The European Union's lawmakers approved the bloc's 2007 budget on Thursday, with a record increase of spending in building Europe's growth potential.

After lengthy negotiations within the EU, the new year spending was finally set at 115.5 billion euros (one euro equals about 1.32 U.S. dollars), an increase of 7.6 percent over 2006. It represents only 0.99 percent of the total national gross income of the 27 EU members including Romania and Bulgaria, who will join the EU on Jan. 1, 2007.

The adopted commitment appropriations, meaning money pledged by member states for expenditure in 2007 and after, amounts to 126.5 billion euros, 5.0 percent more than in this year.

Among the total commitments, 54.9 billion euros will be allocated to education and training, research, innovation, transport, energy network and aid for poor regions, the biggest increase over 2006 at 15.4 percent.

The EU said that this reflects the necessity of transforming the EU economy into a knowledge-based one.

"In this budget a new way of thinking in Europe starts to be visible: there is a significant shift of resources towards competitiveness, innovation and economic progress," EU Commissioner for Financial Programming and Budget Dalia Grybauskaite said.

However, the allocation on agriculture, including the controversial farming subsidies and funds for rural development and environmental protection, remains the biggest single budget heading, standing at 56.3 billion euros and accounting for around 45 percent of the total.

For the rest of the money, 1.2 billion euros will be used for freedom, security and justice issues, while money to help the EU's neighbors and other developing economies will be set at 6.8 billion euros.

The administrative costs to all EU institutions will amount to 6.9 billion euros, corresponding to 5.5 percent of the total commitments in the budget.

Source: Xinhua