Insight

The political small print in the EU budget

General Policy
  • At face value, last week’s collapsed budget negotiations in Brussels were a reminder that there is a good reason why the European Union only debates its long term budget once every seven years. Rather than have an argument every year, the EU has a big argument every seven.
  • What happened in Brussels is as much about politics as money. The negotiations broke down over about €30bn in spending from a €1trn budget. The debate was and is about the political theatre of cutting, freezing, or raising EU spending at a time when all national governments are engaged in some form of austerity and many are undertaking sharp fiscal contractions.
  • The EU budget testifies to the difficulty the EU has in expanding spending in areas that would actually deepen the European Single Market: cross-border infrastructure, joint research and development spending and provision of innovation subsidies. This budget will probably reverse some of the limited progress in this area.
  • But the more important elements of this budget may be buried in the text, rather than the headline spending levels. The draft budget tabled in Brussels contains some interesting proposed changes in the way the EU raises and spends money that reflect a growing desire to give the European ‘centre’ more autonomous resources and more discretion to use them as an incentive to toe a European policy line. These ideas have been echoed by the European Commission’s own blueprint for the governance of the Eurozone, published this week. This may be the real significance of this budget debate.

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