The European Union and money: it’s a divisive issue. For some, it is an infinite source of funding; for others, it is sort of a wastrel. But do you know how it works? Who gives what, who wants to save, who decides? The above video, made in 2020 by Euractiv (an independent media network specialising in EU policies that explains, analyses and summarises to help you better understand) answers these essential questions.
First of all, behind the EU budget, there is yet another acronym: the MFF (Multiannual Financial Framework). It is this framework that determines and limits the amount of money that will be spent on each of the Union’s policy areas (agriculture, climate, etc.). This budget has been voted on every seven years since 1988. The seven-year gap ensures that the resources available correspond to budgetary needs. It also allows for consistency with the many measures put in place that usually last longer than one year.
Almost a trillion euros (that’s 12 zeros in all). This is the budget of the European Union for 7 years. The amount sounds huge, but on a continental scale, it’s just over 1% of the average European gross national income (GNI – roughly the sum of all earned income). In comparison, countries spend an average of 47% of this income.
This budget comes from two main sources: firstly, the contributions of the member countries (this is about €1 per day per person per country), and secondly, the money collected by customs, fines and other own resources collected by the EU. Each state gives according to its GNI: the higher the GNI, the higher the amount allocated to the Union.
For a budget to be voted on, several steps are necessary: the European Commission makes a proposal, the member states discuss it and find common ground, and the European Parliament votes to give its approval. The European Council and the Parliament also decide together on the various annual budgets included in the MFF.
There is a lot of debate when it comes to voting for the new budget. In 2020, the Union has to deal with the departure of the United Kingdom, which leaves a €12 billion hole behind. The rest of the countries are divided on the way forward and two groups stand out: on the one hand, the so-called ‘Friends of Cohesion‘ (17 countries from the south and east of Europe in favour of maintaining the funds) and on the other, the ‘frugal 4‘ (Austria, the Netherlands, Sweden and Denmark, in favour of a reduction in the traditional budget following the Brexit, with more emphasis on climate change, innovation and migration). In the middle of all this, France and Germany, the two main contributors, are divided.
What next? Following the publication of this video, the MFF budget was indeed voted: €1.074 trillion for the period 2021-2027. Germany and the ‘frugal 4’ were granted a rebate in their contribution.