How is the EU budget decided?

KEY POINTS

• EU institutions and bodies forward their budget estimates for the following year no later than 1 July to the European CommissionIn practice, the Commission seeks to have its draft budget ready in spring (April/May).
• Based on these estimates, the Commission draws up the draft budget for the following year. It must forward this draft budget to the Council and the European Parliament by 1 September.
• The Council must reach its position on the draft budget by 1 October. It forwards its position and the reasons for it to the European Parliament.
• The European Parliament must adopt its amendments to the Council’s position within 6 weeks (42 days).
• The Council has 10 days to accept the Parliament’s amendments. If it does not, a conciliation committee is formed comprising equal numbers of representatives of the Council and members of the European Parliament. This committee must agree on a joint text within 3 weeks (21 days).
• If the conciliation committee cannot agree on a joint text, the Commission must present a new draft budget.
• Once agreement is reached in the conciliation committee, the Council and the Parliament must approve or reject the text within 2 weeks (14 days).
• If the Council rejects the joint text, Parliament may still adopt it but only if a majority of its members vote and three fifths of them support it.
• If both institutions reject the joint text, the Commission must prepare a new draft budget.
• If the budget is not agreed by the end of the year, a system known as ‘provisional twelfths’ comes into play (Article 315 of the Treaty on the Functioning of the European Union). This means that the equivalent of no more than one twelfth of the previous year’s budget or of the Commission’s draft budget — whichever is the smaller — can be spent each month until the budget is definitively adopted.
• As new developments arise, the budget may need to be amended. The procedure for adopting amending budgets is the same as that for the annual budget.