24 Apr 2006

Europe’s Financial Perspectives in Perspective

George Gelauff / Herman Stolwijk / Paul Veenendaal

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European Network of Economic Policy Research Institutes (ENEPRI) Working Paper No. 46, 31 pages

The budget of the European Union nearly always raises much commotion. Many member states anxiously guard their net payment positions: don’t they pay too much for the EU compared to what they receive from the EU? Yet, from an economic perspective the subsidiarity principle is much more important: Should the funds be allocated by the Union or by the individual member states? From that angle, a number of fundamental reforms of European agricultural policy and structural actions (support to lagging regions) suggest themselves. These reform options may more than halve the EU budget. In addition they happen to bring the net payment positions of member states closer together.

Key words: EU-budget, economic integration, subsidiarity, common agricultural policy, structural actions, tariff incidence
JEL codes: F4, H7, C67, Q18, R58