An EU budget of states and citizens

• Published date: 01 November 2020
• Author: Richard Crowe
• Date: 01 November 2020
• DOI: http://doi.org/10.1111/eulj.12398

KALEIDOSCOPE 1

THE FUTURE OF EUROPE: TAKING POLICY

REFORM SERIOUSLY

An EU budget of states and citizens

Richard Crowe

*

Abstract

In a European Union of states and citizens, the budget of the Union continues to function principally

as a budget between states. Despite various attempts over the decades to introduce reforms aimed

at strengthening the connection with citizens, the budgetary system has shown itself to be resistant

to change. However, the landmark agreements of 2020 on the new multiannual financial framework

(MFF) 2021–2027, own resources and recovery plan (Next Generation EU [NGEU]) packages poten-

tially open up new possibilities to move beyond the logic of juste retour and promote a more posi-

tive vision of European budgetary integration, founded on solidarity between states and citizens

and coordinated action at all levels of governance. Building on the developments of 2020, this con-

tribution assesses how the Conference on the Future of Europe might explore options to further

strengthen the profile of the Union budget as a ‘budget of citizens’, as well as a ‘budget of states’.

1|INTRODUCTION

The fundamental structure of the European Union's budgetary system has changed little in over three decades, since

the Delors I package of reforms of 1988 introduced the first binding multiannual financial framework (MFF) and cre-

ated a residual own resource based on national contributions calculated in relation to each Member State's gross

national income (GNI).

1

Over the ensuing decades, expenditure remained capped at just over 1% of EU GNI and up

to 80% of the budget was pre-allocated in “national envelopes”for agriculture and cohesion for each seven-year

MFF programming period. Meanwhile, the share of revenue drawn from the GNI-based own resource progressively

increased, to the extent that it now accounts for over 70% of the Union's revenue. The current system has the merit

of providing budgetary stability and predictability. The proven capacity of the GNI-based own resource to act as a

reliable source of financing, even during severe economic crises, underpins the Union budget's triple-A credit rating

and represents an essential pillar of confidence supporting the European project.

However, the current design of the budgetary system also entails drawbacks. In particular, reliance on the GNI-

based resource as the main source of Union revenue focuses attention on national net budgetary balances. Union

budgetary negotiations tend to be driven by a logic of juste retour, with each government seeking to maximise

national returns from the budget, while minimising national contributions. A veteran of several MFF procedures,

Stefan Lehner, explains that, in practice, the Union budget has a dual nature, in that it functions as both a budget for

*

Head of Unit for Institutional & Budgetary Law, Legal Service of the European Parliament. All views expressed are personal to the author.

1

On the Delors budgetary reforms, see European Commission, European Union Public Finance (Office for Official Publications, 5th edn, 2014), chapters

3 and 4.

Received: 10 March 2021 Revised: 10 May 2021 Accepted: 10 May 2021

DOI: 10.1111/eulj.12398

Eur Law J. 2020;26:331–344. wileyonlinelibrary.com/journal/eulj © 2021 John Wiley & Sons, Ltd. 331