Blog: In the Belly of the Beast - Building the EU budget

This evening we start the first 'trilogue' discussions on the EU budget for 2016, with EU Member States and the Parliament. They are ready to negotiate now following their deliberations on the Commission proposal that I presented in late May.

What we have proposed are total payments of 143.5 billion euro - about 1% of the annual income generated in the EU or around 2% of public spending. To look at it a different way, it's about 80 cents per day per citizen of the EU. Less than the price of a cup of coffee for most, but taken together a hugely important contribution from European taxpayers. Because the EU budget packs a big punch, invested in trans-European infrastructure, research that makes our lives better, sustainable farming and much more.

The negotiations starting now will stretch into the autumn. This is when the process gets interesting for most - with the clock ticking down, and the chances of getting an agreement on a knife edge. But how do we even get to the point where Parliament and Member States can decide? Well, to present a draft you have to write the draft. And I can promise you, this is not done on the back of an envelope!

Behind the scenes the work actually starts in the autumn/winter of the year before the draft budget is presented, usually just after the budget for the coming year is agreed. So for the 2016 budget we just presented that meant we started in December 2014 - in fact just after the budget for 2015 was agreed in a marathon negotiation. Experts in the Directorate General for Budget (or 'DG BUDG') start the planning and collect data and projects. They then have meetings, called “hearings”, with colleagues right across the European Commission in the spring. In preparing the 2016 draft budget DG BUDG has had hundreds of hours of meetings inside the Commission.

The ”hearings” are geared towards questioning the departments and services in the Commission, looking to justify the funds required and how they are to be used for the year to come. This is a long and intense process for DG Budget and grueling for the spending departments. There are 65 programmes in the Commission that administer more than 100 million euro a year, including 15 each managing more than a billion euro. The goal is to get projections as accurate as possible so that we spend the taxpayers' money in the best possible way and achieve our policy goals in the service of Europe.

So can the Commission just propose whatever it feels like, without limits? No.

The Commission's calculations are bound by the limits already set by EU Member States and the European Parliament. These limits (or ‘ceilings’ as they are known in the jargon) are contained in the agreement on the (jargon alert again!) Multiannual Financial Framework (or "MFF"). The MFF is the seven-year budget framework, with the current one covering the period 2014-2020. This framework also set limits for the various budget headings, like agriculture or external policies. You can imagine the MFF to be like a credit card limit, and the annual budget expenditure like the actual bill for what you spent on the card.

How close we get to those ceilings and how exactly we distribute the money under headings is important, for instance to boost the infrastructure to grow our economy, to create new jobs or protect the environment. Typically one budget heading has the programmes of a number of services. For instance, heading 4, “EU as a global player”, includes the funding to show solidarity with those in need around the world in form of development and humanitarian aid, funding for countries in our neighbourhood, security missions and so on. Money is always tight in this area, as we face a constantly changing world affected by conflicts and crises, natural disasters, as well as political and security challenges.

In parallel, the Commission also meets with the European Parliament and representatives of the EU Member States. They let us know their views at this early stage in the process so that we can produce a realistic proposal.

Before the Commission then signs off, the draft goes through the tried and tested internal decision making process. The services of the Commission are consulted first, and then the documents are discussed with the offices of the Commissioners. While there is usually a high level of agreement on 99% of the proposal, the last 1% can be the subject of discussion right up until the last minute. For this year's budget one of the topics that took until the night before to agree was the details around two new EU Delegations (the EU word for embassies).

And in a final quirk - while we presented the draft budget in May, the figures are only published and submitted in June. The numbers stay the same, but with more detail and translated into all official languages of the EU. The full set of documents is over 2500 pages - which is why we have taken the pledge this year not to print it in future! (You can already see it electronically here)

So the talks begin now. Hopefully we won't have to go down to the wire this time as we did last year. And once the 2016 budget is agreed, my team and I will sit down and start working on budget 2017!