€urosclerosis: The more productive European nations are getting tired of carrying the less productive


EU Leaders End Summit With No Deal on a Budget

By Matthew Dalton and Vanessa Mock

[image] BRUSSELS—European Union leaders ended a two-day summit Friday without a deal on a common budget for the 27-nation bloc, foiled by clashes between nations that are net contributors to EU finances and those that receive more than they pay.

Leaders said in a statement afterward, however, that after a “constructive discussion,” there was the possibility of a deal “in the beginning of next year.”

The negotiations come at a difficult time for Europe. Grim economic conditions throughout much of the bloc have complicated the talks and exacerbated long-simmering discontent in nations such as the U.K. and the Netherlands about funding the budget, roughly two-thirds of which goes to paying farm subsidies and supporting investment projects in the bloc’s poorer nations.

“We’re not going to be tough on budgets at home just to come here and sign off on big increases in spending,” said U.K. Prime Minister David Cameron, who is seeking a freeze in the budget. But Mr. Cameron added that he thought a deal was “absolutely doable.”

Mr. Cameron and other leaders are facing electorates that have become increasingly reluctant to foot the bill for European integration. And the debt problems of the countries that use the euro, perhaps the most prominent symbol of the bloc’s integration, have only made politicians more skeptical of forging closer ties with their European neighbors.

More at the link. Herman Van Rompuy, president of the EU Council, presented a budget which he called “very restrictive,” of just under €1 trillion, which cut spending on development, foreign policy and projects improving connections of national transport and communications infrastructures, in favor of more spending on agricultural subsidies and other projects for the lower-income EU members. Or, put differently, Mr van Rompuy proposed cutting EU spending on the things which are of value to the more productive European Union nations, in favor of more spending on agriculture, which primarily benefits the poorer nations, but also benefits France, the EU’s “farming powerhouse.” French President François Hollande said that the proposal cut agricultural subsidies too much. It is, of course, not much of a surprise that a Socialist would be upset about a budget which spent less of Other People’s Money on one of his primary interests.

But this one paragraph, near the end of the article, foreshadowed the problems:

If an agreement isn’t reached early next year, it would jeopardize planning for a broad range of EU programs. Without a deal, spending in 2014 would be at the 2013 level, plus inflation—a higher figure for the budget than the proposals under discussion.

In other words, spending is automatic; no wonder there is no control over spending. In the United States, no agreement on a spending measure would mean zero spending, which is how things should be; apparently the EU does things differently. When Prime Minister Cameron said, “We’re not going to be tough on budgets at home just to come here and sign off on big increases in spending,” he was apparently not telling the truth, because a failure to agree on a budget means an automatic spending increase.

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