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Charles Michel as President of the European Council: The first 100+ days

30-03-2020

On 1 December 2019, Charles Michel, previously prime minister of Belgium, became the third President of the European Council. He began his term in dynamic mode, aiming to make his mark in foreign affairs and develop the EU's interinstitutional relations. While pursuing his predecessors' efforts to secure unity between EU leaders, Michel has applied his own style, visible notably in his discourse, social media presence and transparency efforts. An analysis of the President's Twitter activities shows ...

On 1 December 2019, Charles Michel, previously prime minister of Belgium, became the third President of the European Council. He began his term in dynamic mode, aiming to make his mark in foreign affairs and develop the EU's interinstitutional relations. While pursuing his predecessors' efforts to secure unity between EU leaders, Michel has applied his own style, visible notably in his discourse, social media presence and transparency efforts. An analysis of the President's Twitter activities shows his strong focus on EU-Africa relations, climate and, most recently, COVID-19.

Coronavirus Response Investment Initiative

24-03-2020

On 13 March 2020, the European Commission adopted a legislative proposal to amend the regulations on the European structural and investment funds, to enable Member States to promote investments in healthcare systems and other sectors of the economy. This proposal aims to help Member States to address the consequences of the coronavirus pandemic. The proposal is due to be voted during the extraordinary plenary session being held on 26 March to enable the adoption of this and two other specific measures ...

On 13 March 2020, the European Commission adopted a legislative proposal to amend the regulations on the European structural and investment funds, to enable Member States to promote investments in healthcare systems and other sectors of the economy. This proposal aims to help Member States to address the consequences of the coronavirus pandemic. The proposal is due to be voted during the extraordinary plenary session being held on 26 March to enable the adoption of this and two other specific measures.

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 ...

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.

Externe auteur

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.

A new package for finance and expenditure in the EU budget

20-03-2020

Every time a new multiannual financial framework (MFF) is negotiated, there is a call for the EU to invest in new policies that provide added-value. What would this mean? Firstly, that EU investment is cost effective and that it is cheaper to run a single EU expenditure policy even in a policy such as agriculture than as 27 or 28 different national expenditure polices. Secondly, that there are cross-border benefits, efficiently linking areas of opportunity between the Member States. Erasmus+, Horizon ...

Every time a new multiannual financial framework (MFF) is negotiated, there is a call for the EU to invest in new policies that provide added-value. What would this mean? Firstly, that EU investment is cost effective and that it is cheaper to run a single EU expenditure policy even in a policy such as agriculture than as 27 or 28 different national expenditure polices. Secondly, that there are cross-border benefits, efficiently linking areas of opportunity between the Member States. Erasmus+, Horizon 2020, or the Connecting Europe Framework are examples of this. Thirdly, it is the ability to afford expensive investment in the collective good that any one Member State alone would not be able to afford. Examples include Galileo and the nuclear fusion ITER programme. These three types of added-value are the basis for the case of reform of the budget. They always face challenges from the Member States concerned either to maximise their economic benefit, or to minimise the cost for their Treasuries. Others simply call for a lower budget, even if most of them recognise the collective benefits of added-value. Moreover, some Member States in the face of expenditure reductions, move to salvage their benefits in agricultural or cohesion expenditure. The predictable results in negotiating the MFFs in 2006 and 2013 were somewhat smaller budgets. These contained less of an increase in added-value expenditure than originally proposed, and smaller reductions than anticipated for agricultural and cohesion expenditure, against a backdrop of net balance or juste retour calculations by Member States. The question is how to break this logjam. In 2013, the Parliament accepted a package deal of expenditure reductions in exchange for significantly more flexibility in the budget, a full scale review of the MFF in 2016-17 and the establishment of a High Level Group on Own Resources to investigate new sources of finance for the budget (Benedetto 2019). The flexibility and the mid-term review may have allowed for a larger real terms budget to have taken effect despite the reduction in commitments and payments in the official figures. In turn, the paper will focus on the European Commission’s proposal of 2018 for the new MFF, the challenge of net balances, funds and instruments outside the EU budget, and possible packages for reform.

Externe auteur

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 Giacomo Benedetto, Jean Monnet chair in European Union politics, Royal Holloway, University of London.

Benefits outweigh costs of flexibility in EU multiannual financial framework

20-03-2020

Budget flexibility can be defined as the capacity to reorient resources quickly to meet changed circumstances, unexpected events or new policy priorities. There are three different ways of introducing flexibility in the budgetary process: by relaxing constraints on annual budgets and enhancing the capacity of legislative bodies to set annual spending priorities (legislative flexibility), by giving more discretion to executive units on how to execute their allocations (executive flexibility), and ...

Budget flexibility can be defined as the capacity to reorient resources quickly to meet changed circumstances, unexpected events or new policy priorities. There are three different ways of introducing flexibility in the budgetary process: by relaxing constraints on annual budgets and enhancing the capacity of legislative bodies to set annual spending priorities (legislative flexibility), by giving more discretion to executive units on how to execute their allocations (executive flexibility), and by setting up specific mechanisms to deal with large, unforeseen expenditure needs (e.g. contingency reserves for natural disasters and crises). A comparison of flexibility practices at the national and EU level reveals that the EU budget suffers from both limited legislative flexibility (little discretion given to the Council and the Parliament to set annual spending priorities) and executive flexibility (limited capacity conferred on the European Commission to adjust allocations according to needs and circumstances). Debates on EU budget flexibility tend to focus on the first problem and underestimate the second. Any attempt to enhance EU legislative budget flexibility requires reconsideration of the structural aspects of the multiannual financial framework (MFF). To date, focus has been on changing the rules related to the use of budgetary margins, but there are other ways to give EU budgetary authorities more capacity to set annual spending priorities, such as shortening the duration of the MFF, reconsidering the length of spending programmes, allowing for some adjustment of annual ceiling on payments or institutionalising a MFF mid-term review. Enhancing executive budget flexibility demands changes to the design of EU spending programmes, particularly the establishment of less detailed allocation rules and the creation of in-programme flexibility tools (such as performance or programme reserves). Finally, any discussion about enhancing EU budget flexibility must take into account the possible implications or 'costs' in terms of budgetary control and budgetary stability.

Externe auteur

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 Eulalia Rubio, Institut Jacques Delors.

Implementation of the EU trust funds and the Facility for Refugees in Turkey: Overview

16-03-2020

The EU trust funds (TFs) for external action and the Facility for Refugees in Turkey are innovative tools first introduced under the current multiannual financial framework (MFF) for the 2014-2020 period, as made possible by the 2013 Financial Regulation (FR) applicable to the EU budget. Their objective has been to facilitate a swifter and more flexible response to emerging crises and fast moving events, for which funds earmarked in advance had proved insufficient. The EU has set up four trust funds ...

The EU trust funds (TFs) for external action and the Facility for Refugees in Turkey are innovative tools first introduced under the current multiannual financial framework (MFF) for the 2014-2020 period, as made possible by the 2013 Financial Regulation (FR) applicable to the EU budget. Their objective has been to facilitate a swifter and more flexible response to emerging crises and fast moving events, for which funds earmarked in advance had proved insufficient. The EU has set up four trust funds since then, in addition to the Facility for Refugees in Turkey, which, despite some similarities with the trust funds, is a distinct coordination mechanism. The TFs' implementation is ongoing and the Commission reports to the European Parliament regularly on the state of play. Regular reports and evaluations have shown that the EU trust funds have had some positive results, and to some extent met their objectives. However, they have also raised questions. For instance, ad hoc instruments outside the EU budget fall short when it comes to democratic accountability: there is a general need for greater transparency and Parliament scrutiny. Moreover, there is a perceived risk that the TFs could be used to divert development aid funds towards other ends incompatible with official development assistance. While Parliament welcomed the introduction of the EU TFs, acknowledging their advantages, it has insisted that the setting up of instruments outside the EU budget should be the exception to the rule, mostly owing to the above-mentioned concerns. The aim should be to preserve the unity of the EU budget and the principles of accountability, transparency, effectiveness and sound budgetary management, and to safeguard Parliament's right to democratic scrutiny. As argued in a Cost of Non-Europe report, a better coordinated EU development aid budget, incorporating all external assistance, could prove more strategic, bringing efficiency gains, accountability and transparency. This briefing supplements an earlier EPRS briefing on EU trust funds, from November 2015, PE 572.797.

Outcome of the special European Council, 20-21 February 2020

24-02-2020

On 20-21 February 2020, EU Heads of State or Government held their first meeting specially dedicated to the 2021-27 Multiannual Financial Framework (MFF) since the publication of the European Commission’s proposal in May 2018. Despite intense preparations and discussions, lasting over two days, EU leaders failed to overcome their differences and to find an agreement. At the end of the meeting, the President of the European Council, Charles Michel, declared that ‘we need more time’. When, and under ...

On 20-21 February 2020, EU Heads of State or Government held their first meeting specially dedicated to the 2021-27 Multiannual Financial Framework (MFF) since the publication of the European Commission’s proposal in May 2018. Despite intense preparations and discussions, lasting over two days, EU leaders failed to overcome their differences and to find an agreement. At the end of the meeting, the President of the European Council, Charles Michel, declared that ‘we need more time’. When, and under which conditions, the European Council will reconvene for another attempt to finding an agreement has not decided thus far.

The net operating balances or the "Juste retour" approach

19-02-2020

Operating budgetary balances (OBBs) are calculated and published annually by the European Commission as an attempt to document the differences between a Member State’s financial contribution to and its allocated expenditure from the EU budget. OBBs have become a highly politicised concept, with substantial shortcomings. Calculating Operating budgetary balances (OBB) is purely an accounting exercise. This is most convincingly demonstrated by the zero-sum assumption inherent in the Operating budgetary ...

Operating budgetary balances (OBBs) are calculated and published annually by the European Commission as an attempt to document the differences between a Member State’s financial contribution to and its allocated expenditure from the EU budget. OBBs have become a highly politicised concept, with substantial shortcomings. Calculating Operating budgetary balances (OBB) is purely an accounting exercise. This is most convincingly demonstrated by the zero-sum assumption inherent in the Operating budgetary balances concept, as a positive OBB of one country must necessarily be offset by a negative OBB of equal size by another Member State. Evidently, such a perspective stands in sharp contrast with the idea of an EU budget that is not primarily meant as a system of fiscal redistribution, but rather as a means to generate European added value..

Externe auteur

Zareh Astryan, Annika Havlik, Friedrich Heinemann, Justus Nover, Marta Pilati

Net operating balances indicator: A distorted indicator of a Member's benefit from the EU budget

19-02-2020

Operating budgetary balance (OBB) calculations imply that EU spending is a zero-sum game. This feature is inconsistent with the main argument that EU spending creates European added value. Thus, taking simple net operating balances as an indicator of a Member State’s ‘net benefit’ from the Union’s fiscal activities can lead to misleading results, as demonstrated in the following points of argument.

Operating budgetary balance (OBB) calculations imply that EU spending is a zero-sum game. This feature is inconsistent with the main argument that EU spending creates European added value. Thus, taking simple net operating balances as an indicator of a Member State’s ‘net benefit’ from the Union’s fiscal activities can lead to misleading results, as demonstrated in the following points of argument.

Externe auteur

Zareh Astryan, Annika Havlik, Friedrich Heinemann, Justus Nover

EU membership benefits: Not measured by net operating balances

19-02-2020

National operating budgetary balances (OBBs) do not take into account all of the economic and non-monetary benefits that Member States gain from EU membership. In many policy areas with cross-border characteristics and demand for critical mass, common action at the EU level may lead to better results than fragmented national initiatives. Several studies show that the Single Market has increased employment and growth. The effect of the Single Market deepening since 1990 has been quantified by 3.6 ...

National operating budgetary balances (OBBs) do not take into account all of the economic and non-monetary benefits that Member States gain from EU membership. In many policy areas with cross-border characteristics and demand for critical mass, common action at the EU level may lead to better results than fragmented national initiatives. Several studies show that the Single Market has increased employment and growth. The effect of the Single Market deepening since 1990 has been quantified by 3.6 million new jobs. Additionally, EU GDP would be 8.7% lower if there had been no Single Market integration. The average EU citizen gains €840 more per year thanks to the Single Market. While all EU citizens benefit from income gains thanks to the Single Market, these effects are higher for Western Europeans in absolute terms. Relative to GDP, gains and losses are more similar.

Externe auteur

Marta Pilati, Fabian Zuleeg

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