The next long-term budget “must be a catalyst for growth and jobs across Europe”, EU leaders stressed in the conclusions of their summit last week. They decided to increase sub-heading 1a – ‘competitiveness for growth and jobs’ – by 37.3% against its level in the current long-term budget, the biggest increase both in absolute and relative terms of any heading or sub-heading in the new budget. 

Herman Van Rompuy, the president of the European Council, said after the summit: “I am satisfied that all along this negotiation we kept the bigger picture in mind, even in such difficult economic conditions. We have managed to keep the essential features of continuity and of growth.”

The sub-heading covers the Europe 2020 strategy to promote research, innovation and technology, the Erasmus For All programme for education and skills development, and other measures to boost the competitiveness of European companies, especially small and medium- sized enterprises.

“In allocating funding within this heading, particular priority shall be given to delivering a substantial and progressive enhancement of the EU’s research, education and innovation effort, including through simplification of procedures,” according to the conclusions.

However, the €34 billion added to sub-heading 1a brings it to only €125.6bn, representing just over one-quarter of heading 1. The other sub-heading – 1b, ‘regional spending – is a huge €325bn, despite a cut of 8.4%. Direct farm subsidies, possibly the least forward-looking major item of the entire budget, still receive more than double the EU’s spending on competitiveness. There have been adjustments to their relative weight – but not sufficient to amount to re-designing the budget to meet the challenges of the future.

The EU’s competitiveness spending does not come entirely from sub-heading 1a. For example, the Commission’s proposed Erasmus For All programme – funding training or study abroad – will receive contributions for its international (non-EU) dimension from the ‘Global Europe’ heading. Since that heading rises far less than the competitiveness heading, this drags down the funding increase for the Erasmus programme to around 40% instead of around 50%, according to figures from the European Commission.

Since the European Council did not agree specific figures for Erasmus, these are projections based on assumptions, all of which are subject to change in negotiations with MEPs.

Funding for the Commission’s programme for cross-border transport, energy and digital networks, the Connecting Europe Facility, was cut from the €50bn proposed by the Commission in June 2011 to €29bn, including €10bn that was to come from cohesion funding.

The European Council agreed to set up a Youth Employment Initiative of €6bn, primarily to support measures proposed by the European Commission in December, notably a ‘youth guarantee’.

Regions whose youth unemployment exceeded 25% in 2012 will be eligible for funding; they will apply for targeted investment from the European Social Fund (ESF), from which €3bn has been earmarked. This money will count toward the caps to regional aid that each member state may receive. ESF funding will be matched by funding from a dedicated €3bn budget line of new money that will not count toward those caps.

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