EU budget shortfall of €10bn to fall on member states

The richest member states are about to receive demands for extra contributions from the European Commission following the revelation that there is a shortfall of €10bn in the 2012 European Union budget. The "substantial" funding gap, as the commission called it, is thought to have come about as a result of increased payments relating to cohesion policy and science funding - among other areas. Traditionally, member states have agreed to an expansion of EU programmes and then withdrawn support for funding those projects when the time came to deliver the cash – commission figures often claim.

But already some structural funds have struggled to continue operating, as a result of cashflow problems. And French MEP Alain Lamassoure, who chairs the European Parliament's Budgets Committee, said it was "absurd" and "politically shocking" that the Erasmus student exchange programme – for example - was due to run out of money next week. In addition, Lamassoure estimated that the commission would be unable to reimburse authorities in countries – including Greece and Spain – that had paid out hundreds of millions of euros for programmes implemented under the 2012 EU budget.

As a result of 2012 and 2013 being the final years of the seven year financial framework, meaning not enough funding is left in the pot, member states will be expected to pick up the tab. And battle lines have already been drawn over the next seven year EU budget, due to start in 2014. Net contributor nations like Germany, France and Britain have put forward a proposal to reduce the commission's €1,033bn planned budget by €100bn. Meanwhile, beneficiary countries have lobbied for increased cohesion funding.

Leader of the Conservative Party MEPs in the United Kingdom Richard Ashworth MEP put the blame for this year's budgetary difficulties firmly at the door of EU officials. "Rather than saying how much money is available in the EU budget, the commission waits for governments to submit receipts and then it realises it has a shortfall; EU budgeting seems to be more of an art than a science and it is a totally unacceptable way to manage taxpayer money.

"Every year, national governments are rightly asking the EU to squeeze more value out of its budget. Unless we have a complete change in the way the EU and some governments think towards this money, we are going to see this state of affairs continue. Instead of splurging money at projects in an uncontrolled manner, we need much better discipline to produce a better managed and more efficient European budget. We need a better EU budget, not more EU spending at a time of austerity. We need to end this Oliver Twist mentality and adopt a smarter, more controlled approach that gives bang for every buck."

Also attacking the "fiscal incontinence at the European level", British Treasury minister Greg Clark said: "When both in the UK and across European countries we're advocating fiscal responsibility, we can't possibly exempt EU institutions from that. We have got to be consistent." And UKIP leader Nigel Farage added: "It must stick in the throat of decent people that while Spanish pensioners have to scavenge through bins, the European elite are trying to vote themselves another billion pound raid on the UK taxpayers' cash register to fund their wasteful projects. David Cameron must veto these ugly money grabs."

But president of the Socialists and Democrats group in the European Parliament Hannes Swoboda called for a calm and measured response, adding: "The current finance gap must be resolved immediately and a long-term solution needs to be found for the Erasmus programme."