15 October 2019

Fondation Robert Schuman: Put that budget away! Out of my sight!

Whilst the departure of the UK will reduce budgetary resources and new priorities demand new balances, debate over the European budget will demand courage. Two recommendations for EU leaders in this: abandoning the multiannual straitjacket and setting the principle of budgetary regularity.

[...]France’s insistence on demanding a specific budget for the euro zone was finally crowned with success at the European Council in December 2018, despite Berlin’s lack of enthusiasm and strong reserve on the part of the brand new “Hanseatic Club” that rallies our Nordic partners. The interest is not so much in the instrument itself – since the departure of the UK, all the Member States are committed to joining the euro. It lies in the justification given by France and accepted by its partners: a monetary zone cannot do without a sizeable common budgetary tool. On several occasions Emmanuel Macron has mentioned an amount of around “several GDP points”, whilst the community budget in which the line “euro zone” will be included, has been stuck at 1% for the last quarter of a century. Parliament’s long repeated obsession, i.e. the size of the European budget, is now posed at the highest level of the Council.

Likewise, another problem raised by Parliament: the need to create new own resources is no longer challenged by Europe’s governments. Again, we shall have to be patient. The proposals put on the table by the European Commission – tax on plastic, harmonised corporate tax – are just at the stage of the debate of principle and their outcome would require the equivalent of a new treaty (unanimous Council decision, with national ratifications). But the prospect of seeing national contributions, a present predominant resource, increased mathematically by the departure of the rich British contributor is stimulating the imagination of major financiers in the quest for alternative solutions. It remains that opening in-depth debate over the European budget will require leaders with courage close to heroism. Two recommendations can encourage them in this.

Firstly, it means challenging the blind straight-jacket that the multi-annual framework has become. Why have important politicians approve spending ceilings for a period of seven years, which no longer matches the political calendar, and which goes beyond the forecast of the best experts? Setting European priorities now for the entire decade of the 2020’s would simply be stupid. In our local budgets, as in our national budgets, we know how to ensure sustainable long-term policy financing without damaging responsiveness, which is all the more necessary in a time of high uncertainty.

Second recommendation: setting the principle of budgetary regularity. And showing it through figures. Europe has to be built on constant costs, all things being equal. If the principle of subsidiarity is well implemented, 1 euro more spent in “Brussels” should save more than one euro at national or local level in exchange for greater efficacy. A recent study by the European Parliament’s research department focusing on six main European agencies created to supervise the internal market estimated the savings made by this transfer of competence from the States to the Union at several hundred million euro. The European Court of Auditors is prepared to work in a network with its national counterparts to make impact studies like this systematic. The first should focus on the European border guard: the pooling of means and the deployment, for example, of police forces from the west and the north to countries in the south and south-west should significantly improve the cost-effectiveness ratio in terms of border protection. Europe will start to be popular again when we can say that the Union means more security and less taxes.  

Full policy paper

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