Introduction
1. The new Financial Perspective for the EU will
determine the overall revenue and expenditure of the EU and the
expenditure on each category of EU activity for the seven years
from 2007 to 2013. It will also largely determine the net contribution
to the EU of each Member State, and the future of the UK's budget
rebate. It will in practice be binding on the parties to it for
those seven years. It is therefore one of the most crucial forthcoming
EU decisions, with important consequences for enlargement and
the draft constitutional treaty.
2. The process of agreeing the new Financial Perspective
began with the document currently before the Committee —
the Commission Communication of 10 February 2004 — and the
Commission hopes that agreement can be reached in the first half
of 2005, though, given the difficulty of the negotiations, that
must be uncertain.
3. The overall level of revenue and expenditure under
the Financial Perspective is central, and widely differing figures
have already been floated, from the 1% of Gross National Income
(GNI) proposed by the UK and certain other Member States to the
1.24% proposed by the Commission. Within the overall figure,
the two main areas of spending are the Common Agricultural Policy,
on which a major part of the anticipated expenditure up to 2013
has already been determined by the decision taken at the Brussels
European Council in October 2002, and regional and cohesion policy.
Since the latter will in practice be the main determinant of
the overall figure, we examine the Commission's recent proposals
for it as part of this Report.
4. Other increases in spending are scattered through
the Commission Communication, not always with much attempt to
justify them, together with some major new policy commitments.
We have sought to concentrate here on what is new in the Commission's
proposals and what will give rise to increased expenditure. We
deal with each element of the new Financial Perspective in turn,
and then examine the proposals for regional and cohesion policy.
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