Reforming the budget, changing Europe: will the budget review transform Europe?

22 October 2010

Last week the Commission kicked off an open debate on a post-2013 vision, which could turn into a “never-ending story,” said Janusz Lewandowski, European Commissioner for Financial Programming and Budget.  The European Parliament must now give its consent to any Council regulation on the multi-annual financial framework (MFF), and anonymity is required by EU Member States on own resources decisions.

There is a “clear dilemma” between Europe’s growing responsibilities and increasing pressure from EU governments to limit spending, with the European budget used as a tool for economic governance.

It will not be easy to align the EU budget with the EU 2020 Strategy goals of smart, sustainable and inclusive growth, while other budget headings cover EU cultural and citizenship programmes, but they could be combined into a single programme to boost visibility and foster unity in diversity. The EU Solidarity Fund could also be broadened in scope.

The Lisbon Treaty and the EEAS give Europe the tools to act more forcefully internationally, and the EU is committed to increasing overseas development aid to 0.7% of GNI. However, budgets only deliver results if properly leveraged, for example by partnering EU funds with those from the private and financial sectors, with EU project bonds  to finance huge infrastructure projects using the budget as a guarantee.

With the cost of strategically importance projects like Galileo and ITER mushrooming, budget programming is impossible, so one alternative would be to separate the support structure,  and the EU budget makes a fixed annual contribution.

One option for a new MFF structure is to reduce the framework to three headings: internal, external and administrative expenditure, and divide internal expenditure into smart, sustainable and inclusive growth, and citizenship.

On the issue of own resources one possibility is to eliminate the VAT-based contribution and introduce a new own resource, for example an EU tax on air transport, energy or financial transactions. Whatever is chosen, the present-day structure is contradictory to the spirit of the Treaty.

The Commission plans to table the draft regulation for the MFF by June 2011 and aim for a definitive agreement by 2012.