EU Parliament sets terms for budget accord after cuts

The European Parliament set down its terms on Wednesday for final negotiations on the EU's contested 2014-20 budget after the bloc's leaders imposed the first ever overall spending cut at a fractious summit last month.

MEPs voted 506 for and 161 against the budget "in its current form" in a resolution that seeks several key changes, including greater flexibility from one year to another on how funds are accounted for.

EU leaders agreed in February to a more than 3.0 percent cut in the Multiannual Financial Framework, limiting payments made by the EU to 908.4 billion euros ($1.2 trillion) and setting an absolute ceiling of 960 billion for spending commitments.

Wednesday's resolution, backed by the major political parties, rejected those sums, saying they tied the EU's hands for the next seven years and "cannot be accepted unless certain essential conditions" are met.

Lawmakers say there is already a 17-billion-euro hole in the figures for 2013 that needs to be covered and that the numbers as agreed will allow the EU to run up a structural deficit, which they say is expressly against EU rules.

They want to create space for a review of the budget mid-term and to enable the EU to raise more of its own income through direct taxation -- an option that was put off until the next budgetary cycle when a first budget summit in December collapsed in acrimony.

Parliament head Martin Schulz said the resolution paved the way for "possible negotiations" with the European Council, which groups the bloc's 27 heads of state or government.

"Today's vote is a clear indication that the European Parliament has accepted the responsibilities given to it by the treaties and will fight for an improved budget for the EU," said the leader of the Socialist grouping in the chamber, Hannes Swoboda.

"We are ready for serious negotiations and we hope that governments will be as serious and responsible as the European Parliament. We should work together for a result which is more responsive to the needs of the citizens and to global competition."

Former Belgian prime minister Guy Verhofstadt, who heads the group of centrist MEPs in the chamber, said the Parliament cannot countenance "the creation of excessive deficits, building up outstanding commitments year on year to a potential debt of 300 billion by 2020."

"To deal with that problem we need more flexibility between budgetary lines and carry-over between years so that under-utilised funds can be redirected to where the money is most needed," he said.

Verhofstadt complained that just 13 percent of the budget is allocated to research, innovation, infrastructure and competitiveness, with just one billion euros over seven years, instead of nine billion euros, set aside for the rollout of broadband internet connectivity across the whole EU.