By RAF CASERT

Associated Press

BRUSSELS (AP) -- The European Union head office said Wednesday it wanted to see an increase in the overall EU budget to boost growth at a time when the continent's financial crisis is forcing the 27 member states to tighten their belts and cut costs.

EU Commission President Jose Manuel Barroso said he was seeking a 6.8 percent increase in payments to meet earlier financial commitments the EU members had previously made and spur on growth and jobs across the bloc.

"The EU budget is the instrument for investment," Barroso said. But his proposal immediately ran into criticism that while member states are told by the EU institutions to buckle down, the Commission itself is seeking to live larger.

"I don't agree with the assumption that this money is money for Brussels, or Strasbourg," said Barroso, referring to the cities where many of the EU institutions are based. "It is money going back to the member states and it makes sense at many levels to spend it at European levels."

Overall, the budget of the EU institutions is small, representing only around 1 percent of the bloc's gross domestic product, but it has gained increasing political importance as national capitals have tightened their own budgets over the past six years. The EU budget is largely used to fund agriculture and aid programs to the poorer regions to boost a unified single market with cross-border investment initiatives.

The Commission's proposal would set the 2013 budget at ¤138 billion ($182 billion). Barroso said his proposal freezes future expenditure at the level of inflation and keeps the rise of administrative spending below inflation.

It said a lot of spending had already been allocated in multi-annual programs benefiting countries, some of which are first in line to criticize any rise in the budget.

The budget now goes to the European parliament and the member states for further discussion. No full agreement is expected before November.

The Commission said that beyond austerity, there also needed to be room for economic growth and offered an EU budget to counter the crisis.

"We will not restore growth by cuts only; Europe needs to invest wisely for its own future, starting today," said EU Budget Commissioner Janusz Lewandowski.

British Conservative MEP Martin Callanan insisted however that the EU institutions were living beyond their means.

"To ask for an almost seven percent increase is simply out of touch with the real world," he said. "The EU budget battle is symbolic of the problems with Europe today. Instead of asking how we spend money better, the Commission wants to spend more."

Copyright 2012 The Associated Press.

Recommended for you