Brussels blog

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.

The Euroenthusiasts, led by the Commission and the European Parliament, have a clear interest in pushing for more money, as they have done for coming on five decades.

The net recipient countries are mainly now in the former Eastern bloc, and some of the Mediterranean member states. Most of them pay modestly into the EU budget but get great dollops of structural and cohesion funds, a pot of money worth some €50bn a year.

It’s that money that looks most threatened by the letter: France seems to have managed to secure a fully-funded Common Agriculture Policy, its cherished EU-wide subsidy system that gobbles up 40 per cent of the €141bn annual budget.

The net recipients and Euroenthusiasts argue that a secretive plot involving a few big hitters is no way to decide the future of the EU. They point out that the Commission is in charge of proposing a budget – a process it planned to start next year – with the European Parliament and member states then approving it.

In truth, distant and recent history show that the big countries can and do impose their will when it comes to money matters.

In 2003, a similar letter by six countries – led by the same core as today – called for the EU budget for 2007 to 2013 period to hover around 1 per cent of GDP. Though the Commission at the time reacted with outrage, that is precisely what transpired in the end. (See UPDATE below)

And just a few weeks ago, at the October summit, 11 countries once again led by the UK and with France, laid down the terms for the 2011 budget, countering a bid by the Commission and parliament for a 6 per cent rise with a more modest 3 per cent counterproposal.

Again, after much huffing and puffing from the parliament in particular, it’s the big countries that carried the day in that dispute.

One question outstanding is when the countries behind this letter will come forward publicly. Sources say it could be as early as next week, just as Brussels empties for the holidays. Alternatively, a clear message having been sent out over the course of this summit, we may never hear of it again.

UPDATE: An EU official points out that the outcome in 2003 was more nuanced than portrayed. The EU budget did go up, in part because structural funds got a hefty boost, to around 1.2 per cent of economic output, a not insignificant rise.