The politics of the EU budget

Written by Alessandro D’Alfonso

How do the two arms of European Union (EU) budgetary authority (the European Parliament and the Council) reach compromises in annual and multiannual procedures? What formal and informal mechanisms do the EU institutions have at their disposal to influence budgetary decision-making? And what reform options are feasible in the areas of revenue, spending and control procedures?

These three questions were the focus of a workshop on ‘EU budget politics – experiences, dynamics, and reform options’, at the European Parliament in Strasbourg on 8-9 October 2015, organised by the Jean Monnet Chair at Speyer University, with the support of the European Parliamentary Research Service (EPRS). Speakers included academics and institutional ‘insiders’ working in the EU budget area.

The workshop marked two important anniversaries for the EU budget. Forty-five years ago, the first budgetary treaty (in 1970) granted the European Parliament the final say over ‘non-compulsory’ expenditure. Five years later, the second budgetary treaty gave the EP the right to reject the budget as a whole. Both reforms are considered important milestones of European integration, even more so as the budget has considerable size and scope today. In recent years, the EU’s budgetary process has undergone significant changes, not least due to the Lisbon Treaty.

Offering some stimulating opportunities for reflection, it was argued that, with the new financial rules established by the Lisbon Treaty, the European Parliament, as one arm of the EU budgetary authority, has less budgetary influence, especially during the annual procedure, which is somehow compensated by its greater legislative powers. It was also suggested the post-Lisbon arrangements favour whomever wishes to minimise EU spending – traditionally the Council. The debate about EU ‘own resources’ and the prospects for an EU fiscal system to replace the current mechanism, led to exploration of several options, and the observation that major steps forward in European integration are made possible thanks to EU revenue reform. Two speakers warned that the EU budget appears to be drifting towards fragmentation and a system of voluntary contributions and opt-in policies, while one academic presented data demonstrating the EU budget’s surprising efficacy as a tool for redistribution – albeit on a relatively small scale.

The workshop also offered the opportunity to assess the role of the EU institutions in defining EU budgetary policy, during the multiannual negotiations, looking at the EU institutions’ accountability, as well as considering control mechanisms. Finally, an analysis was presented on the origins and state of play of the payments backlog which has bedevilled EU budgetary effectiveness in recent years. The 2011 EU budget, the first to be negotiated under the new budgetary procedure, is considered the starting point of the initial build-up of the backlog. An in-depth analysis is expected from EPRS on this subject in the near future.

See also the full program of EU Budget Politics – Experiences, dynamics, reform options.