EU setback as key parties throw out deal offer on £820bn budget

Yesterday’s move extended the problems for the 27 EU nations that have been trying since last autumn to cobble together a budget for the years 2014-2020 at a time when many are mired in recession as they grapple with their debts. At the same time, a reinvigorated parliament has been clamouring for more clout in the way the EU is run.

The Christian Democrats, Socialists and Liberals all said the conditions laid down in a provisional agreement reached on Wednesday could not get their full backing. The Parliament’s budget rapporteur, Reimer Boege, even resigned from his position, saying the financial elements of the deal on the table were “nothing more than a manipulation”.

Socialist leader Hannes Swoboda said his party “will not take a rushed decision”.

Time is pressing though for a deal that would represent the first cut in spending in the EU’s history, to the dismay of many parliamentarians. The budget sets what the EU can spend on everything from infrastructure, farming to development aid.

The parliament needs to back February’s agreement by EU leaders and has asked for more money and more say in the way the budget will be run. The main parties also want a midway review to assess the changing conditions. If the deal lasts through to 2020, then any MEP elected next year could see his or her five-year term go without having a say on the budget. A failure to agree a budget could make long-term planning difficult.

Liberal ALDE leader Guy Verhofstadt said: “How can we... put the next Parliament and the next Commission in a seven year fiscal straitjacket that starts before their appointment and ends after the end of their term? We demand a real revision.”

The rejection represents a setback for Ireland, which hoped it would crown its six-month presidency of the EU, which ends at the end of this month, with a comprehensive budget agreement.

The discussions over the budget have lasted for months. Before February’s agreement, EU leaders had failed to agree a deal last November.

On one side, countries like Britain have argued that in a time of austerity the EU budget is a drag on national coffers, while others like France said the economic crisis highlighted the need for closer and deeper ties, which would compel the EU to do more than in the past.

Meanwhile, Greece’s governing coalition is to resume talks over a political crisis triggered by the closure of state broadcaster ERT, to try to avoid a snap election that could delay vital economic reforms and disrupt the country’s bailout programme.

Conservative prime minister Antonis Samaras held his second meeting in three days yesterday with his coalition partners – the Socialist Pasok and Democratic Left parties – who oppose his decision to switch off ERT’s signal and fire its 2,700 employees.