European Commission Calls for Steep Boost in EU Spending for 2018 -- Update

By Laurence Norman Features Dow Jones Newswires

The European Union's executive body has proposed a steep rise in EU spending for 2018, the last full year of the U.K.'s membership in the bloc.

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The move comes weeks ahead of the start of negotiations on Britain's exit from the bloc. The EU is pressing the U.K. to agree to a large bill when it leaves covering past British EU spending pledges.

European officials are hoping Britain will agree to pay in full its expected contribution to the 2014-2020 multiyear budget framework, meaning it would continue to pay after it leaves, which is expected to happen in March 2019. However, U.K. Prime Minister Theresa May has said that after Brexit, the U.K. won't make further large budget payments to the bloc.

In the meantime, the European Commission wants member states to agree to EUR145 billion ($162.12 billion) in spending next year, an 8.1% rise from 2017 and the biggest increase since 2013. Brussels also is proposing EUR161 billion in so-called commitments in 2018, which represent spending pledges member states are expected to make next year.

The 2018 budget proposal will have to be agreed upon by the bloc's member states and the European Parliament. That usually takes months of haggling.

EU budget chief Günther Oettinger said his proposed budget would leave member states on target to stay within their 2014-2020 budget ceiling.

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He said the increase was largely due to the slow takeup of some major EU-funded programs in the first years of the current budget. He said that with the takeup of projects now picking up, member states are starting to increase the number of bills they send Brussels for the EU to pay.

Once Britain leaves the bloc, a major fight over the budget's future is expected. The U.K. is currently the second-largest net contributor to the EU, with a net contribution of GBP8.6 billion ($11.07 billion) in 2016, according to the Treasury. The net figure subtracts EU spending in the U.K. from the total.

A number of other net payers, such as the Netherlands and Germany, have said they don't want to spend more once Britain leaves, raising the possibility of a sharp drop in payments for EU programs, including transfers to the bloc's poorer members.

On Tuesday, Mr. Oettinger confirmed he was hoping to delay until the summer of 2018 the draft budget proposal for the post-2020 period. He is currently due to deliver this by year-end, but the German official said that by waiting, he can present a draft budget that would factor in Britain's future EU spending.

It would be "better for all of us to submit a realistic draft...which would take account of the consequences of Brexit," Mr. Oettinger told reporters.

A U.K. Treasury representative said Tuesday's Commission announcement is an "initial proposal and marks the start of the annual negotiations with the U.K. and others."

"The government has previously negotiated legally binding ceilings that ensure, over the seven-year period, the EU budget is cut in real terms," the spokesman said.

Separately Tuesday, a senior EU judge handed down an opinion advising the EU's top court to say the U.K. government wrongly rejected the residency application of an Algerian man whose Spanish wife had taken British citizenship.

The lawyer said the rights derived from the EU's freedom of movement rules should be extended to all the bloc's citizens. The European Court of Justice must rule on the case in coming months.

Citizens rights are another central issue in the coming Brexit negotiations, which the EU wants to start in the week of June 19.

The EU has set out a detailed negotiating position on citizens rights, which would push Britain to offer EU citizens in Britain after Brexit the full range of residency rights and benefits they currently enjoy. As Britain's Home Secretary, Mrs. May has in the past pushed to limit the rights of non-EU spouses to come to Britain.

Write to Laurence Norman at laurence.norman@wsj.com

(END) Dow Jones Newswires

May 30, 2017 13:26 ET (17:26 GMT)