How is the EU budget decided?

The EU’s maximum level of spending is fixed over a period of at least five years, at present 0.95 percent of the EU’s collective gross national income, less than 2 percent of public spending. The total maximum and the amounts for each policy area are decided unanimously by the 28 member governments alongside the European Parliament. If no new agreement is reached before the expiry of the old agreement, expenditure levels will roll over.

Within this maximum spending, annual budgets are agreed by the 28 national finance ministers, voting by qualified majority, together with the European Parliament, voting by a simple majority. If no annual budget is agreed in time, the previous year’s spending will roll over, which the finance ministers may choose to increase or cut. The European Parliament may only block increases to amounts that are rolled over.

The rules for administering the budget are also co-decided by a qualified majority of the finance ministers and by the European Parliament.

The revenue for the EU budget, including the British rebate, is fixed and can only be changed by a unanimous decision of the 28 governments followed by parliamentary ratification in each member state.

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