Blog: Ulla Karvo, 14 May 2018

A long-term budget outlines the future of the European Union

The European Commission held its promise and published a proposal for the EU budget 2021–2027 in early May. Commission President Juncker has said that the negotiations were exceptionally difficult, as Brexit will leave the EU with a financial hole, and there are continuous demands for the EU to take on new tasks.

After the publication, the usual arguing about the proposal’s pros and cons started. The Commission proposes a moderate budget equivalent to 1.11% of the EU27's gross national income instead of the current 1%. The proposal can be deemed moderate because institutions such as the European Parliament and the Committee of the Regions have called for raising the national contributions to 1.3%.

The supporters of a tight budget consider the proposal to raise contributions an outrage. The Netherlands, for example, is of the opinion that the smaller the Union, the smaller the budget should be. Some anticipate that the Eurosceptics will gain momentum from this plan to expand the budget.

The Commission’s proposal aims for better results with fewer resources, while also delivering new goals. There is a wish to reform the agricultural and structural policies, which would see cuts of 5% and 7%. A proposal on the future of cohesion policy will be issued at the end of May, revealing what new changes a tighter budget will bring about.

Over the last years, there have been concerns about how the rule of law is being implemented in some EU member states. Many member states find it unreasonable that EU funding is allocated to countries that do not share the EU’s common principles. One way to pull these countries into line would be to turn off the financial tap. So far, this has not been possible because of the unanimity requirement. Efforts have been made to develop a tool to solve the matter for the next programming period.

The Commission’s proposal for a long-term budget is a basis on which to work. The upcoming negotiations are not expected to be easy, and it is anticipated that an agreement could only be found towards the end of 2020. The EU’s rules require that the budget be unanimously approved by all member states. This may lead to a situation where the various links between EU funding and member states’ national politics make consensus impossible. Any member state that feels its own interests are threatened may vote down the proposal. If new tools were to be developed to help strengthen the Union’s common values, it would be important to take them into use where necessary. So far, the Commission cannot be said to have shown much resolve in implementing even the current rules. For instance, there are rules, which allow the Commission to recover the EU funding granted if it finds irregularities. However, the Commission has not been eager to take action in cases where a member state has not repaid the funding.

The budget proposal’s choice of priorities conveys the Commission’s view of the EU’s future. Cutting red tape, making rules more coherent and setting clearer objectives are goals worth striving for, and they can enhance the Union’s credibility. As I mentioned above, cuts are proposed to agricultural and structural funds, whereas spending on migration and border control would be increased. Budget Commissioner Öttinger has argued that the EU has the right to guard its borders and to ‘know who is coming in’. Accordingly, increased funding is proposed for security and defence.

More emphasis will be placed on young people, research and innovation, the digital transformation and investments. With these priorities, the Commission can be seen as taking a proactive approach to the EU’s future. Investments into these sectors are believed to improve Europe’s competitiveness and to make the EU stabler, while also expanding its global role.

Ulla Karvo

Ulla Karvo is EU Affairs Manager at the Association of Finnish Local and Regional Authorities.