Member States cannot exercise competence in areas

  Direct aids and market related expenditures (31%)
  Administration (6%)
The EU had an agreed budget of €120.7 billion for the year 2007 and €864.3 billion for the period 2007–2013,[91] representing 1.10% and 1.05% of the EU-27's GNI forecast for the respective periods. By comparison, the United Kingdom's expenditure for 2004 was estimated to be €759 billion, and France was estimated to have spent €801 billion. In 1960, the budget of the then European Economic Community was 0.03% of GDP.[92]
In the 2010 budget of €141.5 billion, the largest single expenditure item is "cohesion & competitiveness" with around 45% of the total budget.[93] Next comes "agriculture" with approximately 31% of the total.[93] "Rural development, environment and fisheries" takes up around 11%.[93] "Administration" accounts for around 6%.[93] The "EU as a global partner" and "citizenship, freedom, security and justice" bring up the rear with approximately 6% and 1% respectively.[93]
The Court of Auditors aims to ensure that the budget of the European Union has been properly accounted for. The court provides an audit report for each financial year to the Council and the European Parliament. The Parliament uses this to decide whether to approve the Commission's handling of the budget. The Court also gives opinions and proposals on financial legislation and anti-fraud actions.[94]
The Court of Auditors is legally obliged to provide the Parliament and the Council with "a statement of assurance as to the reliability of the accounts and the legality and regularity of the underlying transactions".[95] The Court has refused to do so every year since 1993, qualifying their report of the Union's accounts every year since then.[96] In their report on 2009 the auditors found that five areas of Union expenditure, agriculture and the cohesion fund, were materially affected by error.[97] The European Commission estimated[when?] that the financial impact of irregularities was €1,863 million.[98]
Competences
EU member states retain all powers not explicitly handed to the European Union. In some areas the EU enjoys exclusive competence. These are areas in which member states have renounced any capacity to enact legislation. In other areas the EU and its member states share the competence to legislate. While both can legislate, member states can only legislate to the extent to which the EU has not. In other policy areas the EU can only co-ordinate, support and supplement member state action but cannot enact legislation with the aim of harmonising national laws.[99]
That a particular policy area falls into a certain category of competence is not necessarily indicative of what legislative procedure is used for enacting legislation within that policy area. Different legislative procedures are used within the same category of competence, and even with the same policy area.
The distribution of competences in various policy areas between Member States and the Union is divided in the following three categories:
As outlined in Part I, Title I of the consolidated Treaty on the Functioning of the European Union:       view talk edit
Exclusive competence:
"The Union has exclusive competence to make directives and conclude international agreements when provided for in a Union legislative act."
the customs union
the establishing of the competition rules necessary for the functioning of the internal market
monetary policy for the Member States whose currency is the euro
the conservation of marine biological resources under the common fisheries policy
common commercial policy
conclusion of certain international agreements
Shared competence:
"Member States cannot exercise competence in areas where the Union has done so."    "Union exercise of competence shall not result in Member States being prevented from exercising theirs in:"
the internal market
social policy, for the aspects defined in this Treaty
economic, social and territorial cohesion
agriculture and fisheries, excluding the conservation of marine biological resources
environment
consumer protection
transport
trans-European networks
energy
the area of freedom, security and justice
common safety concerns in public health matters, for the aspects defined in this Treaty
research, technological development and space
development cooperation, humanitarian aid

the other half of the EU's legislature. It consists of a government minister from each member state and meets

of the European Union
Parliament[show]
European Council[show]
Council[show]
Commission[show]
Court of Justice[show]
Central Bank[show]
Court of Auditors[show]
Agencies
Other bodies[show]
Policies and issues[show]
Foreign relations[show]
Elections[show]
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v t e
European Council


The President of the European Council, Herman Van Rompuy
The European Council gives direction to the EU, and convenes at least four times a year. It comprises the President of the European Council, the President of the European Commission and one representative per member state; either its head of state or head of government. The European Council has been described by some as the Union's "supreme political authority".[81] It is actively involved in the negotiation of the treaty changes and defines the EU's policy agenda and strategies.
The European Council uses its leadership role to sort out disputes between member states and the institutions, and to resolve political crises and disagreements over controversial issues and policies. It acts externally as a "collective head of state" and ratifies important documents (for example, international agreements and treaties).[82]
On 19 November 2009, Herman Van Rompuy was chosen as the first permanent President of the European Council. On 1 December 2009, the Treaty of Lisbon entered into force and he assumed office. Ensuring the external representation of the EU,[83] driving consensus and settling divergences among members are tasks for the President both during the convocations of the European Council and in the time periods between them. The European Council should not be mistaken for the Council of Europe, an international organisation independent from the EU.
Commission


The Commission President, José Manuel Barroso
The European Commission acts as the EU's executive arm and is responsible for initiating legislation and the day-to-day running of the EU. The Commission is also seen as the motor of European integration. It operates as a cabinet government, with 28 Commissioners for different areas of policy, one from each member state, though Commissioners are bound to represent the interests of the EU as a whole rather than their home state.
One of the 28 is the Commission President (currently José Manuel Durão Barroso) appointed by the European Council. After the President, the most prominent Commissioner is the High Representative of the Union for Foreign Affairs and Security Policy who is ex-officio Vice-President of the Commission and is chosen by the European Council too.[84] The other 25 Commissioners are subsequently appointed by the Council of the European Union in agreement with the nominated President. The 28 Commissioners as a single body are subject to a vote of approval by the European Parliament.
Parliament


The European Parliament building in Brussels.
The European Parliament forms one half of the EU's legislature (the other half is the Council of the European Union, see below). The 736 (soon to be 751) Members of the European Parliament (MEPs) are directly elected by EU citizens every five years on the basis of proportional representation. Although MEPs are elected on a national basis, they sit according to political groups rather than their nationality. Each country has a set number of seats and is divided into sub-national constituencies where this does not affect the proportional nature of the voting system.[85]


The ordinary legislative procedure of the European Union.
The Parliament and the Council of the European Union pass legislation jointly in nearly all areas under the ordinary legislative procedure. This also applies to the EU budget. Finally, the Commission is accountable to Parliament, requiring its approval to take office, having to report back to it and subject to motions of censure from it. The President of the European Parliament carries out the role of speaker in parliament and represents it externally. The EP President and Vice-Presidents are elected by MEPs every two and a half years.[86]
Council
The Council of the European Union (also called the "Council"[87] and sometimes referred to as the "Council of Ministers")[88] forms the other half of the EU's legislature. It consists of a government minister from each member state and meets in different compositions depending on the policy area being addressed. Notwithstanding its different configurations, it is considered to be one single body.[89] In addition to its legislative functions, the Council also exercises executive functions in relations to the Common Foreign and Security Policy.
Budget
Main article: Budget of the European Union




Circle frame.svg
The 2011 EU budget (€141.9 bn. in total; commitment appropriations):[90]
  Cohesion and competitiveness for growth and employment (45%)
  Citizenship, freedom, security and justice (1%)
  The EU as a global partner (6%)
  Rural development (11%)