The EU Budget

Project manager: Jonas Eriksson

Despite its size of c. 1 per cent of EU GNI, the political impact of the EU budget is significant, not least in terms of facilitating further integration. At the same time the economic effects of EU expenditures are contended. Over the years SIEPS has analysed various reform options, whether related to revenues, expenditures or institutional aspects of the budget.

The current multiannual financial framework (MFF) ends in 2020. History shows that the discussions on reforms needs to be taking place well before the negotiations on the subsequent MFF commences. Hence, the upcoming mid-term review is an opportune moment to engage in serious discussion on budget reform.

Several aspects need to be analysed. For instance, the Treaty allows for an MFF of five to seven years, which implies that the framework could be adapted so as to follow the mandates of the Commission and the European Parliament. Another facet of the budget concerns its lack of flexibility and how in the future it can be made more responsive to current events. As most of its expenditure is reserved for national envelopes, flexibility in the short term implies taking money from headings such as research and external relations; i.e., true European public goods. A third aspect concerns the possibility of allowing the Commission to withhold money as a way to influence Member States that do not abide by EU legislation.