How is the budget decided?

The procedure in detail

The annual budgetary procedure as established by article 314 of the Treaty on the Functioning of the European Union lasts from 1 September to 31 December.

All EU institutions draw up their estimates for the draft budget according to their internal procedures before 1 July.

Commission’s draft budget

The Commission consolidates these estimates and establishes the annual 'draft budget', which is submitted to the Council and the European Parliament by 1 September. In practice, the Commission endeavours to present the draft budget before the end of April/beginning of May.

Council's reading

The Council adopts its position on the draft budget including amending letters, if any, and passes it to the European Parliament before 1 October. The Council informs the European Parliament of the reasons which led it to adopt its position.

Parliament’s reading

The Parliament has then 42 days to adopt its amendments on the Council's position. The Council may accept the amendments within 10 days and adopt the draft budget.

Conciliation Committee

If the Council does not accept the Parliament's amendments, a Conciliation Committee is set up, composed of the members of the Council or their representatives and an equal number of members representing the European Parliament. The Conciliation Committee is assigned to come up with a joint text within 21 days. If the conciliatory procedure fails, the Commission has to come up with a new draft budget.

Once a joint text is agreed upon by the Conciliation Committee in early November, the Council and the Parliament have 14 days to approve or reject it. The Parliament may adopt the budget even if the Council rejects the joint text. In case the Council and the Parliament both reject the joint draft or fail to decide, the budget is rejected and the Commission has to submit a new draft budget.

If, at the beginning of a financial year, the budget has not yet been definitively adopted, a sum equivalent to not more than 1/12 of the budget appropriations for the preceding financial year may be spent each month.

Detailed description of the annual budget procedure: Treaty on the Functioning of the European Union, Article 310 and subsequent

Budget may be amended after adoption

In the event of unavoidable, exceptional or unforeseen circumstances, the Commission may propose during the year, that the budget as adopted be amended; it does this by submitting draft amending budgets.
Amending budgets are also used to enter the balance from the previous year in the budget for the current year.

Similarly, the Commission may, on its own initiative or at the request of the other institutions with their own budget section, present a letter of amendment to the draft budget in the light of information which was not available when the draft was established.

Both amending budgets and letters of amendment are subject to the same procedural rules as the general budget.

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