The cornerstone of the budgetary procedure is the Commission’s preliminary draft budget. The European Parliament and the Council determine the extent of the expenditure on individual items, after which the final budget is adopted by the European Parliament. The Commission’s draft budget is generally debated twice in both the Council and Parliament before adoption. During these readings the proposal is examined with a view to proposing changes in the total appropriations or allocating the appropriations differently. In the course of the procedure the Commission, Council and European Parliament meet regularly to try to reach agreement on the budget.
The EU’s budget is laid down for one year at a time from 1 January to 31 December, but the overall financial framework (the financial perspective) for the EU’s budget is laid down by the Commission, Council and European Parliament for several years at a time in the interinstitutional agreements. The budgets for individual years are laid down in the light of these agreements, which contain multiannual expenditure ceilings for the individual categories of expenditure in the EU budget.
The basis for the adoption of the EU’s budget is Article 272 of the Treaty. In addition, there are more detailed provisions on the budget’s adoption and implementation, etc. in the Financial Regulation and a number of agreements between the Commission, the Council and the European Parliament on the course of the procedure. Article 272 does not therefore entirely reflect the actual process of adopting the EU’s budget.
The Commission submits a preliminary draft budget
The budgetary procedure begins with the Commission preparing a preliminary draft budget. Each EU institution draws up an estimate of its expected expenditure and it is on the basis of these estimates that the Commission prepares the preliminary draft budget.
According to Article 272 of the Treaty, the Commission’s preliminary draft budget must be presented to the Council no later than 1 September of the year preceding the year to which the budget relates, but the institutions have agreed a different timetable, according to which the draft budget must be submitted no later than 15 June, although in practice the Commission usually presents the preliminary draft budget to the Council at the beginning of May.
If circumstances arise of which the Commission was not aware during the drafting of the proposal, the Commission has the opportunity to amend the preliminary draft, but no later than 30 days before the first reading of the proposal in the European Parliament.
The Council’s first reading
The Council’s first reading normally takes place in July, and after the Council’s reading the draft budget is presented to the European Parliament no later than 5 October.
Only after the Council’s first reading of the preliminary draft budget is the proposal called the ‘draft budget’.
During its first reading of the preliminary proposal, and after consultation with a delegation from the European Parliament, the Council adopts the proposal and any proposed amendments by qualified majority.
If the Council wishes to amend the proposal, it must obtain an opinion from the Commission and any other institutions concerned.
The European Parliament’s first reading
The Council usually adopts a number of amendments, after which the draft budget is sent to the European Parliament.
The European Parliament then has a period of 45 days to express its opinion. The budget is regarded as finally adopted if Parliament gives final approval to the draft budget or fails to express its opinion within this period.
However, it is far more usual for Parliament to propose amendments to the budget. These amendments may be:
– amendments to the draft budget concerning the non-compulsory expenditure, which are adopted by a majority of the votes in Parliament
- amendments concerning compulsory expenditure, which are adopted by a majority of the votes cast
After the amendments are adopted, the amended draft budget is sent for a second reading in the Council.
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One thing that makes the budgetary procedure complicated is the fact that a distinction is made between compulsory and non-compulsory expenditure, and the fact that the European Parliament’s influence over these types of expenditure differs, depending on which part of the budget it concerns. Parliament has the last word in relation to non-compulsory expenditure, while the Council has the last word in relation to compulsory expenditure. According to Article 272, compulsory expenditure is ‘expenditure necessarily resulting from this Treaty or from acts adopted in accordance therewith.’ This means that the compulsory expenditure is statutory expenditure. This may be expenditure to which farmers are entitled or expenditure to which a third country is entitled under agreements with the EU. The non-compulsory expenditure relates to appropriations that can be cut. In practice, the distinction between the two types of expenditure has given rise to conflicts between the Council and the European Parliament. |
The Council’s second reading
After it has been submitted by Parliament, the Council has a period of 15 days to express an opinion on the amended draft budget. The Council’s second reading normally takes place in the third week of November. If the Council accepts all of Parliament’s amendments, the budget is deemed to be finally adopted. If the Council decides not to accept Parliament’s amendments the following applies:
Compulsory expenditure
If Parliament’s amendment does not entail an increase in an institution’s overall expenditure, the Council may only reject the amendment by a qualified majority.
If the Council adopts such a decision, it can subsequently substitute a different amount by qualified majority.
If the Council does not adopt such a decision, the draft budget is deemed to be finally adopted.
If Parliament’s amendment entails an increase in an institution’s overall expenditure, a qualified majority is required in the Council to adopt the amendment.
If the Council does not adopt such a decision, the proposal is deemed to be rejected, and the Council can substitute a different amount by qualified majority.
The Council has the last word on the adoption of compulsory expenditure, which cannot be amended by Parliament.
The situation with regard to non-compulsory expenditure is different.
Non-compulsory expenditure
The Council can modify or reject Parliament’s amendments to non-compulsory expenditure by qualified majority.
However, the final decision on amendments concerning non-compulsory expenditure is taken by the European Parliament.
The European Parliament’s second reading
The draft budget is sent with the Council’s amendments to the European Parliament, which then has a period of 15 days for the second and final reading of the budget. The European Parliament’s second reading usually takes place in December.
If Parliament does not state its position within the period of 15 days the budget is deemed to be adopted with the amendments the Council has proposed.
Non-compulsory expenditure
As far as the Council’s amendments to non-compulsory expenditure are concerned, Parliament may decide to modify or reject the Council’s modifications of Parliament’s amendments by a majority of the 785 votes in Parliament, providing this also amounts to three-fifths of the votes cast.
Such a decision means that the budget is finally adopted and Parliament has had the last word.
In its second reading Parliament cannot debate the Council’s proposed amendments to compulsory expenditure.
Rejection of the budget
However, Parliament may by a majority of the total of 785 votes, providing this also amounts to three-fifths of the votes cast, reject the entire draft budget. This means that the procedure must start from the beginning again on the basis of a new draft budget. If this proposal is not accepted the EU will operate on the basis of monthly appropriations corresponding to one twelfth of the previous year’s budget (the provisional twelfths system).
Parliament has rejected the budget three times in the history of the EU.
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In the 1980s the EU institutions began to enter into multi-annual agreements to improve the budgetary procedure and ensure a limitation of expenditure. The agreements lay down the priorities for the budget and lay down ceilings for the individual categories of expenditure in the EU’s budget. The first agreement was entered into in 1988 to take account of the Single European Act, and the second agreement was entered into in October 1993 for the period 1993-1998 after the Edinburgh European Council. The latest agreement applies to the period 2007-2013. |
Further information:
Link to Directorate-General for Budget
Link to summery of Budget legislation
Sidst opdateret: 22-07-2008 - ANSJ