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EU Clash Over Unpaid Bills Delays Accord on Bloc's 2015 Budget

Tuesday, 18 Nov 2014 06:54 AM

Nov. 18 (Bloomberg) -- European Union governments and the bloc’s Parliament failed to agree on spending increases for next year, raising the prospect of a drawn-out battle over the 2015 EU budget.

The European Commission, the EU’s executive arm, must now present a new draft spending plan for 2015 and push for agreement before year end to avoid the introduction of emergency spending restrictions.

The 28-nation European Parliament is pushing for an 8.1 percent increase in EU payments in 2015, in the face of sluggish growth around the bloc, including in Germany, the region’s largest economy and a net contributor to the EU budget. Governments want a 3.7 percent increase, to bring spending “in line with budgetary constraints of the member states,” they said in a statement after a midnight deadline passed without an agreement.

Negotiations on the 2015 budget have been complicated by being linked to bills for 2014 that the EU has not yet paid.

The governments’ position is “utterly unacceptable and incomprehensible,” Jose Manuel Fernandes, a Portuguese lawmaker leading discussions on behalf of the Parliament, said in a statement today. Nations have “once again stimulated extremists, populists and Euroskeptics across Europe” by refusing to take action over 2014’s outstanding payments, he said.

Extra Time

Demands from the U.K. to get extra time to pay a 2.1 billion-euro ($2.6 billion) surcharge also have clouded the discussion, with some lawmakers saying that dispute should be treated as part of the wider budget debate.

While the Brussels-based commission last week put forward legislation to move back a deadline from the end of this month until Sept. 1, 2015, for Britain and eight other countries to transfer unusually high sums to the EU without being charged interest, it still requires formal approval by governments and an opinion by the Parliament.

The talks on the 2014 bills and the 2015 budget have so far been “constructive and proved to be useful for looking for a common ground,” the EU said in a statement.

The directly-elected EU assembly and the governments must reach a settlement before the 2015 spending plan can be enacted. If that doesn’t happen before the end of the year, the EU would be subject to emergency measures limiting it to using one twelfth of the 2014 budget each month.

To contact the reporter on this story: Ian Wishart in Brussels at iwishart@bloomberg.net To contact the editors responsible for this story: Alan Crawford at acrawford6@bloomberg.net Jones Hayden, Tony Czuczka

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