Following the entry into force of the Lisbon Treaty, the European Parliament now shares the power to decide on the entire annual budget of the EU with the Council of the European Union and it has the final say.

Every year the European Commission proposes a budget for the EU for the following year. The final figures then have to be agreed by both the Parliament and the Council, which represents the member states, before the budget can be adopted. As the Council tends to propose figures below what the Parliament is asking for, the two institutions enter into negotiations in order to find an agreement. This takes place after the Parliament adopts its position at the end of October and is referred to as the conciliation process.