EU Strikes Deal Over Long-Term Budget

Jose Manuel Barroso
Georges Gobet | AFP | Getty Images
Jose Manuel Barroso

European Union governments struck a deal with the head of the European Parliament on Thursday to finalize the bloc's long-term budget, ending months of doubt over nearly 1 trillion euros ($1.3 trillion) in future funding.

"I am delighted to announce that today we have a political agreement on the European Union's future budget," European Commission President Jose Manuel Barroso told reporters.

(Read more: EU Eases Hard Line on Austerity)

EU leaders agreed a spending plan for 2014-2020 at a summit in February, including the first ever real-terms fall in future spending limits. But ratification was blocked by the parliament, which must give its consent for any deal to enter force.

The German socialist president of the European Parliament, Martin Schulz, said he would ask the assembly to approve the agreement in a vote next week.

Under the deal, the figures agreed by leaders in February will remain unchanged. But the parliament won concessions that will allow unspent money to be transferred from one year to the next, rather than returning to national budgets as at present.

(Read more: Merkel Urges More EU Structural Reforms)

EU officials have said the change could allow spending to rise over the next seven-year period, despite the lower expenditure ceiling agreed by leaders, because actual spending will be closer to the upper limits than at present.

If approved, the deal will unlock 960 billion euros in funding for the next seven years, funding everything from roads and bridges in poorer eastern European member states to subsidies for farmers and fishermen in France and Spain.

The package also includes 6 billion euros for a new initiative to fight rising youth unemployment in Europe, which will be discussed at a summit of EU leaders starting in Brussels later on Thursday.

(Watch: Unemployment Is EU's 'Collective Failure': Olli Rehn)

"This is an important day for 500 million citizens. It is also an important day for the 26 million people who are unemployed in this union," said Irish Prime Minister Enda Kenny, who represented EU governments in the negotiations.