The distinction between compulsory expenditure and non-compulsory expenditure

This determines the respective budgetary powers of Parliament and the Council.

a. Compulsory expenditure (CE)

Compulsory expenditure is expenditure necessarily resulting from the Treaties or from acts adopted in accordance with them. As far as this type of expenditure is concerned, Parliament may only propose modifications, on which the Council has the last word. However, as we saw above, if Parliament's proposals would not increase the overall expenditure of any of the Institutions, the Council must act by a qualified majority in rejecting them, failing which they will be deemed accepted. This arrangement enables Parliament to exert influence even over compulsory expenditure.

Compulsory expenditure, currently approximately 45% of the budget, consists mainly of:

§ agricultural price support expenditure (EAGGF-Guarantee Section);

§ various items of expenditure connected with structural agricultural policy (EAGGF-Guidance Section) and the common fisheries policy;

§ flat-rate refunds to the Member States, in particular of costs incurred in collecting own resources;

§ part of development aid expenditure.

b. Non-compulsory expenditure (NCE)

Parliament has the last word on this type of expenditure, in that it takes the final decision at last reading on the amendments which it adopted previously. However, its powers are restricted by the maximum rate of increase in expenditure. As a result, Parliament cannot add to the draft budget adopted by the Council a volume of non-compulsory expenditure equivalent to more than half this rate. Nonetheless, if the Council has already increased expenditure by more than half the rate, Parliament may still make use of the remaining half.

Principles of the EU budget spending – for self preparation.

The articles are Mechanism of forming of budget of the EU, Implementation of budget of the EU, Financial policy of the EU, Economic and Monetary union, Currency integration of the EU, Currency policy of the EU, Currency system (European), Currency union (European), Currency backlogs of the EU are considered in Reference Book on the European Union (Donetsk: DONNUET, 2010).