EU to cut budget for the first time

European Union leaders agreed yesterday to a seven-year budget worth 959 billion euros, the first decrease in a budget in the union's history.

European Union leaders agreed yesterday to a seven-year budget worth €959 billion (Dh4.71 trillion), the first decrease in a budget in the union's history.

The prior seven-year budget was for €975bn.

The European Council president, Herman Van Rompuy, said that the agreement had been reached after two days of negotiations.

The €959bn is about 7 per cent less than the €1.03tn that the EU's executive arm, the EU Commission, had originally proposed.

The heated debate over what the EU pledged to spend on everything from infrastructure to development aid laid bare divisions over what the role of the union should be.

"It's done!" a spokesman for the German Chancellor, Angela Merkel, tweeted. "The 27 EU members have agreed on a budgetary framework for 2014-2020. Europe has shown itself to be capable of acting."

"The effort was worth it," Ms Merkel said. "The agreement is good and important."

The European parliament must still approve the deal - and legislators there suggested that drastic cuts would be unacceptable.

"This agreement will not strengthen the competitiveness of the European economy but weaken it," said a statement by the leaders of the four largest political groups in the parliament. "It is not in the prime interest of our European citizens."

The deal that emerged leaned towards the position of countries led by Britain, which insisted that the EU could not look for more money at a time of belt-tightening across Europe.

But it seemed a loss for many of the newer - and generally poorer - members. That group, led by Poland and France, argued that Europe meant nothing if the budget were not used to bridge the gap between rich and poor members and help restart growth.

Both sides had threatened to walk away from the table if they did not get what they wanted. The first summit to negotiate a budget collapsed in November.

Mr Van Rompuy noted, however, that the budget did put aside €6bn to alleviate youth unemployment, which has skyrocketed because of the economic crisis over the past few years, notably in Greece and Spain.

The budget also includes items meant to generate economic growth in the future, such as research and development, increasing digitalisation and a new, more accurate satellite navigation system.

* Associated Press