(MENAFN - Khaleej Times) Despite demanding deep government spending cuts across the continent, the European Union's executive body has called for a 6.8 per cent increase in the bloc's own budget for 2013, provoking protests and adding fuel to the debate over austerity in Europe.
The request from the European Commission was condemned in several EU member states as unrealistic in a climate of stagnant economic growth, rising unemployment and cuts in welfare programmes and other government spending. Jan Kees De Jager, finance minister of the Netherlands, whose government collapsed last week amid a dispute over proposed spending cuts, was one of the critics.
The Netherlands is one of a number of EU member states that are net contributors to the Union's budget. The Union receives part of its funding from value-added tax receipts and duties, but the bulk is contributed by the governments of member states according to a formula related to their gross national income. Other net contributors include Germany, Britain and Sweden. The spending plan must be approved by a weighted majority of EU nations and of the European Parliament. Tough negotiations are inevitable, and the final increase is likely to be less than the commission requested.
Most of the proposed spending increase would be used to pay for projects in Europe's poorer regions that the Union has already promised to support. Because the bloc is nearing the end of its current seven-year funding program, which runs from 2007 through 2013, much of this spending would be carried out next year.
But budget hawks argued that the commission should propose cuts in other areas to allow it to fulfill those commitments while limiting the spending increase to the rate of inflation. Some diplomats argued privately that demanding a big increase was politically inept and played into the hands of critics of the Union. The European Union has been criticised as being out of touch with its constituents, particularly in countries that have received international bailouts " Greece, Portugal and Ireland - and by populists in other member countries, like the Netherlands.
But the debate over austerity in Europe has been complicated by clear indications that financial markets are worried that retrenchment across the Continent is eroding prospects for economic growth.