This report contains four sections: overview, revenue, expenditure and annexes.
Section I presents an overview of EU finances in 2012. It introduces the current multiannual financial framework (MFF) 2007–13 — the EU’s long-term financial plan — including its role and structure and the specific steps of the 2012 annual budgetary procedure. The section ends with a short description of the way the EU budget is managed.
Section II provides information on the budget revenue and describes the EU budget’s own resources. It also explains a number of particularities such as the UK correction and other rebates, other revenue, donations and fines.
Section III represents the main part of the report, covering the expenditure from the EU budget grouped by area of spending (heading) according to the current MFF. The text includes information on the main programmes as well as on the expenditure allocations by Member State. This section also presents and explains the expenditure methodology.
Section IV includes six annexes which provide detailed information, with figures and charts on the last MFF (2000–06) and the current one (2007–13). The annexes also show the expenditure and revenue by heading, source type and Member State for the period 2000–13, as well as the methodology and calculation of the operating budgetary balances in Annex 3. Recoveries and financial corrections are detailed in Annex 4, while Annex 5 summarises the borrowing and lending activities. The last annex is a glossary with the main terminology of the report explained in plain language.
The 2012 annual budget was the sixth annual budget executed under the current MFF. This multiannual plan is divided into headings (some of them broken down into subheadings) with annual limits (ceilings) for commitment appropriations (legal pledges to provide finance, provided that certain conditions are fulfilled) for each heading or subheading. The sum of the ceilings of all headings gives the total ceiling of commitment appropriations. An estimate is then established for the annual ceiling of payment appropriations (cash or bank transfers to the beneficiaries). Total annual ceilings are expressed in millions of euros and as a percentage of the gross national income of the EU (EU GNI). The total annual ceiling of payment appropriations as a percentage of EU GNI is compared to the reference own resource ceiling (1.23 % of EU GNI).
At the time of presentation of the draft budget for 2012 the overall ceiling set by the MFF for commitment appropriations was EUR 148.2 billion, representing 1.12 % of EU GNI. The ceiling for payment appropriations was EUR 141.4 billion, or 1.07 % of GNI.
Based on the MFF in force and the budget guidelines for the coming year, the Commission prepares an annual draft budget. The budgetary authority, comprised of the Parliament and the Council, usually amends the draft budget, and following further negotiations adopts the annual EU budget prior to the end of the current calendar year.
In the draft EU budget for 2012 presented on 20 April 2011, the Commission proposed EUR 147 435 million in commitment appropriations and called for a 4.9 % increase in payment appropriations compared to the 2011 budget, amounting to EUR 132 739 million. In July 2011, the Council set commitment appropriations at EUR 146 245 million and reduced payment appropriations to EUR 129 088 million. In October 2011, the Parliament proposed EUR 147 764 million in commitment appropriations. The level of payments was set at EUR 133 139 million.
The Conciliation Committee, during its 21-day period, reached agreement on the 2012 EU budget through conciliation in November 2011. The final compromise set the level of commitments at EUR 147 232 million, representing 1.12 % of GNI, and EUR 129 088 million for payments, which is EUR 3 651 million less than the Commission’s estimates.
The life cycle of the EU budget, from approval of the annual budget onwards, means that the figures for the commitment appropriations and payment appropriations available for a given financial year tend to vary over the course of the year. Procedures similar to the budgetary one apply to the adoption of amending budgets. The following factors influence the amounts of the annual budget over the financial year.
Carry-overs represent amounts from the previous year’s budget that have not been used and are carried over to the current financial year. The carry-over decision was taken by the Commission on 13 February 2012.
Amending budgets ensure more precise and economical financing of the budget by the Member States. In 2012, a total of six amending budgets were adopted. Moves of appropriations from one budget line to another are also made via transfers during the year.
As a result, the final budget represents the outcome, at the end of the financial year, of active budget management, including all measures that have an effect on the total EU budget — carry-overs, amending budgets and transfers — which have been proposed and adopted during the financial year. Of the final budget for 2012 totalling EUR 136 892 million in payment appropriations, EUR 135 602 million — or 99 % — has been used.
The Commission has accounts with Member State treasuries, central banks and commercial banks. As the source of EU finances is almost entirely stemming from own resources — including Member States’ contributions based on their share in EU GNI — these are credited twice a month to the accounts opened with Member State treasuries or central banks. The funds are used to execute payments through commercial bank accounts on the basis of the ‘just-in-time’ principle. In 2012, 0.7 % out of a total of 1 855 119 payments were executed through treasuries and central banks, representing 72 % of the total amount of payments. The remaining 99.3 % of payments were made through commercial banks (representing 28 % of the total amount of payments).
The EU budget is financed by own resources, other revenue and the surplus carried over from the previous year. As the EU budget must be balanced, in accordance with Treaty provisions, total revenue must equal total expenditure. However, since out-turns of revenue and expenditure usually differ from the budgeted estimates, there is a balance resulting from implementation. Normally, there is a surplus, which reduces Member States’ own resources contributions in the subsequent year. In 2012, own resources amounted to EUR 129 429.8 million and other revenue to EUR 8 613.8 million. The surplus carried over from 2011 was EUR 1 497.0 million.
The overall amount of own resources is determined by total expenditure less other revenue. Own resources are divided into the following categories: traditional own resources (TOR); the VAT own resource; and the GNI own resource, which plays the role of a residual (or balancing) resource.
Customs duties (TOR) are levied on economic operators and collected by Member States on behalf of the EU. In 2012, this resource corresponded to 12 % of total revenue. A production charge is also paid by sugar producers. Revenue from this resource amounted to 0.1 % of total revenue in 2012.
The VAT own resource is levied on Member States’ VAT bases, which are harmonised for this purpose. According to the Council Decision 2007/436 of 7 June 2007 on system of the European Communities’ own resources (ORD 2007) (3), the uniform rate of call of the VAT own resource is fixed at 0.30 % from 1 January 2007. However, the VAT base to take into account is capped at 50 % of each Member State’s GNI. For the period 2007–13, the rate of call of the VAT own resource has been fixed at 0.225 % for Austria, at 0.15 % for Germany and at 0.10 % for the Netherlands and Sweden. In 2012, the total amount of the VAT own resource levied reached 11 % of total revenue.
The GNI own resource finances the part of the budget not covered by other revenue. The same percentage is levied on each Member State’s GNI, with two Member States receiving reductions. The amount of the GNI own resource needed depends on the difference between total expenditure and the sum of all other revenue. In 2012, the total amount of the GNI resource levied reached 76 % of total revenue.
A specific mechanism for correcting budgetary imbalances in favour of the United Kingdom (UK correction) is also part of the own resources system. It is to correct the imbalance between the United Kingdom’s share in payments and expenditure of the EU budget. The total amount of the UK correction paid in 2012 amounted to EUR 3.8 billion. Sweden and Netherlands also benefit from a reduction in their annual GNI contribution of EUR 605 million for the Netherlands and EUR 150 million for Sweden, expressed in 2004 prices.
Revenue other than own resources includes taxes from EU staff remunerations and other diverse items. In 2012, this revenue amounted to EUR 8.6 billion.
|1a Competitiveness for growth and employment||11 969|
|1b Cohesion for growth and employment||48 486|
|2 Preservation and management of natural resources||58 032|
|3a Freedom, security and justice||855|
|3b Citizenship||1 383|
|4 The EU as a global player||6 773|
|5 Administration||8 102|
As in the MFF, the annual EU budget expenditure is presented in this financial report for 2012 according to headings and subheadings. Data are also structured according to the allocation of expenditure by each Member State. Both presentations are based on authorised appropriations implemented in 2012, with some exceptions. In total, 94 % of the 2012 EU budget is funding policies and projects in Member States. The chart below provides an overview of how each country benefited from the budget and gives the relative importance compared with each Member State’s GNI for a better understanding of the figures.
Competitiveness for growth and employment is the key action of the drive to turn the EU into a smart, sustainable and inclusive economy, delivering high levels of employment, productivity and social cohesion.
EUR 12.1 billion has been allocated under this budget heading, which includes major programmes such as the seventh framework programme for research and technological development (FP7), the lifelong learning programme (LLP), the competitiveness and innovation programme (CIP) and the trans-European networks (TENs). Other actions concern the internal market, statistics, financial services and supervision, taxation, the customs union and the fight against fraud.
The trans-European transport network (TEN-T) is one of the key infrastructure programmes of the European Union, supporting investment in the core European transport routes (including road, rail, multimodal links, air, inland waterways and maritime) and linking national and international regions by implementing more efficient and sustainable transport infrastructure. TEN-T investments are focused on the 30 priority projects and a number of horizontal areas of common interest relating to traffic management systems, and positioning and navigation systems.
The LLP aims to contribute through lifelong learning to the development of the Union as an advanced knowledge-based society, with sustainable economic development, more and better jobs and greater social cohesion, while ensuring good protection of the environment for future generations. This global objective is instrumental in achieving the goals set out in Europe 2020. EUR 1.2 billion was dedicated to learning activities in 2012.
The Structural Funds, i.e. the European Regional Development Fund (ERDF) and the European Social Fund (ESF), along with the Cohesion Fund (CF), contribute to making cohesion for growth and employment a reality in Europe. These funds help to strengthen economic, social and territorial cohesion between regions and the EU Member States. They also support competitiveness and employment, and encourage cross-border, transnational and interregional cooperation. For example, the ESF supports employment opportunities by focusing on labour mobility and workers’ adaptation to industrial changes.
In 2012, EUR 38.9 billion was made available for the Structural Funds, while the CF projects had a budget of EUR 9.6 billion.
Agriculture belongs, in budgetary terms, to the most important Union policies. It is the only policy fully integrated at Union level and plays an important role in providing a viable food supply and in the management of natural resources, as well as contributing to preserving biodiversity, landscapes, and clean water, soil and air.
EUR 43.9 billion was made available in 2012 for market-related expenditure and direct aid as income support for farmers, of which more than 90 % was not linked to the level of production. EUR 13.1 billion was available through the European Agricultural Fund for Rural Development (EAFRD) to improve the quality of life and to encourage the diversification of activities by creating new jobs and contributing to an adequate level of services for the rural economy. This includes activities such as training, modernisation projects on farms, enterprise projects and the participation of farms in ‘quality schemes’.
LIFE + contributes to the implementation, updating and development of EU environmental policy and legislation. Of all the nature and biodiversity projects financed under LIFE +, almost 50 % included actions for the restoration/improvement of Natura 2000 (the EU-wide network of nature protection areas) sites, while more than 40 % included conservation actions. EUR 242 million was dedicated to LIFE + actions.
The protection of life, freedom and the property of citizens are core objectives of the European Union, for which EUR 855.2 million was allocated in 2012. In a context of ever stronger security interdependence, responsibilities in this area include the management of the Union’s external borders, the development of a common asylum area, cooperation between law enforcement agencies and judicial authorities to prevent and fight terrorism and crime, respect for fundamental rights and a global approach to drug issues.
The effective management of migration flows is a challenge common to all EU Member States. That is why the EU provided EUR 427.1 million to reinforce measures against illegal immigration and develop programmes to integrate skilled migrants. To increase the security and well-being of citizens, the ‘Security and safeguarding liberties’ programme foresaw EUR 40 million to fight all forms of crime and terrorism and develop effective EU crisis management systems to exchange information and increase cooperation over law enforcement.
The EUR 1.4 billion provided for this policy in 2012 included contributions to numerous Europe 2020 strategy flagship initiatives, including ‘Youth on the move’, ‘An agenda for new skills and jobs’, ‘European platform against poverty’ and ‘Innovation union’. Issues of particular concern to citizens, including health, consumer protection and civil protection, were covered. The crucial task of reaching out and communicating with Europe was funded through cultural programmes and the policy area of ‘communication’.
With a budget of EUR 28.4 million in 2012, the ‘Europe for citizens’ programme encouraged civil society and other organisations to develop projects of European interest, town twinning and activities directly involving citizens.
The EU continued to strengthen its role in the world through a number of policy-driven instruments. In 2012, these instruments were allocated EUR 6.8 billion to tackle the challenges facing Europe as well as the rest of the world: climate change, terrorism, drugs and energy security. This policy also contributed to preventing, managing and resolving conflict, and building peace in the world.
Enlargement policy is one of the most effective EU foreign policy instruments, with a strong stimulus for political and economic reforms in candidate countries. In 2012, the EU provided focused pre-accession financial aid to six candidate countries (Croatia 1, the former Yugoslav Republic of Macedonia, Iceland, Montenegro, Serbia and Turkey) and three potential candidates (Albania, Bosnia and Herzegovina, Kosovo 2), intended to help these countries carry out political, economic and institutional reforms in line with EU standards with a view to their eventual accession to the EU.
The Commission is one of the world’s largest humanitarian aid donors. The European Union, together with Member States, continued to provide about half of global funding for emergency relief to victims of man-made and natural disasters.
In 2012, the Commission provided humanitarian assistance to more than 122 million people in over 90 non-member countries. It was present in all major emergencies and covered most of the countries facing food assistance crises.
In order to serve approximately 500 million citizens and ensure the smooth operation of all EU institutions, around 6 % of the total 2012 EU budget, amounting to EUR 8.1 billion, was spent. This covered, for example, staff salaries and pensions, buildings and infrastructure, information technology, and security.
The Commission remained committed to optimising its tools and procedures. It continued to meet all staffing needs from constant resources as it maintained its policy of ‘zero post increases’. In this context, delivering on the EU agenda and ambitions required more redeployments than ever.
Examples of results achieved thanks to the EU budget:
- Erasmus celebrated its 25th birthday in 2012. Close to 3 million students from 33 countries
and 300 000 university staff have participated in the programme, one of the most successful financed
from the EU budget;
- Thanks to the European Regional Development Fund almost 400 000 jobs were created between 2007 and 2012, nearly 1.9 million additional people have gained broadband access, total greenhouse emissions reduced by 33 400 kt, about 3 000 megawatts of additional electricity generation capacity was created from renewables and nearly 3.4 million people are served with improved urban transport;
- The EU Cohesion Fund helped to co-finance the building of 1 274 km of roads and 950 km of railways,
and the reconstruction of 3 000 km of roads and 3 800 km of railways;
- The European Agricultural Fund for Rural Development financed 217 300 modernisation projects and supported 1 350 million participants who have successfully completed a training activity related to agriculture and/or forestry;
- EU rules to ease cross-border successions were adopted, bringing legal certainty to the estimated
450 000 European families dealing with an international succession each year;
- Nearly 12 000 people and organisations participated in the consultation ‘Your rights, your future’
and shared their experience of using their EU rights. It was the largest public consultation organised by the Commission ever;
- Some 2 278 measures against dangerous non-food products were taken by EU countries and reported
in the EU Rapid Information system (RAPEX) in 2012 (26 % more than in 2011);
- The EU confirmed its status as the biggest humanitarian aid donor in the world with assistance provided
to 122 million people in over 90 non-EU countries in 2012;
- The European Ombudsman directly helped over 22 000 individuals by dealing with their complaints,
replying to questions or offering advice;
- More than 3 000 research proposals were retained for funding; 15 000 applicants were funded with
EUR 5 billion contribution from the EU via the seventh framework programme for research and technological development.
1 Croatia became a member of the EU on 1 July 2013.
2 This designation is without prejudice to positions on status, and is in line with UN Security Council Resolution (UNSCR) 1244/1999 and the International Court of Justice (ICJ) opinion on the Kosovo declaration of independence. 3 O.J. L163/17, 23.06.2007, http://eur-lex.europa.eu/LexUriServ/LexUriServ.do?uri=OJ:L:2007:163:0017:0021:EN:PDF