Richard Ashworth

EU Budget Procedure

The process for drawing up and approving the EU budget follows a rough timetable and set of procedures. Over the years the procedure has been amended to take account of new pressures and for convenience. The most recent change was made in 1999 by an 'Interinstertutional Agreement' between the Council and the Parliament, which lays out the current procedure.

The process starts with the Commission which prepares a Preliminary Draft Budget (PDB) in the winter of the year previous to which the budget is to be implemented. The Commission holds a meeting with the Parliament and Council before finalising their proposals.

The PDB is presented in two forms:

Payment appropriations - actual expenditure during the financial year

Commitment appropriations - expenditure plus liabilities extending beyond the year

Next the PDB goes to the Council, usually in April or May and is looked at by the council's budgets committee line by line, then by member states permanent representatives to the EU and finally by government ministers from each country. The ministers will also meet with a delegation from the Parliament at this stage to understand the Parliament's priorities. The Council then produces a first draft of the Budget and sends it to the Parliament where it is referred to the Budgets committee.

The Parliament's budgets committee will go through the Council's first draft and will produce its opinion, it will also co-ordinate opinions given by all other Parliament committees.

Now in mid November, the draft is returned to the Council with the parliament's opinion and the two bodies usually meet to discuss any problems. At this stage the Council is seeking to strike a balance between accommodating the Parliament and sticking to its first draft.

By December the draft has been returned to the Parliament for a second reading. The budgets committee will meet and review the draft then recommend adoption. The whole Parliament then votes on the draft and if approved the President of the Parliament signs it and declares the budget adopted.

The timetable for the current procedure establishing the 2006 budget is as follows:

2005 April - Commission adopted PDB

July - Council decision on draft budget

September - Parliaments first reading of draft budget

October - Parliament votes on its first reading of draft budget

- Trialogue meeting between Commission, Council and EP

November - Council Second Reading

December - Parliament Second Reading and Vote on final draft budget