November 19, 2012 6:14 pm

Eurocrats face cull over Brussels budget

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The EU’s much-maligned civil servants are facing a cull and renewed pay restraint as the price of possible British support for an agreement on the bloc’s long-term budget.

A plan produced last week by the European Council revealed a €536m reduction from the administrative budget proposed by the European Commission, the EU’s executive arm, in July.

Those cuts are sure to deepen this week, according to several diplomats, as negotiations intensify ahead of a two-day summit that begins on Thursday, where the EU’s 27 heads of government will try to strike a deal.

In a sign of their growing concern, unions representing EU civil servants have begun preparations for a possible strike on Wednesday afternoon – a development that could complicate summit preparations.

Administration accounts only for about 6 per cent of an EU budget that is expected to total about €1tn for the seven-year period from 2014-20.

Yet its political symbolism is important as leaders such as David Cameron, the UK prime minister, try to demonstrate to their citizens that so-called “eurocrats” living in Brussels are suffering austerity too.

Cuts in staffing costs are one of the main demands of Mr Cameron, who said at a Brussels summit in October: “My favourite fact of the day is that there are 16 per cent of employees in the commission that earn over €100,000.”

The British prime minister spent the weekend “hitting the phones” to counterparts in France, Germany, the Netherlands, Sweden, Denmark and Poland as he worked “constructively” to find an EU budget deal.

But in a sign of deep differences between Paris and London, France’s president François Hollande on Monday lashed out at those who “come looking for their cheque, their rebate, their discount” and seek to reduce the European budget “at the moment when were are appealing for solidarity and mobilising for growth”.

One senior EU diplomat involved in the negotiations said further cuts in staffing costs were necessary “to show that it is not true that they are immune from what is happening”, and so that “Cameron can make the case to the House of Commons”.

The focus on administration is also an implicit admission that diplomats do not expect to satisfy Mr Cameron’s larger demands for a real terms freeze on EU spending.

Mr Cameron says he cannot sell to a hostile British parliament any budget increase, although the complexity of the financial negotiation creates the “creative ambiguity” vital in EU negotiations to allow all sides to claim victory.

Apart from Poland – a big net beneficiary of EU spending – Mr Cameron is devoting his efforts to building up support for budget discipline among those countries that pay most into EU coffers.

The EU’s 55,000 civil servants are an attractive target for budget hawks. Except for Belgium and Luxembourg, which host most of the EU institutions, the bloc’s civil servants have no natural protectors. Germany, France and others also see the merits of thinning them, albeit with less fervour than Mr Cameron, say diplomats.

The UK, which has imposed a 30 per cent cut in all government administrative budgets, signed a letter with seven other national governments in July asking the commission to draw up plans to save as much as €15bn from 2014-20 by reducing staff, pensions, allowances and raising the 5.5 per cent special levy paid by EU staff.

At a meeting of EU ambassadors last week, Sir Jon Cunliffe, the UK’s representative, greeted Mr Van Rompuy’s proposed reductions with the question: “Are you serious?”

EU officials complain that the image of the cosseted eurocrat – often touted by eurosceptics – was far removed from reality. Civil servants have already accepted a 5 per cent reduction in headcount between 2013 and 2017 as part of a commission plan to save €1bn. Benefits have also been reduced and career paths altered as part of a 2004 reform.

“There are a lot of myths,” said Antonio Gravili, a commission spokesperson, claiming that it was now difficult to recruit qualified staff from the UK and other, wealthier member states.

Even diplomats who are sympathetic to the UK argue that the scale of cuts Mr Cameron has advocated would be impossible without mass lay-offs, causing the EU’s machinery to break down.

One compromise under discussion would be a nominal cuts to the proposed administrative budget – say €1bn – accompanied by an increase in the special levy, reforms to holidays and other benefits that would yield bigger savings over time.

Additional reporting by Hugh Carnegy in Paris

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