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EU Commission set to propose 6.8% increase for 2013 EU budget

The European Commission will present its draft budget for 2013 later today (25-4-12), with Reuters reporting that, according to leaked copy, it will ask member states and the European Parliament for a €9bn increase in spending, equivalent to an increase of 6.8%. The Telegraph reports that the UK’s share of this increase will amount to £890m. The Commission is expected to justify the increase on the basis that the EU is legally bound to honour spending commitments made in previous years, particularly in the area of the structural and cohesion funds. The proposal will largely set the tone for negotiations over the EU’s next seven year budget which are also taking place today.

Rzeczpospolita reports that the EU Commission is withholding payments from already allocated EU funds for 20 member states leading to accusations that it is a political ploy intended to prepare the ground for a cut in the overall budget for regional policy. Open Europe’s Pawel Swidlicki is quoted as saying, “Rather than striking backroom deals regarding funds that have already been committed, the whole budget needs to be re-designed to deliver better value for money for all European taxpayers. The structural funds have the biggest potential for delivering growth in the new member states so that is where they should be focused, whereas significant savings could be found by completely devolving them for wealthier member states.”

Separately, the Bank of Greece said yesterday that it expects the Greek economy to contract by 5% this year, above its previous estimate of 4.5% given only a few weeks ago, but said that achieving a primary surplus next year still looks possible. Greek Central Bank Governor George Provopoulos also warned that if the new government does not adhere to the scheduled reform programme, Greece’s place in the eurozone will come under threat.