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The budget of the European Union

Editor : Fondation Robert Schuman
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The debate on the financial perspectives of the European Union from 2007 is already underway. Two main issues are at stake:

Issue N°1: are the Member States equal before community expenditure? The answer is yes since contributions made by the States to the Union's budget are mainly calculated in relation to the GDP, ie their wealth. However Member States see their “net contribution” ie the difference between how much they contribute to the budget and what they receive. There is a great contrast in situations between each Member State.

In addition to this the “British cheque” has introduced a bias into the system. Since 1984 the Union has reimbursed the UK a part of its contribution to the community budget yearly. Is this “British exception” still justified since the UK is one of the richest countries in the Union?

Issue N°2: does the EU budget need to be increased? Does the present budget need to be maintained at its present level of 1% of the gross domestic product of the Union within a context of budgetary restrictions imposed by the Stability and Growth Pact and as desired by some States such as France? Or should the Union's new requirements be taken into account and increase its budget significantly as the Commission suggests?

This question can only be decided upon if the following question is answered: what should the EU budget be used for?

There is little room to manoeuvre since the Common Agricultural Budget was settled by Heads of State and Government in 2002. However it is vital to provide a generous regional policy to the new Member States who in terms of development are lagging sadly behind. It is also vital to finance growth and employment policies across the whole of Europe: innovation, research, the reconversion of areas in decline, professional training, transport infrastructure, environment, culture…

This study analyses the various possible answers. It provides the opportunity to give a detailed presentation of the European budget. This is indispensable in order to understand what is at stake!
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Alexandre Muller
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