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Brussels is preparing to overhaul the EU’s shared budget for the next euro, replacing dozens of plans with consolidated funds that will hand over more spending capacity to the capital.
The program outlines the “ambitious” budget of “size and design” in a paper outlined in the Financial Times to meet the expenditure needs of defense and large debt repayments.
While the document no longer proposes a multi-year budget total starting in 2028, the European Commission has restructured cases for the largest allocation of funds ever, saying “the status quo is impossible.”
It noted that the cost of repaying covalent era bonds alone would only account for €30 billion per year, or 20% of the group’s annual expenditure, an unprecedented financial burden that forces the EU to reconsider overall contributions.
Any bidding to increase the overall budget could face strong resistance from budgets such as the largest networking companies to Germany and the Netherlands.
Rather than negotiating around long-standing categories, the committee expressed its desire to completely change the budget structure, converging more than 50 “rigid” spending plans into three main funds that provide more “flexibility” to address unexpected challenges .
Traditionally, the EU budget is funded by state contributions, accounting for 1% of the EU’s total national income. Through the so-called “cohesion” policy, about one-third were allocated to agricultural subsidies, one-third to the least developed regions, and the rest covered everything from foreign aid to the salaries of EU employees.
Under the simplified budget, the Commission will agree to a single “plan for critical reforms and investments for each country”, including regional funding and agricultural subsidies. In fact, this will give national governments more room for deciding projects, including some projects traditionally agreed with Brussels.
The second “European Competitiveness Fund” will promote investment in key sectors and common projects, while the “transformation” foreign policy fund will “more aligned with our strategic interests.”
These two funds could allow the EU to use a larger share of its budget for cross-border defense projects, which was not a priority in past EU budgets.
The committee’s opening reminder was proposed this summer in the budget’s formal legislative proposal (formally known as the multi-year financial framework). All 27 countries need to reach a consensus on this, and this process took the last two years of final MFF negotiations.
The Committee considers that the existing allocation mechanism is too bureaucratic and slow in approving projects. While the EU is currently in half of its seven-year budget cycle, so far, only 6.4% of regional funds have been spent.
Negotiating expenditure envelopes with member governments will simplify the process and allow the committee to monitor how the project meets overall reform goals. But this may make local and regional authorities less publicized funds. The paper says any policy needs to be designed “in collaboration with national, regional and local authorities.”
A committee spokesman declined to comment on the proposals, which will be unveiled on Wednesday.
“We want the budget to align with the new priorities of the alliance, which are a defense of competitiveness and the EU,” said Siegfried Mureșan, a conservative member of the European Parliament who is in charge of budget negotiations.
Other reports by Andy Bons and Henry Foy
