Despite efforts made by the parties involved and convergence on the figures of the EU budget for 2011 and other connected items, the Council and the European Parliament did not reach an agreement on the whole negotiation package, within the Conciliation Committee. The Commission will now have to propose a new draft budget and, should not being an agreement by the beginning of 2011, the EU will have to move to provisional twelfths scheme.

The first application of the new annual budgetary procedure provided for by the Lisbon Treaty, which puts the Council and the European Parliament at the same level for budget adoption, seems to have caused an impasse which could lead to a “provisional twelfth” application of the budget. Discussions within the Conciliation Committee were framed by the Council's and the European Parliament's position voted on 12 August and 20 October, and started on 27 October with the 21-days deadline imposed by the budget procedure.

Subject to an overall agreement the Council and European Parliament in principle agreed to limit  the total amount of payments for the 2011 EU budget to 126.527 billion Euro, which represented  2.91% more compared to 2010, and corresponding to 1.01% of the Gross National Income (GNI) of the EU. The European Parliament, however, insisted to link the discussions on the EU 2011 budget to the question of the flexibility for the revision of the multiannual financial framework and the way in which the Parliament would be included in the negotiations on the next multiannual financial framework.

Parliament's negotiating team, led by President Jerzy Buzek, reiterated its willingness to limit the rise in 2011 payments to 2.91%, while it had already capped commitments (which determine future payments) to 1%. However, the also repeated their desire to open talks about how Parliament can be involved in a review of the EU budget financing system in order to make it less crisis-prone, stressing that this is provided for in the Lisbon Treaty.

The MEPs declared that given the failure within the Council of Ministers it is now the responsibility for Heads of State or Government of the EU to take up the issue and reach an agreement with the Parliament before the end of the year

Consequences of not adopting the budget: the provisional twelfths

As the 21-days-conciliation-period as provided for by the Lisbon Treaty is now expired, the Commission has to make a new proposal, in line with the Treaty on the Functioning of the EU (TFEU). In the case that at the beginning of 2011 the budget is not adopted, a sum equivalent to not more than one twelfth of the budget appropriations for 2010 may be spent each month for any chapter of the budget, as long as this sum does not exceed one twelfth of the appropriations provided for in the same chapter of the draft budget proposed by the Commission.

The so-called provisional twelfths could have some major consequences. It could affect projects such as the European External Action Service and the three new financial supervision authorities. It could also represent a set-back for the International Thermonuclear Experimental Reactor (ITER) as without an overall agreement it will not be possible to finance of 940 million Euro of the additional needs of 1.2 billion Euro through a revision of the multiannual financial framework.

The application of the provisional twelfths would also risk to undermine plans for spending increase in certain areas such as cohesion policy and for priority issues such as youth, mobility and education. It also puts a question mark behind the reimbursement for expenditure on a part of the direct aids for farmers and the mobilisation of the EU solidarity fund and the European Globalisation Adjustment Fund.