Today, my colleague Commissioner Gunther Oettinger and I present the Commission's "reflection paper on the future of EU finances". What sort of budget will we need in future? In what should it invest? How should it work?
Putting a common budget together is no easy matter even at the best of times. In the age of Brexit and the emergence of new priorities such as migration and defence, it closely resembles to squaring the circle. The departure of the United Kingdom alone leaves us with a revenue shortfall of minimum EUR 10 billion a year. At the same time we need to finance new tasks such as defence, internal security... The total gap could therefore be up to twice as much. Therefore, though money is not everything, we will need the financial resources to fulfil these new tasks. Or scale down our ambitions…
There are two knee-jerk responses to this: those calling for cuts within the EU budget (mostly "net contributors", Member States whose direct contribution to the EU budget exceed the amount of EU funds available to them), and others (mostly "net beneficiaries", for whom the amount of available EU funds exceeds their direct contribution to the EU budget) who call for net contributors to up their contributions. However, we, as co-authors of this reflection paper, believe that we need to abandon the outdated, single-entry bookkeeping approach with its payees and payers. Instead we propose a completely new concept, which we elaborate in a reflection paper on the "future of EU finances", presented this Wednesday 28 June. It is one of five reflection papers looking at different dimensions of the "Future of Europe" debate. The main question is: what should the EU budget be like in future? The aim is to engage Member States, regions and cities, NGOs, businesses and citizens.
We want to set the bar really high for EU projects. Every euro we spend in Brussels must provide clear added value. The bottom line for the citizens in Berlin, Warsaw or Lisbon is that each Euro spent from the EU budget has more impact than if spent by their respective national budgets. It is the "subsidiarity principle", by which the EU acts only if it can do so better than national or regional levels, adapted to the budget.
In many cases, this means that it simply costs less if we act together than if every Member States acts alone. In the defence sector, for instance, just through economies of scale we can save between 25 and 100 billion Euro a year of national defence expenditures by reducing the number of different types of weapon systems, coordinating buying weapons and avoiding to duplicate structures.
In other areas, we can reach the critical mass only together to really achieve the goal. Supercomputing, is such an example. No single country or company has the financial resources to be able to compete with the forefront supercomputers. However, we need those for scientific computing simulation, for Big Data, the analysis of very large datasets, which should ultimately secure us an economic advantage.
Also, the EU budget avoids costly duplication such as in the case of research; pooling research investments together is better than having various labs in different Member States working in parallel on the exact same experiment.
By the same token, investing in less developed regions not only benefits those regions, but through exports directly linked to projects financed by the EU or indirectly because of more welfare, other regions benefit too. Indeed, all sectors of the German economy for instance, benefit from EU investments elsewhere in Europe.
Every single EU policy will have to pass the same test that consist of a number of conditionalities: future EU funding will have to be in line with the EU's priorities, especially in terms of economic strategy; link with important reforms; flexibility to react quickly and effectively to unforeseen new priorities and challenges.
One mistake must be avoided though: the EU budget has its limits. Yes, it contributes to improving 500 Million Europeans' daily lives, but it cannot and will never be the answer to each and every issue faced by Europeans at large. At around €140-150 billion a year, it represents a mere 1% of the combined GNI of all Member States. It also amounts to less than one EURO a day per European, less than the price of a cup of coffee a day in most Member States.