The European Commission proposed adjustments to the 2021-2027 EU budget to cover both new and existing needs in response to the European Parliament’s call for urgent action, but it’s no secret that member states are more willing to agree on common policy goals rather than how to fund them – EUobserver.
This week’s summit of EU leaders should be a moment to invest in supporting agreed policy objectives, whereas inaction will only come at a higher cost.
The proposed changes are aimed at the most acute funding problems and structural weaknesses in the budget, as the long-term budget agreed at the end of 2020 was not designed for military conflicts such as the war in Ukraine.
Changes are needed to ensure stable support to Ukraine, EU Member States on migration management and industrial policy funding. In addition, higher interest rates created the demand for additional crisis response measures.
Some EU countries argue that there is a lot of spare money in the bloc’s coffers, but these funds are needed to support real people, businesses and organisations across the Union.
Billions of euros were reallocated to cope with the consequences of the war: to help countries hosting refugees, to improve energy security and reduce costs for households, to boost defence cooperation, and to support industrial policy. Today, the European Commission must take action because reallocating funds will not deal with the new challenges.
Some of the proposals for cuts are questionable. For instance, there are proposals to cut support for certain policies and objectives in order to spend the savings on the same policies and objectives.
Other proposals from member states include drastic across-the-board cuts to programmes such as Horizon Europe’s research and innovation programme or the Erasmus+ student exchange programme in order to cover higher borrowing costs caused by rising interest rates. This money will be “saved” at the expense of researchers and students already struggling with the rising cost of living.
However, national budgets can also raise taxes or run deficits. In fact, national contributions to the EU budget in 2023 and 2024 are at historically low levels.
The Commission’s budget proposal would mean a level of payments of around 1.02 per cent of GNI (around €172 billion in 2023), which is well below the 1.1 per cent (€186 billion in 2023) that the Commission deemed necessary back in 2018.
It must be realised that inflation will wipe €74 billion off the real value of the seven-year budget, meaning that the €66 billion on the table will not even make up the deficit.
The European Council is due to reach a decision this week to allow negotiations with the Parliament to begin. The necessary legislation and changes to the budget can be adopted in early 2024.
The budget needs urgent revision and targeted reinforcement to ensure that it addresses the needs of EU citizens and fulfils agreed political commitments.
The adoption of the budget amendments is a critical event as it will determine the future course of the European Union and the effectiveness of its existence.
