Spending at EU level saves at national level … and more

20-03-2020

The European Union (EU) budget is often portrayed as a cost for net contributors to the EU, and it is revealing how redistribution to other Member States is presented as having little value for contributing states. Conversely, while critical of a number of areas of expenditure, the academic literature generally considers the EU budget to be far too small to contribute effectively to the demands made upon it. Studies of the optimum distribution of competences and finance, following the theories of fiscal federalism, call for a considerable expansion of the EU budget and competences. There is no doubt that there are many ways to improve and expand the EU budget based on comparisons with federal states. However, as the EU is not a federal state, it does not have the capacity to rearrange its competences in this way (the EU Treaty is hard to amend), and any proposal for change would have to remain within the EU's Treaty limitations. The EU's supranational nature, bringing sovereign nations together voluntarily in a complex single market that requires some pooling of competences, makes it a unique budgetary entity. Reality therefore complicates explanations of the EU budget, the value it adds and the consequent savings for Member States.

The European Union (EU) budget is often portrayed as a cost for net contributors to the EU, and it is revealing how redistribution to other Member States is presented as having little value for contributing states. Conversely, while critical of a number of areas of expenditure, the academic literature generally considers the EU budget to be far too small to contribute effectively to the demands made upon it. Studies of the optimum distribution of competences and finance, following the theories of fiscal federalism, call for a considerable expansion of the EU budget and competences. There is no doubt that there are many ways to improve and expand the EU budget based on comparisons with federal states. However, as the EU is not a federal state, it does not have the capacity to rearrange its competences in this way (the EU Treaty is hard to amend), and any proposal for change would have to remain within the EU's Treaty limitations. The EU's supranational nature, bringing sovereign nations together voluntarily in a complex single market that requires some pooling of competences, makes it a unique budgetary entity. Reality therefore complicates explanations of the EU budget, the value it adds and the consequent savings for Member States.

Ekstern forfatter

This paper was drafted as a contribution to the EPRS expert seminar on 'EU Budget 2021-27: Challenges and opportunities', held on 28 January 2020. Its author is Jorge Núñez Ferrer, associate senior research fellow, CEPS.