Leaders of the European Union agreed to the first spending cut in the organisation’s history on Friday.
The 27 nation bloc reached a deal for a 7 year budget worth 960 billion euros ($1.28 trillion ) after difficult negotiations. The deal represents more than a 40 billion reduction on the 1.03 trillion euros originally proposed by the European Commission. It is also lower than the previously seven year budget from 2007-2013, which stood at 975.777 billion, marking the first time in its history that the leaders of the EU have agreed to a spending cut.
After two days of tense round-the-clock negotiations, the European Council President Herman Van Rompuy announced the deal; “We simply could not ignore the extremely difficult economic realities across Europe,” Van Rompuy told reporters. “It had to be a leaner budget,” he said.
Both sides had threatened to walk away from this week’s negotiations – which were already the second set after talks collapsed without a deal in November 2012.
The new budget is equal to approximately 1% of the EU’s GDP. It will be seen as a victory for the UK’s David Cameron, who had said before negotiations that he would not consider any deal which didn’t cut the organisation’s budget. It was also welcomed by Germany’s Angela Merkel, who along with Britain, Sweden and the Netherlands had fought hard to secure a reduction.
“The UK public can be proud that we cut the ‘credit card level’ for the first time ever,” said Cameron. “I wanted a cut. That is what I achieved today. Working with allies, this is a great deal for Britain and a great deal for Europe. And a great deal for European taxpayers.”
France, who had led the group of states pushing for a higher budget, also claimed victory. President Hollands noted that Prime Minister Cameron had moved further from his desired budget total that France had.
The European Parliament still have to approve the deal negotiated by its leaders, however, and some MEP’s (Members of the European Parliament) have suggested that the cuts would not be accepted.
“This agreement will not strengthen the competitiveness of the European economy but weaken it,” said a joint statement issued by the leaders of the four biggest political groups in the parliament.