Reuters AlertNet Lite - Govts seek leaner 2010 EU budget as crisis rages

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Govts seek leaner 2010 EU budget as crisis rages

10 Jul 2009 13:42:46 GMT
Source: Reuters

BRUSSELS, July 10 (Reuters) - European Union governments, faced with swelling budget deficits due to the economic crisis, proposed cuts in the bloc's 2010 budget on Friday which would lower spending on foreign aid and agriculture.

Senior finance ministry officials from the EU's 27 member states demanded at a Brussels meeting a cut of 1.8 billion euros ($2.5 billion) to the 122.3 billion euro budget proposed by the executive European Commission.

"The draft budget ... strikes a balance between targeted cuts and financing political priorities such as measures to support growth and employment," Hans Linblad, state secretary at the Swedish Finance Ministry, told a news conference. Sweden holds the EU's rotating presidency in the second half of 2009.

The proposal came as G8 leaders, among them three from the EU, pledged $20 billion in farm aid to help poor nations feed themselves. [nL9671639]

EU governments say the budget needs to be disciplined for the bloc whose members are struggling with soaring fiscal deficits as they spend billions of euros to fight the worst economic crisis since World War Two.

The governments, Commission and the European Parliament will now negotiate for four months over the final shape of the budget. In previous years, the EU legislature has always restored some cuts proposed by governments.

Under the proposals, the biggest EU cut would slash 508 million euros from the foreign aid budget, lowering it to 7.2 billion euros. The governments also want 490 million euros less spent on farm subsidies.

Currently, over 70 percent of the EU budget is spent on farm subsidies and aid to poor regions.

Governments have also proposed a 293 million euro reduction on various growth strategies and a cut of 408 million euros for regional aid which involves projects such as motorway construction or environmental clean-up. (Editing by Sophie Hares)

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