decisions will be executed.

The Financial Programming 2007 - 2013
commitment appropriations
sustainable growth
preservation and management of natural resources
citizenship, freedom, security and justice
EU as a global player

The projects of the EU are of enormous value. Everywhere budgets are cut. Youth unemployment is at higher rate than ever. We invest: these projects create jobs, keep the economy on track, promote growth. This is not about money-transfers to poor countries. We are building bridges, co-financing country-development. We are filling a gap, just when governments are focussing on austerity. However, it will become a hot debate on the project of Europe and Europe's money, small growth, debt and 27 member-states with legal obligations. We should not allow to have trouble. We learned lessons from the past and outlooks for 2015 - 2020 are very optimistic: a common platform for Europe in the future!