At 3am on Saturday 19 November, the conciliation committee agreed the budget for 2012. Originally, the European Commission had propose an increase of 4.9% on the figure for 2011. The Council cut this to the rate of inflation at 2% though the British government would have preferred less. The European Parliament increased this to 5.2%, above the Commission's figure. The stage was set for the conciliation committtee of the 27 governments and 27 representatives from the European Parliament to find a solution.

The agreement concluded almost the same figure as that expressed by the Council, just 2%. Parliament and the Commission had claimed that above inflation increses were required, even in an age of austerity, because EU-level intervention is more efficient in securing economic resurgence than 27 more expensive national policies, such that EU spending represents a saving. Their other argument was that the increases were necessary to cover contractual obligations to meet spending targets agreed back in 2006 for a seven year term that expires in 2013. There is some truth in the second argument, because the way that EU funding programmes work, including co-financing, means that money is released for spending towards the end of multiannual programmes. We would therefore expect more to be spent in 2012-13 than in 2007-08.

At 3am, Parliament's negotiators accepted the Council's figures over the alternative of having no budgety. Under the budget procedure in place due to the Lisbon Treaty the Parliament and Council can each exercise a mutual veto. Previously, if Council and Parliament disagreed, each side could force through amendments on different types of spending against the wishes of the other.

Alain Lamassoure, Chairman of the Parliament's Budget Committee, explained that before the economic crisis, governments tried to refuse budget increases because they didn't want them. Now, they refuse increases not because they don't want them, but because they do not have the money. This is a matter of opinion. What happened last year? In November 2010, the conciliation process for the budget of 2011 broke down without agreement. The Commission rapidly tabled a new budget and the Parliament agreed it in line with the Council's demands. Whether the outcomes of the bugets of 2011 and 2012 as well as future budgets are due to the reason suggested by Lamassoure or, rather, to the power of the mutual veto provided by the Lisbon Treaty is a matter for debate. It seems that the lower figure as demanded by either the Council or the Parliament will be adopted.

The Conclusions of the Conciliation Committee for the 2012 budget can be found here:

http://www.consilium.europa.eu/uedocs/cms_data/docs/pressdata/en/ecofin/126157.pdf