Van Rompuy tables new framework budget proposal

European Council President Herman van Rompuy presented an updated draft of his proposal for the long term EU budget last night keeping overall spending, but cutting spending on growth and foreign aid to increase spending on agriculture and cohesion, in a concession to the likes of France, Italy and Poland.

The proposal still contains changes to the UK rebate which could cost the UK €3.5 billion to €7 billion over seven years.

Out of the roughly €15 billion that Van Rompuy had originally proposed to cut from each funding line compared to the European Commission proposal, the new draft proposes to restore €8 billion to agriculture and €10 billion to regional aid. France is the biggest recipient of Common Agricultural Policy (CAP) funds, while Poland is the biggest recipient of regional aid (cohesion) funds.

The cuts come from budget items which have no powerful defenders - research, overseas spending and cross-border telecommunications and energy infrastructure.

Leaders arrived at the summit contemplating an initial proposal from Van Rompuy that suggested that agricultural policy - the EU's largest budget item - should receive €364.5bn over the next seven years. He is now putting forward a figure of €372.2bn.

Regional aid would increase from €309.5bn to €320.1bn.

Among the other changes to Van Rompuy's original proposal is a €5bn cut, to €60.6bn to a part of the EU's budget that covers the EU's activities beyond its borders, 'global Europe'. Rompuy's initial proposal was already €5bn lower than suggested by the European Commission in June 2011.

Security and citizenship - which also covers migration and emergency services - would be cut by €1.6bn under the new proposal. It was previously €18.3bn.

The proposed budget for trans-European infrastructure projects - 'connecting Europe' - has been reduced by €5bn, to €41.2.

The EU's administrative spending would remain untouched.

The text on rebates - money returned to net contributors as a means of correction - remains unchanged. The issue is particularly important to the United Kingdom, both in absolute terms (its rebate, of €3.6bn, is the largest) and politically.