"For 500 million Europeans in times of austerity"

...That was how EU Budget Commissioner Janusz Lewandowski presented his 2012 EU budget proposal, tabled today.

With such a heading it must include lots of belt tightening, better targeting and some relief for those European governments whose budget is already incredibly strained, right?

Unfortunately, not.

To the surprise of no one, the proposal includes increasing the budget by 4.9% (€6.2bn), around 2% more than average inflation in the EU. I don't know about you, but we wouldn't usually describe that as austerity.

Needles to say, given that all EU members are trying to cut spending, increase taxes and impose varying austerity levels onto taxpayers, we have a feeling that Lewandowski's proposal won't be met by cheers in many countries. Below we have a breakdown of what we estimate each country’s increased contributions to the EU budget will be under the proposal - based on the projected national share of contributions for 2011, as forecast by the Commission (it's a moving target since you're never be quite sure what the actual contributions are until the money is paid out.)

We're looking at a €769m (£680m) increase for the UK. This is dwarfed by the €1.2bn that is added to Germany's EU bill for next year under the proposal (quite apart from the €100bn+ in loan guarantees that the country's taxpayers are already liable for through the bail-out packages). The French, who are beginning to realise that they are now net contributors to the EU budget, are on the hook for an extra €1bn - not exactly pocket change. The Netherlands, whose Government is now asking uncomfortable questions about the EU's external aid (partly as a result of our recent report on the topic) are on the hook for another €309 million. For all the contributions see table below (click to enlarge - these figures are gross contribution, meaning that in reality some countries might actually get more cash back than what they pay in, for example Spain).

Comically the Commission's press release outlines the fact that "bills must be paid", alluding to the fact that the Commission has committed to various projects which still are running. This argument is weak. Although it's true that the EU budget can't run a deficit, meaning less room for manoeuvre compared to national budgets, there's no reason whatsoever why the Commisison, MEPs and member states can't come together to prioritise and re-shuffle, since funds are clearly getting tighter. Just as national governments are forced to prioritise. As we note in our response to the proposal, there's plenty of fat to cut in the EU budget, from the 50 or so EU quangos, to paying non-farmers not to farm, to recycling 'cohesion' funds between some of Europe's richest regions. And, seriously, does Europe really need projects like these...(click link for examples)

We're sorry, Mr. Lewandowski , this proposal is neither for "500 million Europeans" nor for "times of austerity". In fact, it's quite the opposite.

The EU won the Olympics, the World Cup...and now an Oscar

The EU won the 2006 and 2010 World Cups in football (at least according to Romani Prodi and Jean-Claude Trichet, so it has to be true).

It also won the 2008 Olympics, according to highly credible EU-funded sources.

Now, it has upped its game yet another notch and raked in the film world's greatest prize - an Oscar.

The "King’s Speech”, which won several Oscars at last night's ceremony, apparently received €562,000 in “distribution support” from the EU’s Media Programme. Stopping just short of "there are a few people that I want to thank...", Androulla Vassiliou, the European commissioner in charge of cultural issues, wasted little time in claiming the EU's share of the credit (in what the FT Brussels blog labels "an acceptance speech"),

"What a great night for the European film industry and the Media programme. Europe loves cinema and the world loves our films. This shows that the European film industry can compete with the best."

After such an accomplishment, all eyes now turn to Euro 2012 (the football tournament, not the currency), where we're told the EU has an excellent chance of repeating its record of success.

Progress?

UK Chancellor George Osborne yesterday refused to sign off the EU budget for 2009 in a routine vote in Brussels. This was a purely symbolic - but still important - gesture to protest wasteful spending in the EU. A spokesperson for the Treasury said that

The Chancellor has put Europe on notice that we can't afford not to put Europe's house in order.

The UK government is talking up EU budget reform, which can come back and bite them if they fail to deliver (remember the budget freeze promised by Cameron, which sort of back-fired?), but is also showing political will to get something done. That's a good sign.

Osborne was joined by Sweden and the Netherlands in abstaining in the vote. The reason for the Dutch absention was, as the country's Finance Ministry bluntly put it, that "€2 billion has disappeared" from the EU budget, which strikes us as a pretty valid reason.

Last year only the Netherlands abstained from the budget vote, meaning that we're looking at progress this year.

With this rate, all member states will refuse to sign off the annual budget by 2022 or 2016 (depending on how optimistically you count).

We're not exactly holding our breath though.

A Royal Extravagance

Spot the odd one out…

• Buckingham Palace in London
  
• Palacio Real de Madrid, Spain
• Stockholms slott, Sweden, and
• The Louise Weiss building in Strasbourg, France.

We’re guessing that most people will not ever have heard of the last one. It’s in fact, the infamous seat of the European Parliament in Strasbourg – better known as the reason for the European Parliament’s utterly ridiculous ‘travelling circus’.

The European Parliament's 216-mile monthly trek to Strasbourg beggars belief. But no matter how many citizens, MEPs or even EU officials complain, the out-of-touch people at the very top refuse to bow their heads to listen.

In an interview with Euractiv, European Parliament President Jerzy Buzek got the chance to explain why he defends the Strasbourg seat.

Strasbourg is a symbolic place. Symbols are important

€200 million a year is an expensive symbol, but Buzek sticks to his guns:

We can also ask whether for some member states it is right to keep a monarchy. But for these countries that has an historical meaning and it is still an important part of public life and interest

Right...Perhaps that explains the European Parliament’s, at times, interesting take on democracy (i.e. voting to ignore the outcome of the Irish referendum on the Lisbon Treaty). He continues,

So, why would we eliminate Strasbourg? It is the very symbolic place of the European Union. It is indeed very important as it represents the essence of our main value: solidarity

Apart from the bizarre parallel that Buzek is trying to draw between Europe's monarchies and the two-seat European Parliament, what kind of 'solidarity' is he talking about? And with who exactly? Scrapping Strasbourg would save over €200 million a year and 20,268 tonnes of CO2 emissions, so he certainly can't be referring to solidarity with taxpayers or the environment (but who cares, eh?)

What's next, horse drawn carriages for Buzek and his mates and a regal eurocrat wedding?

The EU in 2011

For those of you who can't wait to see what 2011 has in store for European politics, Open Europe has published a briefing looking at the issues facing the EU - and most importantly the eurozone - next year. Read it here.

Let's put it like this: EU leaders better be ready to hit the New Year running...

Not restrictive enough...

We see it as a bit ambiguous and from a Swedish point of view, not restrictive enough when it comes to the budget...our position is that even the possibility of an increase to the budget, which the signatory countries are open to, is too far-reaching...First we want to discuss the content in the budget, what we should spend the money on. When that is done, we can see what it costs.

- Swedish PM Fredrik Reinfeldt explains why he didn't sign the Cameron-Merkel-Sarkozy letter at last week's EU summit, which called for a cash freeze to the EU's long-term budget.

Message to the Commission: Denial won't reduce waste

You remember the non-existing Hungarian dog fitness centre which received €400,000 in EU subsidies? We highlighted the project at the top of our list of 50 examples of EU waste.

Well, from the Hungarian press we now learn that the Hungarian Development Agency - the national body responsible for the distribution of the EU's regional development funds - has asked the company Gyrotech Ltd (which, bizarrely enough is an IT company) to pay back the money it received in 2007 for the project to the European Regional Development Fund. The original grant was aimed at "improving the lifestyle and living standard of dogs."

Hungarian economic magazine HVG credits Open Europe for bringing the case to the attention of the international press.

If the money will in fact be paid back, this is good news and shows that it’s possible to fight EU waste. As a result of efforts to shed some light on these funds (by Open Europe and others), EU waste was detected and the money which was misused is now being reclaimed. Everyone happy?

Not the European Commission, it appears, which didn't quite seem to appreciate Open Europe's efforts to ensure that the EU budget constitutes good value for taxpayers' money and contributes to growth and jobs in Europe.

Note the differing responses:

The Hungarian National Development Agency – which admittedly should have been more prudent when giving grants to the project in the first place - investigated what went wrong and claimed back the money.

The European Commission:

“We don’t consider this to be credible research”. Our list, with the dog fitness centre at the top, was apparently “based on a loose collection of unverified secondary sources”, according to the Commission.

And, “It is regrettable that Open Europe did not even approach the commission to verify any of their so-called facts…it is very easy to pull out a few of the less orthodox projects from thousands funded by the EU and present them in a onedimensional manner for ridicule.”

The Commission does indeed look pretty ridiculous when it makes statements like this, and it turns out that the number one item on the list, the dog fitness centre in question, was a clear case of undisputable EU waste and that the project is now forced to refund the cash.

It’s not that hard to verify actually. The first-hand source (the Hungarian Regional Development Agency), detailing the grant, is right there in the footnotes of our report – all you have to do is to click on the link and voila!

The same goes for almost all the other projects we’ve highlighted, apart from a handful, such as the case of the two fishermen who received a €500,000 grant from the EU and the Swedish government to scrap their boat under a scheme to reduce over-fishing. It then used the grant to buy a new boat, under a separate set of rules, and carried on with their fishing business. In this case, the fishermen themselves were widely documented to have admitted that this was exactly what had happened.

Instead of going on its counterproductive rant, the Commission should thank anyone who tries to identify waste and who proposes reforms to stamp it out.

We’re not holding our breathes though.

Meanwhile, the Financial Times and the Bureau of Investigative Journalists have made European taxpayers and transparency campaigners a great service this weak by shedding some additional, and much needed light, on the EU's structural funds. See here, here, here, here, here, here, here, here, here, and here for example.

Some of the findings have included:

• Only 10% of the earmarked funds for 2007-2013 have actually been paid out to date, due to difficulties in many member states to find money for co-financing projects at a time of austerity in Europe (showing how poorly equipped the structural funds are to respond to changing economic circumstances in Europe, in turn undermining their ability to foster "convergence")
  

• €12mn of EU funds have been spent on a port which lays idle in Gran Canaria.

• More than €3mn of public funds – including an estimated €1.5m from EU structural funds – have been allocated to tobacco companies in Europe. The funds have gone to help equip cigarette factories and to fund training projects. Under the Framework Convention this is in breach of WHO guidelines on tobacco control. Paradoxically, the EU also spends more than €16mn a year on antismoking campaigns.

• Some big beneficiaries of the structural funds include McDonald's, which received funds to train staff in an affluent region of Sweden, in addition to IBM, Coca-Cola, and Japan Tobacco International. This is despite the fact that the funds are specifically meant to help small and medium sized companies, particularly in poorer regions.

• Structural funds have been allocated to companies relocating factories from west to east Europe, despite this contravening EU rules.

The Commission has resorted to its trade mark 'nothing-to-see-here' and 'it’s-all-only-a-misunderstanding' response. Indeed, denial remains the most predictable of the Commission's responses.

To be fair, the Commission has at least one sensible proposal for improving the targetting of the structural funds - linking more of the funds to actual performance and achieved targets (as outlined by Commissioner Hahn).

More stuff like this and fewer defensive rants, would serve to improve both the effectiveness of the funds as well as the image of the Commission itself.

In case you missed it...

In case you missed them, here are a few of Open Europe's appearances from this week - on three very topical issues:

On Tuesday, Open Europe discussed the problems with the EU's structural funds on BBC Radio 4's File on 4 programme. Listen to it here (worth a listen, particularly the part looking at the ongoing problems with fraudulent use of the funds).

On Wednesday, we debated the EU's External Action Service on Radio France Internationale, arguing that it's far from clear that the EU's diplomatic body adds value at the moment - and that the EU should be focussing on policy rather than institutions. Listen here (in French)

We also appeared on the BBC Radio 4's The World Tonight, discussing the future of the euro.

Giving people the wrong ideas?

Presenters on Hungarian radio station NeoFM's daily morning show, "Bumerang", have joined the long line of people trying to make sense of the bizarre projects that have received EU funding. Listeners have been asked to choose their favourites amongst our list of examples of EU waste and send in any of their own.

Polling highest is the example of €500,000 given to two Swedish fishermen to scrap their fishing vessels, only to find them later applying for further EU subsidies to buy new, smaller boats, which were subject to a different set of EU rules. Other contenders included Hungary's very own €411,000 dog "rehabilitation centre", which never materialised and the €16,000 given to Tyrolean farmers to boost their emotional connection with the landscape.

But the exercise may have produced an unintended side effect. This is what the presenters had to sat at the end of the show, "We are so stupid! Why aren't we also applying for EU funding to raise the popularity of European Radio. We'd only need €100,000."

Barroso's case of the Budget Blues

After a tumultuous five-plus-months of discussions, EU negotiations over the 2011 budget broke down two days ago, leaving an array of despondent MEPs, Commissioners and eurocrats to lament a 'budgetary crisis'.

Commission President Jose Manuel Barroso launched a not so veiled attack on the terribly obstinate member states who tried to install a little 'pseudo-austerity' into the EU budget (real austerity would mean actually cutting expenditure rather than trying to cap the budget rise at 2.9%). Jose said:

I regret that a small number of member states were not prepared to negotiate in a European spirit Those that think they have won a victory over 'Brussels' have shot themselves in the foot. They should know that they have dealt a blow to people all over Europe and in the developing world.

Yes, you read right. Barroso is actually attempting to take the moral high ground here. First of all, if the EU institutions really wanted to help the developing world, why not spend some time taking a long hard look at the existing fat in the EU budget rather than jumping up and down demanding more money.

But, more hypocritical, is the presumption that an increased EU budget is necessarily going to help the developing world. What about the huge amounts spent supporting European farmers at the expense of their competitors in poorer countries and the additional impact this has on increasing food prices?

One can also point to flaws in EU trade agreements that leave poorer countries unable to support domestic producers against floods of cheap, subsidised European imports.

The EU's large aid budget is also less effective at targeting funds at the poorest countries than many of member states' own aid programmes.

All in all, Barrosso's tug at the heart strings looks a lot more like a self-serving attempt to boost the power of the EU institutions rather than a sudden bout of altruism.

What do a dog fitness centre, a €5.25m fleet of limousines, a cartoon horse and 'virtual language swimming' have in common?

Yep, you've guessed it, it's that time of year again. Today we've published yet another list of wasteful EU projects, the third such list in as many years (you can find the previous ones here and here).

One of our favourites is "Eurogaloppo" the cartoon horse which was dreamt up in order to teach German schoolchildren about the EU. A booklet was published chronicling Eurogaloppo's journey to Brussels on which he met several high-profile EU leaders, including Chancellor Angela Merkel and former European Parliament President Hans-Gert Pöttering.

The cartoon horse also bumped into Commission President Jose Manuel Barroso, seemingly unable to contain his excitement:

Eurogaloppo: “I have so been looking forward to finally meeting a commissioner!”

Barroso: “Do you mean a commissioner like in a crime programme?”

Eurogaloppo: (sheepish silence)

Barroso: (grins) “Actually, you are not far wrong. The EU Commission and the crime commissioners of the police have something in common: they are both authorities.”

The top of the list is however reserved for the aforementioned "dog fitness centre", designed to “improve dogs’ wellbeing”. Perhaps the biggest crime of all, or maybe not, is that the dog rehab centre is yet to be built, despite receiving €411,000 of EU funds.

Hungarian media have noted that apart from new office buildings that remain derelict (click here for photographic evidence), the centre remains a distant dream for the local dog population. For now dogs in the area will have to put up with the kind of equipment pictured, which we can all agree doesn't compare to the "hydrotherapy" promised by the new centre.

All joking aside, the list is well worth reading ahead of tomorrow's likely agreement on an increase to the 2011 EU budget as a reminder of the kind of waste inherent in the EU's outdated and overly-complex budget.

Of course not all EU spending is bad, and we pick out a few good examples at the end of our list. But until the EU budget is reformed around more rational priorities (rather than used to subsidise farmers and redistribute large amounts of money among the EU's richest countries) and had the fat trimmed from it, we make no apologies for pointing out its flaws and mismanagement.

A step backwards? Hardly

In an interview with the FT, Nick Clegg today declared that the Coalition Government would not use the negotiations over a new EU treaty to repatriate powers from Brussels to London. "We are not going to reopen this issue of the repatriation of powers. We are not proposing to go backwards", he said.

Well, we kind of suspected that was the Government's position already, but "not going backwards"?! That's an utterly silly comment - it belongs to a time when the EU debate was divided between arch-eurosceptics harking back to the British Empire and European federalists equating more EU integration with "progress".

Europe and UK politics have both changed however (clue: the coalition itself). Clegg's assertion is a bit like saying that the Coalition's drive for more localism - which the Lib Dems champion - is somehow a reactionary move. Bringing back powers from Brussels to the UK means bringing decisions closer to people. That, Nick, is not a step backwards by your own definition - on the contrary.

The interview wasn't all nonsense though. Clegg did suggest that the UK's willingness to passively wave through an EU Treaty change, must be matched by reforms to the budget and changes to some of the EU's more counterproductive habits.

He said,

There is no interest for the EU in getting entirely on the wrong side of public opinion on this budget issue...They have got to get real. You can’t make these budget decisions in a political vacuum.

He also lashed out at the EU's “summit inflation” which left EU policymakers “chasing their tails”.

That's sensible stuff. But the question now is: having given away its veto over Treaty change, how does the Coalition plan to deliver in the post-2013 EU budget negotiations?

Talking about EU reform as a "step back" is probably not the smartest way of doing things. Not least since many member states would make the same argument about any change to the EU budget.

Two vetoes for the price of one

In Parliament this afternoon, David Cameron gave his statement on last week's EU summit, followed by questions from MPs. The debate was a bit all over the place if we're to be perfectly honest, with the 2.9% increase to the EU's 2011 budget dominating.

The most talked about intervention came from Ed Miliband who said in response to Cameron's alleged cave-in on the EU budget freeze for 2011: “He wished he could come back and say No, No No, but in his case it's a bit more like No, Maybe, Oh go on then.” (apparently a phrase Miliband didn't quite come up with himself).

On actual substance, Chris Heaton-Harris made the most astute observation. He noted that the PM now has two separate vetoes at his disposal: one over Treaty change and one over the EU budget post-2013. Heaton-Harris asked whether Cameron would use the two vetoes independently to achieve EU reform. As we’ve argued before, a twin-track approach to EU negotiations is by far the smartest way to achieve reform in Europe and the restoration of some democratic control over key EU powers.

If the two vetoes are used in parallel but for seperate issues - one for repatriation of powers and the other for concessions on the CAP for instance - we bet anyone (eurosceptics and federalists alike) that the Coalition government will get at least one game-changing concession in return.

The Coalition could even get other member states along for the ride if it's confident and strategic enough. After all, Merkel has given us a great example for how to do it.

Unfortunately, in response to Heaton-Harris and also earlier in the debate, Cameron hinted he would pass up his veto over the treaty change, effectively giving EU partners a two-vetoes-for-the-price-of-one deal.

Hopefully this isn't the end of the story though, as there's still much to play for before Treaty changes are agreed. But MPs need to get their line of argument in order or the Coalition might well go for the do-nothing option.

For Cameron to use the twin-vetoes separately but in parallel, is surely what backbenchers in favour of EU refom should be pushing for?

So not a fan of the limited EU budget increase then?

"I deplore this initiative. This letter is provocative and has clearly been written for reasons of domestic policy."

- The caretaker Prime Minister of Belgium, Yves Leterme, in response to the letter signed by Cameron, Merkel, Sarkozy et. al. backing a 2.9% increase to the 2011 EU budget.

Cameron gives way on new treaty for 2.9% budget increase?

Die Welt is reporting that Cameron has done a deal with Merkel on treaty change.

The article notes that Merkel signed a letter penned by Cameron stating that the Council would not accept a budget increase higher than 2.9% in negotiations with the European Parliament. In return, Cameron will back Merkel's demand for a treaty change, reportedly assuring Merkel that he will secure the passage of a new treaty through the UK Parliament without a referendum.

As we argued earlier today, even if Cameron were to achieve a freeze to the EU budget, there’s nothing stopping MEPs and other member states from pushing through a substantial increase in 2012 or 2013 to make up for it.

If the reports are true, Cameron may well have severely underplayed the UK's hand, missing the opportunity to get real concessions in return for treaty change. A one-year 2.9% budget increase certainly doesn't cut it.

If true, Cameron has just given away the greatest leverage the UK has had in EU negotiations in a very, very long time...

Nice to know that you're expected...

The publication of our annual list of examples of EU waste seems to have become a much-anticipated occasion in Brussels.

As L'Express reports today, an internal document prepared by EU Tax Commissioner Algirdas Semeta reveals that the Commission expects us to "publish a list of 'absurd' EU projects" on the eve of the publication of the EU Court of Auditors' annual report, due for 9 November. The Commission is reportedly investing extra energy in preparing its defence.

All this attention could seriously make us blush...

How Cameron should play his cards in Europe

Over at the Spectator's Coffee House blog, we take a look at how David Cameron should approach today and tomorrow's EU summit - and how he should play his cards in negotiations in Europe moving forward.

We argue,

The British media woke up this week, realising that Europe still exists. As David Cameron travels to Brussels, questions loom over what, exactly, he can achieve in Europe – at this summit, and more importantly, moving forward.

Much of the commentary surrounding the summit has focussed on the increase to the EU’s 2011 budget, which Cameron is fighting. And for good reason. It’s insane that Britain – or any other net contributing state – should be forced to accept any increase to the EU budget, at a time of tough austerity at home.

Cameron has spent considerable time talking up the negotiations on the budget increase, so he may have an ace up his sleeve to achieve a cash freeze tomorrow or in the coming weeks. But a 2.9% hike is not unlikely, meaning that an extra £430 million would be added to UK taxpayers EU bill – or even more once the European Parliament has had its greedy hands on it.

However, as outrageous as it is, the annual budget increase is only a side show in a far bigger act.

Even if he were to achieve a freeze to the EU budget, there’s nothing stopping MEPs and other member states from pushing through a substantial increase in 2012 or 2013 to make up for it. The EU budget is negotiated in seven-year periods (though that can vary), with minor adjustments being made on an annual basis. Sadly, negotiations over this budget period have already been lost – courtesy of Tony Blair in 2005.

So the bigger prize – which may or may not be discussed in corridors at the summit – is clearly a reduction in the size of the budget from 2014 onwards. Cameron has rightly stated that this is his priority moving forward.

But here Cameron could be committing a strategic mistake. The temptation is to try to ask for concessions on the post-21014 EU budget, in return for supporting Merkel’s repeated calls for a Treaty change to fix the eurozone.

Thing is, the UK already has a veto over the negotiations on the post-2014 budget. If the UK refuses to agree, an effective cash freeze will be achieved anyway as the previous budget will be carried over. Secondly, member states are desperate to get rid of the UK’s rebate from the EU budget – in itself a powerful bargaining chip.

So if Cameron trades budget concessions for Treaty change, he will effectively be giving his EU partners two for the price of one.

A better way forward for Cameron is to horse trade on the EU budget and possible Treaty change separately.

Despite strong opposition from EU leaders, German Chancellor Angela Merkel continues to push for a Treaty change to fix the eurozone. And she won’t cave in easily.

As we’ve argued before, Cameron should back Merkel’s calls for Treaty change in return for repatriating powers to Britain. It Treaty change actually materialises, the whole package can then be put to a public vote in a genuine referendum on EU reform. Many Tory backbenchers are now picking up on this idea as well.

Cameron and Merkel will meet on Saturday night over dinner to discuss the way forward for the EU. The Prime Minister must think carefully about how to use the unusually fluid European situation to put Britain’s relationship with the EU on a more sustainable path.

The scope for a new Anglo-German grand bargain is greater than in a long-time. But for Cameron to give away his hand this early would be a serious mistake.

The EU's problems with agency-itus

The past week has seen the EU come under immense pressure, from press and politicians from across member states, as negotiations for 2011's budget come to a head. However, criticisms have seemed to fall on deaf ears, as the Commission and the European Parliament have continued to push for an overall 5.9% increase in spending.

We released a new report yesterday examining one of the growth areas that provokes serious cause for concern: EU agencies and committees.

While the UK government has announced that it wants to scrap some 190 quangos as part of the spending cuts, the Commission - cheered on by MEPs - has proposed a staggering 8% increase to the budget for EU agencies from 2010 levels.

This would see the EU's annual quango-budget rise by €180mn to €2.4 billion in 2011. The extra cash would be used to fund five new agencies, taking the total number of EU quangos - including the Economic and Social Committee and the Committe of the Regions which are the mothers of all talking shops - to 52. Extra cash will also be sprayed on the existing EU agencies.

And what do taxpayers get in return?

It's Brussels worst kept secret that many of the EU's agencies do not add much value: some duplicate eachother's work; many duplicate work being carried out by the core EU institutions; some deal with issues that shouldn't concern the EU in the first place; while others have no impact on actual policy whatsoever. A worrying number of them tick all of these boxes.

It's also not clear who these agencies are actually accountable to.

We identify eleven agencies and committees which could be downsized or abolished altogether without citizens noticing any difference whatsoever. If combined with 30% efficiency savings, to mirror austerity measures in member states, the EU could save €709mn per year starting in 2011.

First on the list: the Committee of the Regions and the Economic and Social Committee.

European Parliament starting to get embarrased about asking for more money?

We've said a thing or two in the past about the wonders of EU spin 'communication'. But the European Parliament's attempted defence of MEPs' decision to increase the EU's 2011 budget by 5.9% is a stretch so far that it has descended into farce.



Firstly, let's take the EP's press release titled, "MEPs vote for moderate budget for 2011". "Moderate" is hardly the word to describe a 5.9% increase when national governments all across Europe are tightening their belts and, in the UK, George Osborne is announcing the most significant spending cuts for generations.



The press release goes on to say "MEPs understand the pressures on Member States' budgets and have therefore broken with their tradition of suggesting a notably larger budget than the Commission has proposed."



How gracious of them.



Strange too that the press release didn't mention the percentage increase to payments (5.9%), instead opting for the increase to commitments of 0.8%. An earlier April press release has no such qualms about mentioning the higher figure.



To add insult to injury, EP President Jerzy Buzek has stated that "The European Parliament has acted with a great sense of responsibility."



MEPs are certainly doing themselves no favours whatsoever.

If the EU did satellites, they'd probably be...

It is hard to think of a better example of how not to run a large-scale infrastructure project than the EU's Galileo satellite system. In a new briefing we set out the latest cost over-runs and delays to a project that is now expected to be completed a decade late and cost taxpayers over €22bn to launch and run over a 20 year period. In 2000, it was projected to cost taxpayers only €2.6bn (UK taxpayers' share has gone from £385 million, under the original estimates, to £2.95 billion, under the revised figures).

This is an overspend which could rival with the previous UK government's handling of the defence budget for incompetence.

The scale of the strategic mistakes made in Galileo's development is simply shocking. The German government has admitted that "All in all, it is assumed, based on the currently available estimates, that the operating costs will exceed direct revenues, even in the long term." The reason for the astronomic rise in costs is primarily due to private investors withdrawing from the project, unconvinced by the project's commercial viability in a market where it is competing with US, Russian, Chinese and now also Indian and Japanese alternatives. Despite this, the European Commission saw a market of potentially 3 billion users and some €275 billion per year by 2020 worldwide. This looks ridicolously optimistic now.

The story behind the Chinese competitor is particularly sobering. Initial Chinese investment in the project was spurned and eventually withdrawn over fears that the Chinese government was a little too interested in the security related aspects of the project. But, due to the delays, China went ahead with its own system using the very radio frequencies the EU wishes to use for Galileo. So the EU is now in the absurd position of having to ask China's permission to run its secure 'encrypted' signal on Chinese frequencies.

With the European Commission's EU budget review expected tomorrow, we can expect the usual calls for more investment in research and development as a way of modernising and redirecting the EU budget. Spending less money on the CAP and Structural Funds would certainly be welcomed but, on this evidence, the EU's R&D spending leaves a lot to be desired.