In the words of the European Commission’s President José Manuel Barroso, “Europe has avoided paralysis”. The European Council has agreed upon a budget for the period 2007-2013. The heads of EU member states worked late into the night last Friday, until they agreed upon a maximum total expenditure of 862 363 million Euro, corresponding to 1.045 percent of the EU GNI. Although the budget remains below the European Commission’s original proposal, it represents a 15 billion Euro increase from the current EU budget. Important features of the agreement are:

• Increased resources – over five billion Euro - allocated to the new member states;
• A change to the British rebate, which will not apply to the spending in the new member states;
• A review clause, implying a revision of all aspects of the European budget in 2008 by the European Commission, “without taboos” (Barroso), i.e. including the Common Agricultural Policy and the UK rebate. The European Council will then decide on the subjects covered by this revision.

Following the European Council’s decision, the budget still needs to be negotiated between the European Parliament, the Council and the European Commission, a process which can easily take several months: the Council and the Parliament have to reach an interinstitutional agreement on the division of the main budget headings between different instruments.

The final implications of this new budget for education and research depend upon these negotiations:

• Expenditure for education and research is included under the heading “Competitiveness for Growth and Employment”. With 72 120 billion Euro for the whole period 2007-2013, the amount attributed to this heading corresponds to 59 percent of what the European Commission had requested.
• The different instruments and framework programmes will have to bare their share of this reduction. Hence, while in terms of timing, it is now again achievable to have the new Integrated Lifelong Learning Programme (ILLP) in place as from 2007, it may undergo some financial cuts.
• While education is not specifically mentioned in the document summarising the Council’s agreement, the Council recommends to prioritise research in allocating funding within the heading, for it is “one of the most promising and effective drivers of innovation and growth”. By 2013, resources allocated to research should be around 75 percent higher than in 2006. In addition, the Council encouraged the Commission and the European Investment Bank to look into possibilities to increase especially private sector R&D investment by up to 10 billion Euro through a financing facility with risk-sharing components.