Tuesday, May 06, 2008

More equals less … or is it more?

You pays your money and you makes your choice – or so the old saying goes. But, in this case, you pays your money … and you get no choice.

To what else could we be referring, other than the annual EU budget, the 2009 spendfest having just been announced by Dalia Grybauskaité, the EU commissioner for financial programming and budget.

With appropriate fanfares, her press release tells us that this particular budget has the "highest spending for growth and employment" which is, of course, in complete contrast to last year's fanfares which heralded the news that growth and employment was "at the heart of EU spending".

Inevitably, Reuters via IHT picks up the "growth and employment" theme, noting that the EU "is to spend more on growth and employment than on agriculture for the second year running" – is if this was an achievement or even intended.

In fact, while agricultural spending will remain "stable" at €42.9 billion, actual expenditure in the core EU-15 is reduced as more funds are diverted to the new members. They will receive 18 percent of CAP funds – up from 10 percent in 2006 and up from 16 percent in 2008.

That overall expenditure has been contained, however, is nothing directly to do with the commission. Some 25 percent of more of the CAP goes not to farmers but on market support schemes, such as intervention and export restitution. With current high global commodities, this expenditure will not be needed – giving the flexibility to spend the money elsewhere while keeping the headline budget figure down.

So it is that, for 2008, the proposal was set at €129.2 billion in "commitment appropriations" – an increase of two percent over the previous year and payments were set at €121.6 billion, a 5.3 percent increase.

Now, this forthcoming year's "washes whiter" budget increases commitments to €134.4 billion - a four percent increase. But, since not all of these "commitments" will fall due in the financial period, the fair Grybauskaité is able to reduce payments to €116.7 billion – a four percent reduction. Yet, as Dalia readily admits, there has been a shift (i.e, increase) in "the centre of gravity of spending", with proportionately larger sums spend on conditional schemes which directly further the integration agenda.

In effect - and with more that a little help from high commodity prices - the EU is squaring the magic circle. It is able to promise more money to its growing constituency but, on the year, is having to pay less out of its bank account(s).

Such legerdemain thus enables the The Guardian to offer the headline: "EU proposes smaller budget for 2009," a point that will be seized upon by the Europhiles as illustrating that the EU is not some monster spiralling out of control – or words to that effect.

Such is a dazzling ambiguity of the headline proposal, though, that maybe Mz Dalia Grybauskaité should offer the beleaguered Gordon Brown some help with the presentation of his tax policies. She has managed to spend more where it matters (to the EU), while appearing to spend less, allowing her plans to be presented any which way depending on what suits the particular circumstances.


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