Bugetary procedure (BUD) - Main contents

The budgetary procedure is one of the special legislative procedures used in the European Union. It is used to set the annual budget of the European Union. In determining the multiannual financial framework, the assent procedure is used. For granting discharge on the budget a different procedure i is used.

Roughly, the budgetary procedure proceeds as follows: the European Commission prepares a draft budget. The European Parliament (EP) and the Council of Ministers (Council) will either approve or amend the proposal. If EP and Council cannot reach an agreement on the proposed budget, they enter into negotiations. If they still cannot reach an agreement the budget is rejected and the Commission has to prepare a new draft budget. The procedure then starts anew.

After an agreement is reached, the Parliament, more so than the Council, has the final word in adopting the joint text.

Step 1: establishing the draft budget

All European institutions, except for the European Central Bank, provide the European Commission with an estimation of their expected expenditures in the coming year. Based on these estimates the Commission establishes the draft annual budget.

Step 2: approval or amendments, first reading.

The Council adopts a position on the draft budget and forwards it to Parliament.

In the European Parliament there are three possible outcomes:

• 1. 

  the EP does not take a decision within fourteen days, the budget is adopted
• 2. 

  the EP adopts the position of the Council with a majority of votes cast, the budget is adopted
• 3. 

  the EP, by majority of its members, amends the proposed budget

Should Parliament decide to amend the proposal, a meeting of the Conciliation Committee is convened. The Committee does not meet if the Council approves the amendments made by Parliament within ten days.

Step 3: conciliation

The Conciliation Committee, composed of delegations of Council, Parliament and Commission, has to agree on a joint text Negotiations take place on the basis of the proposals made by the Parliament and the Council.

If negotiations on the budget are not concluded within three weeks, the budget is rejected. The Commission then will have to submit a new draft budget.

Step 4: adopting the budget

Both the European Parliament and the Council decide on the budget seperately. Four things can happen:

• 1. 

  if neither EP nor Council make a decision regarding the budget, it is adopted
• 2. 

  if both EP and Council approve the budget, it is adopted (the EP decides by majority of votes cast)
• 3. 

  if Parliament, by majority of votes cast, approves of the budget but the Council rejects the budget Parliament, by two-thirds majority of votes cast and a majority of its members, may make a decision to confirm or strike each individual amendment it adopted in its first reading. The EP may reinstate previous amendments or it can agree with the budget proposed by the Conciliation Committee. Effectively, the EP drafts a new budget. This budget then becomes the adopted budget.
• 4. 

  If EP, by a majority of its members, disapprove of the budget, the budget it rejected, regardless of whether the Council approved the budget or not. The Commission has to submit a new draft budget.

On voting procedures

For every step in the decision-making process the European Council decides by qualified majority vote. The voting method of the European Parliament differs by each step, as described above.

Timeframe of the procedure

Strict deadlines apply to this procedure. The first draft budget is drawn up before 1st of July. All subsequent steps have to be taken within a set number of days. The budget is finalized by January at the latest, unless the Commission has to draft a new budget.

The budgetary procedure is unique for setting the annual budget. The budget is the only area where the European Parliament has a stronger voice in decision-making than the Council of Ministers.

The European budgetary procedure is based on the Treaty on the functioning of the European Union.

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  Establishing the Union’s annual budget: part six TfEU title II chapter 3 art. 314