Daily Archives: December 17, 2010

On the second and final day of the EU summit, attention turned briefly away from the ongoing eurozone crisis and onto a letter the British government was circulating to get other member states to agree to freezes in the EU’s budget.

During their post-summit press conference, both Nicolas Sarkozy, the French president, and Angela Merkel, the German chancellor, said they would sign onto the effort, giving David Cameron, the UK prime minister, significant backing.

After breaking the story Thursday night, we have obtained a copy of the letter being circulated and thought we’d post it here. The so-called “financial framework” and “financial perspectives” mentioned is the seven-year budget cycle that begins in 2014. Negotiations over the new multi-year budget are due to begin in mid-2011.

The next multiannual financial framework will come as Member States make extraordinary efforts to clean up public finances. These efforts are intended to bring down public deficits and public debt to a sustainable level in keeping with an enhanced fiscal and macroeconomic monitoring framework.

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One of the more mysterious elements of the summit, which is now wrapping up, is the chatter about some of the EU’s big countries looking to cap community spending for up to a decade, as we reported in today’s paper.

The plan is to keep net EU contributions at the same levels, adjusted for inflation. If you assume the European economy grows by a couple of percentage points a year in real terms, that would mean EU spending falling as a percentage of GDP from roughly 1 per cent today to 0.8 per cent by 2020.

That would amount to stopping the European project dead in its tracks, critics of the letter say. Those critics broadly fall in two categories: Euroenthusiasts and net recipient countries. Read more

During his normal mid-summit breakfast with reporters, José Manuel Barroso, the president of the European Commission, the EU’s executive branch, was in a feisty mood, despite the late session Thursday night.

Barroso gave an overview of the debate over treaty changes and a summary of what he hopes will be a strong statement in support of the euro today.

But his most pointed comments were aimed at reports of a letter being circulated by Britain and other member states attempting to set limits to the seven-year budget framework, which starts in 2014. Read more