Parliament backs €9 billion EU budget hike

BRUSSELS - MEPs defied calls by national governments to rein in EU budget spending on Thursday (4 October), instead restoring most of the €138 billion settlement proposed by the European Commission for the 2013 budget.

The European Commission’s budget proposal had called for a €9 billion increase on the 2012 budget, equivalent to an additional 6.8 percent.

Goran Farm, the Swedish deputy who leads for the Socialist group on the Budget committee, described the parliament’s position as “very modest, with a clear focus on jobs and growth.”

Member states had agreed to a 2.8 percent increase but the EU’s seven net-contributing countries, which include Germany, France and the UK, insist that they will not cede more ground at a time when governments are imposing national austerity plans. Critics of the council position say that governments are trying to block funding to pay for projects they have already agreed to.

Helga Truepel, the Green group’s spokesperson, said the commission’s increase was to cover payments already agreed by governments. “Council prefers to keep the level of payments under the EU budget artificially low while knowing very well that the commission is currently unable to honour its financial obligations,” she said. 

For his part, Richard Ashworth, spokesman for the British conservative dominated ECR group, accused the committee of adopting an “Oliver Twist mentality” and backing “an inflation-busting increase that those who pay the EU’s bills are unable and unwilling to pay.”

Under the Lisbon Treaty, parliament enjoys equal power with governments on the adoption of the EU budget which must be no higher than 1.23 percent of GDP.

The vote by the budget committee comes after the commission revealed that it would table a supplementary budget to plug an estimated €10 billion hole to ensure that payments under programmes such as the European Social Fund and Erasmus scheme could continue to be made. 

While negotiations on the next seven year budget framework starting in 2014 remains deadlocked, a number of EU funding programmes are on the brink of insolvency.

Socialist group leader Hannes Swoboda accused governments of “blackmailing successful programmes” with the immediate future of the EU’s Erasmus student exchange programme affected by the budget gridlock.

Although the Commission has sought to play down the prospect of students not receiving their grants, the European Students’ Union (ESU) said that failure to reach a budget settlement could leave students in the 2012-13 semester empty-handed. 

ESU chair Karina Ufert urged the EU executive to “solve the current financial shortcomings of the European Social Fund by using money from underspent EU funds.” Over 2 million students have used the Erasmus programme in its 25 year existence.

The Cypriot Presidency is hoping to cajole ministers into a compromise deal over the coming weeks. They will then attempt to bridge the gaps with the parliament and commission position.

Source: http://euobserver.com/news/117759

Parliament Protects Inducements

European lawmakers voted this week to protect the practice under which banks and other financial companies pay inducements to financial advisers for selling their products to retail investors.

They thereby overturned  expectations that they would in effect ban the inducements, which it is argued created a conflict of interest between a financial adviser and his or her customer. The practice is said to give advisers the incentive to sell the products on which they earn the most commission rather than those that best suit investors’ needs.

The economics committee of the European Parliament agreed in a last-minute amendment to financial legislation Wednesday that it would not ban such inducements. Up until the night before the vote, it looked as if the committee would effectively ban the practice by forcing banks pay the commissions to clients, rather than to the advisers.

“This would have been an incentive for financial advisers to recommend products in their clients’ interest and not simply on the basis of securing the highest commission,” said Sven Giegold, a German parliamentarian from the Green Party.

The legislation, called the Markets in Financial Instruments Directive, which was put forward by the European Commission last year, is expected to gain the support of the full parliament next week. Following the vote, the Parliament will then enter negotiations with the commission and the 27 member states before it becomes law.

The Commission, the EU’s executive, had proposed an outright ban against advisers receiving inducements from a financial product provider.

However, support in Parliament for barring the practice crumbled when the European Socialists and Democrats group backed away. The group put forward an amendment during the vote Wednesday that bankers would only be compelled to disclose the use of commissions. The extent of the expected disclosure is as yet unclear.

However, no politician from the group is willing to attach his name to the amendment, which is being presented as a party-wide initiative. Usually, legislators personally present such last-minute proposals.

Legislators and others familiar with events say the shift in support came because the group is led by politicians from Germany, Luxembourg and France, whose banks heavily rely on paying such inducements–which the the U.K. is already on track to ban.

“This is a dramatic setback for consumers,” said Monique Goyens, director general of The European Consumer Organisation. “Incomprehensibly, [members of the European Parliament] persist in supporting the inadequate system of disclosure of sales inducements which has done nothing to prevent intermediaries pushing their most self-serving products.”


Source: http://blogs.wsj.com/brussels/2012/09/28/parliament-protects-inducements/