EU Leaders Agree Budget Deal after Lengthy Talks

European Union (EU) leaders have agreed a budget deal in Brussels after lengthy negotiations, under which the EU budget for the seven-year period 2014 to 2020 will be trimmed to €960bn. The figure represents a 3% cut from the current long-term budget and represent the first-ever reduction in EU spending in its 56-year history, contrasting with a figure of €1,033bn proposed by the European Commission (EC) when negotiations commenced.

The cuts package was  tabled by the EU’s president Herman Van Rompuy, following a clash between UK prime minister, David Cameron, who led demands for substantial cuts to reflect austerity measures in many EU member countries and François Hollande, the French president, who advocated maintained spending to assist recession-hit economies. The debate mirrored the ‘austerity versus stimulus’ discussions seen around the world since the 2008 financial crash.

German chancellor Angela Merkel acted as architect of the deal, which would include €1bn cuts in spending on the Brussels bureaucracy, reductions in cross-border infrastructure projects aimed at boosting economic growth – typically in southern European countries, and a €6bn fund set up to tackle youth unemployment in countries such as Spain, where the jobless rate is rapidly approaching 60% in the 16 to 24 year old age group.

The deal still has to secure the approval of the European Parliament, a process likely to take several months and where success is not guaranteed as several legislators have expressed opposition; not least its president, Martin Schulz.

The lengthy negotiations have also delayed discussion of another key issue on which EU leaders were hoping to make progress; developing a new free trade deal between Europe and the US. According to a report by Reuters, a draft of the final summit statement confirms that the EU will give “its support for a comprehensive trade agreement” with the US.

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