EU Budget


The EU budget in 2019 was around 150 billion euros a year, which is equivalent to 1,120 billion kroner – or approximately 2,200 kroner per citizen of the EU.┬áThe table shows EU spending in the 2019 budget in large, broad areas.

Amounts in billions kr. Territory
600 Innovation and inclusive growth: Job creation, research and education
445 Sustainable growth: Agriculture, climate and fisheries
84 Global Europe: Foreign Policy and Humanitarian Aid
74 Administration: Employees’ salaries and pensions, buildings
28 Security and citizenship: Immigration and asylum policy, border control and consumer security

There is widespread agreement among Member States that more money should be spent from the EU budget on migration, security and defense, as well as mobility and education. This means either that spending on traditional policies such as agriculture and cohesion must fall, or that more money must be added to the EU budget. Based on Countryaah, the countries of Eastern and Southern Europe are not interested in cutting agricultural subsidies because they receive a lot of money from the EU in this area.

EU budget

How is the budget decided?

The EU operates with a budget for each year and with a multiannual financial framework. The power to decide on expenditure in the EU budget is shared between the Council of Ministers and the European Parliament. This is laid down in the Treaty of Lisbon.

The Commission proposes the EU budget and its adoption takes place after one reading in both the European Parliament and the Council of Ministers. If the two institutions cannot agree, a so-called conciliation committee is convened. If a compromise can be negotiated here, it will only have to be approved by the European Parliament and the Council of Ministers in order to be adopted. If the proposal is rejected, the Commission will have to make a new one.

The multiannual financial framework is the EU’s overall budgetary framework for a period of at least five years. It sets the overall spending limits in the EU budget categories.

Income

Once the EU has negotiated budget spending, the EU must ensure that the same level of revenue can be found. The EU has adopted a so-called scheme for how the individual sources of revenue are to be calculated and in what order.

  1. Taxes (sugar), customs revenue (goods from outside the EU) and fines are calculated first
  2. To this is added 0.3% of the individual Member States’ VAT revenues
  3. The difference between budget expenditure and revenue above is covered by Member States ‘own contributions, which are calculated as a percentage of countries’ gross national income (GNI).

The GNI contribution ensures a balance between budget expenditure and revenue.

All of this revenue is called “EU revenue” by Abbreviationfinder to mark the EU’s independence from the Member States, but in reality VAT revenue and GNI revenue are contingents allocated to the countries’ annual national finance laws. However, the payments are mandatory, and unlike the UN, for example, the EU has not had any problems with countries withholding payments for political reasons.

The United Kingdom, Germany, the Netherlands, Sweden, Austria and Denmark have negotiated discounts on payments to the EU budget. Some rebate schemes have been temporary and may cover reduced payments of both VAT revenue and GNI revenue. The European Commission has wanted to abolish all rebates in connection with the multiannual financial framework for 2021-2027. This is partly due to the fact that the UK is leaving the EU with Brexit. However, it is unclear whether it will succeed, as the rebate countries do not immediately want to give up rebates, which will cost them billions of euros in extra payments.

European union budget

Discussion areas

The political dispute over the EU budget revolves around about how big the EU budget should be. The Commission and the European Parliament, together with a group of Member States, want a larger budget, but another group of Member States want the budget to remain the same (measured as a percentage of GNI).

The EU countries that contribute more to the EU budget than they receive are called net contribution countries. They are worried that they will cover the gap when the UK leaves the EU and thus no longer pays into the budget. Countries that receive more than they contribute, on the other hand, are worried that the budget will be cut after Brexit, so that part of their EU support will be lost. Net contribution countries such as Denmark, Austria and the Netherlands argue that the EU budget should not increase, whereas a number of countries from Eastern and Southern Europe will not have a smaller budget.

The political discussion on the EU budget regarding the net payments between each Member State and the EU budget is recurring. However, it is not possible to draw up a precise net balance for each Member State in relation to the EU budget. approximately However, 80% of both revenue and expenditure can independently be said to be localized to specific Member States.

Historic

At European level, the struggle for power over the budget has been a central part of an institutional power struggle between the Council of Ministers and the European Parliament, and thus of the question of the extent to which the EU must develop supranationally.

The treaties adopted have, since the 1970’s, given the European Parliament greater influence over the EU budget than over other resolutions. Parliament has constantly and deliberately used this influence as a lever to increase its influence in general, inter alia by demanding increased influence on legislation on a subject as a condition for accepting appropriations for the purpose.

The actual decisions in the budgetary procedures show that Parliament has gradually wanted to increase the EU budget, especially in the main areas of Structural Funds and Internal Policy. The Council of Ministers generally votes for smaller appropriations compared to Parliament’s wishes; an exception, however, is agricultural policy.

Budgetary competence was not significantly affected by the Single European Act, which entered into force in 1987, or by the Treaty of Maastricht, which entered into force in 1993, but the Lisbon Treaty of 2009 gave Parliament full say in all aspects of the budget, including agricultural policy.

Initially, separate budgets existed for the ECSC, EEC and EURATOM, but since 1970 a single budget has been established. With the Treaty of Lisbon, the European Parliament co-decided on the entire budget. The multiannual financial framework (seven-year expenditure ceilings in the EU budget) was enshrined in the Treaty of Lisbon.

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