Reflection on the future of EU finances

SUMMARY OF:

Reflection paper (COM(2017) 358 final) on the future of EU finances

WHAT IS THE AIM OF THIS REFLECTION PAPER?

The EU faces many important challenges such as immigration, internal and external security and defence, as well as trying to maintain its role on the world stage as a major donor of humanitarian and development aid and as a lead player in fighting climate change. To meet these challenges, it needs to consider its future financing and find ways to do as much as possible with each euro. These competing demands also need to be seen in the context of a budget that is going to be reduced following Brexit.

Mid-way through the current multiannual financial framework which runs until 2020, this European Commission reflection paper constitutes the last in a series of 5 papers on issues that are central to the debate launched on 1 March 2017 by the White Paper on the future of Europe.

KEY POINTS

Structure

The paper comprises 5 chapters.

1.
Financing European integration: the evolution of EU finances — this chapter traces the development of the budget over the years as the scope of the EU’s competences has broadened and the number of member countries has grown. It points out how the EU budget remains a small part of total public expenditure in the EU, accounting for less than 1% of EU income and only around 2% of EU public expenditure. This share has fallen over time, increasing the pressure on the EU budget to be more efficient, focus on areas where its impact is greatest and ensure that its rules do not get in the way of results.
2.
The added value of EU finances: European added value is about achieving the objectives set out in the treaties but also about a budget that provides for public goods of a European dimension or helps uphold basic freedoms, the single market or the economic and monetary union. European added value also fits with the principles of subsidiarity and proportionality and EU action has to be additional or complementary to national or regional efforts, but should not be a substitute for shortcomings in national policies.
3.
Trends and challenges: current trends that will remain relevant for some time include the digital revolution, globalisation, demographic change, economic convergence and climate change. At the same time, citizens are looking for prosperity, stability and security in a rapidly evolving world, and further unexpected challenges that emerge should not be excluded. This chapter looks at how EU spending matches its priorities and what room there might be for improvement.
4.
Options for future EU finances: the design of the future budget must be underpinned by a clear vision of the EU’s priorities. To date, new priorities have been accommodated under the current financial framework by pushing existing flexibilities to their limits. This is not an option in the future. The size, structure and content of the budget have to correspond to the EU’s political ambition. The chapter looks at:
- what the EU budget should be spent on;
- how the budget should be financed;
- how some key policies should be reformed; and
- how the budget itself should be structured and organised.
5.
Possible scenarios for the EU-27: this chapter mirrors — in budgetary terms — the five scenarios for the future model of the EU presented in the White Paper:
- carrying on as at present;
- doing less together — mainly focusing on the single market;
- some EU countries doing more — a variant of the ‘multi-speed’ Europe;
- radical redesigning — with fewer policy fields but deeper and more efficient integration;
- doing much more together.

BACKGROUND

The White Paper on the future of Europe and the accompanying reflection papers on key topics will now be debated by the EU institutions and in EU countries.

For more information, see:

Reflection paper on the future of EU finances (European Commission)
Reflection paper on the future of EU finances — Facts & figures — factsheet (European Commission)
Reflection paper on the future of EU finances — Five scenarios — Implications — factsheet (European Commission).

MAIN DOCUMENT

Reflection paper on the future of EU finances (COM(2017) 358 final, 28.6.2017)