for-phone-onlyfor-tablet-portrait-upfor-tablet-landscape-upfor-desktop-upfor-wide-desktop-up

Explainer: What is at stake in talks on next EU long-term budget?

BRUSSELS (Reuters) - The leaders of 27 European Union countries will try to narrow their differences over the bloc’s next long-term budget at a summit on Thursday, but the discussions are likely to drag well into 2020.

FILE PHOTO: European Union leaders attend a round table meeting at the European Union leaders summit, in Brussels, Belgium October 17, 2019. Olivier Matthys/Pool via REUTERS

There has been a lot of haggling over the joint budget for 2021-27 because Britain’s departure from the EU means there will be less money in the pot. New priorities like fighting climate change and managing migration will also use up funds that have in the past gone to supporting farmers and poorer regions.

Below are the main issues at stake in talks on the so-called Multi-annual Financial framework (MFF):

SIZE MATTERS

The size of the budget is the biggest battle, even though the gap between the “frugal” camp and those pressing for heavier spending is only between 6 billion and 15 billion euros a year, not much for a bloc of about half a billion people.

The EU’s executive proposed the budget be 1.11% of the gross national income (GNI) of the 27 member states, virtually the same as the 2014-2020 budget if Britain is excluded from the calculations.

The European Parliament wants the budget at 1.3% while the governments of Germany, Austria, the Netherlands, Sweden and Denmark, which pay more into the budget than they get from it, want it to be no larger than 1%.

Finland, which currently holds the rotating EU presidency, proposed the budget be 1.07%, or 1.087 trillion euros over the seven years.

WHERE DOES THE MONEY COME FROM?

The EU budget gets its money from:

** import duties on goods entering the bloc from outside

** a fraction of national income from VAT

** national contributions based on the size of the economy

WHAT IS THE MONEY SPENT ON?

The two biggest items in the EU budget, which together account for some 70-80 percent of spending are:

** the Common Agriculture Policy that supports farmers across the bloc (Finnish proposal: 347 bln euros over the seven years)

** cohesion policy, to equalise living conditions between the bloc’s richest and poorest countries and regions (Finnish proposal: 374 bln euros).

The EU also wants to spend on:

** research, innovation and digital policies, investments, strengthening the single market and competitiveness of companies

** dealing with migration and guarding borders

** Security and defence

** the EU’s external policy, like development aid for EU neighbours, migration issues outside the EU and help for countries preparing to join the bloc

** EU administration

Reporting by Jan Strupczewski, Editing by William Maclean

for-phone-onlyfor-tablet-portrait-upfor-tablet-landscape-upfor-desktop-upfor-wide-desktop-up