Contributions boosted

EU planning to cut subsidies for farmers and roads

Landtag Mecklenburg-Vorpommern
Manuela Schwesig, frustrated with Brussels. Source: DPA

Günther Oettinger may be a German politician, but as the budget commissioner for the European Union he is not doing his countrymen any favors. His medium-term budget for 2021 to 2027 would cut billions of euros in subsidies to German states while requiring substantially higher payments to the EU from the German government.

The subsidy cuts are so deep that for the first time in 11 years, the prime ministers of all 16 German states trooped to Brussels to protest. “We do not want the cuts,” said Manuela Schwesig, who heads the state government in Mecklenburg-Vorpommern.

Nonetheless, Mr. Oettinger is determined to save the EU money. For the two largest EU programs, agricultural policy and the so-called cohesion policy, which is aid for less-developed parts of the EU, he said he would cut 6 percent of spending compared to the budget for 2020. The subsidies for farmers and structurally weak regions still account for 70 percent of the Brussels budget. But their share should “now drop to 60 percent,” Mr. Oettinger said.

Jan 11 2016 Brussels Bxl Belgium Günther Oettinger EU commissioner for Digital economy hol
Günther Oettinger noticing the spot he missed shaving that morning because he was thinking about cuts. Source: Imago

The inevitable budget changes should be distributed as evenly as possible to all of the EU’s 27 members, he said. Net contributors should transfer more to Brussels and net recipients will get less. Austria and the Netherlands have already said they cannot contribute more.

In the current financial period from 2014 to 2020, the EU has around €1 trillion available, which works out to about 1 percent of European economic output. For the next period, Mr. Oettinger wants to ask for between 1.13 and 1.18 percent of European gross national product. But commission officials believe that is likely to end up at the lower end of the range.

In addition, the commissioner is planning other profound changes in the way the EU gives assistance. He wants to make direct payments to farmers on a declining scale, with larger farms receiving less than before. In the case of structure funds, the EU wants comparatively prosperous regions to shoulder more than the usual 50 percent of project costs.

On the other hand, the EU is planning to increase help for regions that take care of large populations of refugees or have particularly high levels of youth unemployment.

Ruth Berschens heads Handelsblatt’s Brussels office, leading coverage of European policy. To contact the author:berschens@handelsblatt.com

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