Union’s budget focused on recovery

The European Commission’s draft budget sets spending at 131.1bn euros ($174.6bn), some 5.9 percent more than in 2010.

Funds for poor regions, research and development and to improve the EU’s economic competitiveness had the biggest increase – by 14.7 percent to 54.6 billion euros.

“The ambition of the draft budget is to continue to promote economic recovery together with the EU Member States,” EU Budget Commissioner Janusz Lewandowski told a news conference.

The EU’s 27 countries are trying to bolster a fragile economic recovery from the worst crisis in decades with fiscal stimuli, but most of them face gaping budget deficits.

EU spending on agriculture, including much-criticised direct subsidies for farmers, is to remain stable at 58.1bn euros.

Many politicians and experts have said EU farm spending, which accounts for more than 40 percent of the budget, is wasteful and distorts international trade.

Lewandowski said crisis-hit Greece should receive some 2.5bn euros in regional aid and about 700m euros in farm funds. This money will be separate from the aid package aimed to prevent Greece from defaulting, now being negotiated between Athens, the Commission, and the IMF.

But the EU’s poorer members from central and eastern Europe will be the biggest recipients of EU aid, whose general proportions are set in the bloc’s long-term spending plan. The current, seven-year plan ends in 2013.

Under the draft, foreign aid is to fall by 2.4 percent to 7.6bn euros, but spending on administration will grow by 4.5 percent to 8.3bn euros.

The EU will overhaul its budget from 2014. Politicians and analysts expect the reform to shift EU spending away from agriculture, although France, long the biggest beneficiary of EU farm subsidies, is expected to oppose this.

The draft budget will now be scrutinised by the EU’s 27 governments. They have in the past cut such spending plans, something the European Parliament is likely to resist.

The EU budget is financed by contributions from Member States, of which Germany is the biggest net payer.