EU Budget

The annual budget of the European Union is based on a multiannual financial framework. After the entry into force of the Lisbon Treaty the financial framework will be adopted as a regulation that has to be adopted unanimously by the Council after the consent of the European Parliament. Current multiannual financial framework covers the period of 2007-2013.

The Council's position on the annual budget is prepared in the working group, budget committee, of the Council and is adopted by the Ecofin-Council. In budgetary issues a qualified majority is usually needed for decisions. The positions are prepared under the responsibility of the rotating presidency.

The Council and the European Parliament constitute the budgetary authority and the two institutions in practice share equal powers when deciding the budget. After the position of each institution, should their views differ, the European Parliament, the Council and the Commission will continue negotiations in a special conciliation committee. The aim of the conciliation committee is to reach a conclusion (to agree a joint text) on the annual budget. Usually the budget will be agreed in November-December.

EU's expenditure and revenue constitute the budget of the European union. The exceptions to this rule are the European Development Fund and the European Investment Bank, which are financed through direct contributions by member states.

The European Union budget is relatively small in relation to the EU's GDP and the size of member states' public finances. For example in 2010 the payment appropriations of the European Union represent 1,03 % of EU's GDP.

The principles and policies of the European Union are defined in the Treaty. The principles and policies requiring EU funds are financed from the EU's budget. Agricultural policy and cohesion policy take the biggest share of EU budget. Other policies financed from the budget are the internal policy actions and external actions.

The Commission implements the budget in cooperation with the member states. The European Court of Auditors is in charge of the audit and the European Parliament, acting on a recommendation from the Council, gives the discharge to the Commission in respect of the implementation of the budget.

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