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The structure of the EU budget and its allocation

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Introduction

The structure of the EU budget and its allocation. The European Union (EU) is a union of 27 member states. The Administration of the Union has a parliament, a civil service and a judiciary that is distinct from those of the member states. These arms administer the application of treaties, laws and agreements between the member states and their expenditure on common policies throughout the Union. To pay for this, the EU had an agreed budget of �120.7 billion for the year 2007 and �864.3 billion for the period 2007-2013, representing 1.10% and 1.05% of the EU-27's GNI forecast for the respective periods. By comparison, the UK expenditure for 2004 alone was estimated at about �759 billion and France was estimated at about �801 billion. The Administration of the European Union has three elements to its government: the Council of Ministers, the European Commission and the European Parliament. In addition, the European Court of Justice is funded from the budget of the Administration. All three take a part in setting the annual budget. The budget for a year, or period of years, is determined in advance, but final calculations of payments required from each member state are not completed until after the budget year is over and information about revenue and expenditure is available. The UK rebate is one of the last elements of the budget to be calculated (though it is estimated in advance) as it depends upon the balance of all EU revenue to and from the UK. Overall structure of the EU budget The budget consists of: * General revenue * Revenue and expenditure by section: o Section I - Parliament o Section II - European Council and Council o Section III - Commission o Section IV - Court of Justice o Section V - Court of Auditors o Section VI - Economic and Social Committee o Section VII - Committee of the Regions o Section VIII - European Ombudsman o Section IX - European Data Protection Supervisor o Section ...read more.

Middle

� Completion of programme for enterprises: improvement of the financial environment for small and middle-sized enterprises (SMEs), under-implementation of EUR 35 million. Consequently, for similar reasons to those outlined above, no payments were made in 2010 and payment credits of EUR 14 million are being carried forward to 2011. In commitments, the variation between initial appropriations and their actual implementation concerns: � Energy projects to aid economic recovery - Energy networks, under-implementation of EUR 97 million. The under-implementation concerns one project of interconnection for which the call for proposal attracted no candidate and nine other projects for which the beneficiaries requested less co-financing than was foreseen in the regulation. The unused credits will be carried forward to 2011 to finance a new financial facility supporting energy efficiency and renewable energy which will be operational in 2011. � Energy projects to aid economic recovery - Carbon Capture and Storage (CCS), underimplementation of EUR 50 million.The under-implementation concerns one project of carbon capture and storage for which the evaluation was not positive. The unused credits will be carried forward to 2011 to finance a new financial facility supporting energy efficiency and renewable energy which will be operational in 2011. In payments the variation concerns principally: � Energy projects to aid economic recovery - Energy networks, under-implementation of EUR 238 million. Contrary to expectations, some beneficiaries have not requested prefinancing payments because certain conditions were not met, e.g. bank guarantees, environmental permits or a formal investment decision. Others minimised the number of intermediate payments requests to avoid the production of costly audit certificates. � Energy projects to aid economic recovery - European Offshore wind grid system, underimplementation of EUR 107 million. When the requirements for payment appropriations were estimated, the projects had not yet been negotiated. It appears that beneficiaries of six projects have foregone pre-financing because of the need to provide bank guarantees. On the other hand, their reporting timetable is now tighter. ...read more.

Conclusion

The budgetary estimates were modified at the time the Amending Budget No 4/2010 was established (they were increased by EUR 1.5 billion). These adjustments were based, on the new macroeconomic forecasts of spring 2010 being more optimistic than the previous ones. Actual amounts versus budgetary estimates for sugar levies reached 118.0 %. The Member States' VAT and GNI payments corresponded closely to the budgetary estimate. The differences between the estimated twelfths and the amounts actually paid are explained by the differences in the euro rates used for budgetary purposes (see Article 10 (3) of Regulation No 1150/2000) and the rates in force at the time when the Member States (not part of the EMU) actually made their payments. The changes in the exchange rates during 2010 had a positive impact of EUR 115 million and EUR 674 million for VAT and GNI respectively. According to Council Decision No. 2007/436 on the system of the European Communities' own resources, the United Kingdom is granted a correction in respect of budgetary imbalances. As this amount is financed by the other Member States there should be no net effect on the budget. However, a negative amount of EUR 128 million was registered. This was caused by differences in the exchange rates similar to those for the VAT/GNI resources. According to Council Decision No. 2007/436 the Netherlands and Sweden benefit from a gross reduction in their annual GNI-based contributions for the period 2007 - 2013. The gross reduction for the Netherlands and Sweden, which equals respectively EUR 605 million and EUR 150 million in 2004 prices, is adjusted to current prices by applying the GDP deflator for the EU expressed in Euro and granted after financing of the correction mechanism in favour of the UK. Similarly to the UK correction, this amount is financed by the other Member States so there should be no net effect on the budget. However, a negative amount of EUR 3 million was registered, which was caused by differences in the exchange rates similar to those for the VAT/GNI resources. ...read more.

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