Sunday

15th Dec 2019

Magazine

The EU debate on its own resources

  • Johan Van Overtveldt (ECR, Belgium) the president of BUDG committee (Photo: EP)

In May 2019, the European Commission proposed to increase the EU budget from 1.03 percent to 1.11 percent of all European economies combined.

This figure will be the basis of the debate on the so-called Multi-Annual Financial Framework (MFF), which is Brussels-bubble speak for the EU budget for the next seven years.

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The last MFF started in 2014 and ends in 2020. The next one will start in 2021 and end in 2027.

The increase was then seen as high, but less so than expected.

Compared to this other federation, the United States, one percent is still a very low number, as the federal government in Washington has a budget of around 20 percent of the GDP of the country.

Until the First World War however, the US federal budget was not much higher than one percent too, with the postal service as the largest federal budgetary post.

In other words, the EU budget is still rather small. But this doesn't mean that the discussions on the next MFF will not be substantial.

Johan Van Overtveldt (ECR, Belgium), the president of the committee that coordinates the discussions on the MFF, or BUDG, obviously sees "reaching an agreement on the next MFF" as the committee's priority number one.

A second challenge, according to him, will be "the absorption of what comes out of the Brexit saga".

Brexit has two major consequences on the budget.

First of all, the UK's contribution to the EU disappears from the budget. This will need to be compensated, mainly by net-contributors (countries that pay more than they receive.)

A second consequence is that the European Commission wants to abolish all rebates when the UK, the mother of all rebates, leaves the Union.

Germany calculated that its contribution will double, while the contribution of the Netherlands would go up by 75 percent.

That is the reason why five net contributors – Germany, the Netherlands, Austria, Denmark and Sweden – have asked not to increase the EU's budget and stick to the one percent.

A third challenge, Van Overtveldt said, will be "the question of the own resources of the EU and whether or not there will be more EU fiscal revenues or not."

The fact that the European economy – and certainly the German economy – is doing less well than predicted, will make the discussions on increasing the EU budget even tougher.

So, for Van Overtveldt, it is clear that he will be happy if his committee succeeds "in reaching an MFF in which the member states can find themselves, one that will strengthen the credibility of the EU and the social-economic fabric."

The coordinators are: José Manuel Fernandes (EPP, Portugal), Eider Gardiazabal (S&D, Spain), Valérie Hayer (Renew, France), Rasmus Andresen (Greens/EFA, Germany), Joachim Kuhs (ID, Germany), Bogdan Rzonca (ECR, Poland), Younous Omarjee (GUE/GNL, France).

This article first appeared in EUobserver's latest magazine, Who's Who in European Parliament Committees, which you can now read in full online.
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