The European Commission submitted a new proposal on Monday for the European Union's 2013 budget, just days after the bloc's leaders failed to agree a separate long-term spending plan for 2014-2020.
The revised 2013 budget blueprint is virtually unchanged from the Commission's original proposal, which earlier this month failed to win the joint backing of EU governments and lawmakers needed for approval.
Continue Reading Below
European Parliament negotiators boycotted talks with EU governments to finalize the 137 billion euro ($178 billion) budget for next year, after member states refused to first approve a last-minute request for more funds in 2012.
Many northern European countries that contribute most to the bloc's budget have been angered by demands for above-inflation increases in future EU spending, which they say fly in the face of budget cuts and austerity policies being implemented at home.
Failure to agree on the 2013 budget created uncertainty in future EU finances, amplified last Friday when leaders were unable to reach a compromise on a budget framework for 2014-2020, delaying a decision until next year.
A revised 2013 budget plan must now be agreed by the end of this year to avoid triggering an arrangement where the total for 2012 is rolled over and paid out in 12 monthly installments, which would cause chaos in several areas of EU spending.
But governments are likely to remain opposed to the proposed 137.8 billion euro limit on EU payments for next year, which is only 126 million euros less than the Commission's original plan and represents an increase of almost 7 percent from 2012.
Negotiators from the European Parliament support the Commission's 2013 blueprint and its request for an extra 9 billion euros in funding for this year, which it says is needed to meet funding commitments for EU public works and education programs.
The 2013 budget dispute has extra significance in that if there were to be no deal on the EU's long-term financial framework by 2014, next year's spending would be the basis for subsequent annual budgets until agreement was reached.
Unlike national governments, the EU cannot borrow to finance a deficit and must ensure its books are balanced each year.
The European Union agrees in advance its maximum future spending levels for all areas of policy and administration in seven-year budget plans. Actual spending is then fixed annually in a budget for the year ahead, with later revisions to cover any unforeseen spending.
About three-quarters of the bloc's annual budget is currently spent on agricultural subsidies and motorways, bridges and other infrastructure projects in poorer eastern and southern European member countries.
(Reporting by Charlie Dunmore; editing by Rex Merrifield, Ron Askew)