Europe for Growth: For a Radical Change in Financing the EU

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06 April 2011

The system for financing the EU today is on its last legs. Indeed, with the EU budget being predominantly financed by national contributions, member states attach great importance to what they get in return, which in the end affects the European principle of solidarity and makes every budgetary negotiation a potential arena for political blockage. The economic and financial crisis, with its corresponding increase in the public deficit of member states, has unfortunately worsened the situation.
Fully funding the European Union with own resources is the only way to put an end to the fair return approach and to make the necessary changes to EU spending that would provide it with the financial means equal to its needs and allow it to face the challenges of the future.
On the eve of the presentation of a new proposal for own resources announced by the European Commission, Jutta Haug, Alain Lamassoure and Guy Verhofstadt, Members of the European Parliament belonging to three different political groups, have brought together their views and present this report as their contribution to the debate. Economists Daniel Gros and Paul De Grauwe of CEPS and Gaëtane Ricard-Nihoul and Eulalia Rubio of Notre Europe have collaborated with them in this important project
They demonstrate in this report that fully financing an EU budget of the size it is today with genuine own resources is not a dream but that such a change is feasible, provided that the political will to reform the current system can be summoned. Moreover, they find that it would not infringe on the member states’ fiscal sovereignty. On the contrary, it would reinforce the link between the European Union and its citizens, putting an end to member states' tendency to calculate their net returns and possibly even enabling them to make cuts to their public expenditure. Finally, such a reform would represent a return to the spirit and the letter of the Treaty of Rome, which contained a clear aspiration for financial autonomy and which prevailed until the end of the 1980s.