01 Jun 2005

The Real Budget Battle: Une crise peut en cacher une autre

Richard E. Baldwin

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In the view of Richard Baldwin, Professor of International Economics at the Graduate Institute of International Studies in Geneva, the failure of the European Council to agree the last-minute compromise on the 2007-2013 Financial Perspective may have been a blessing in disguise. In this new CEPS Policy Brief, he argues that things might have been even worse had they agreed, given the draft budget’s serious inadequacies and inequities. Namely, it attempted to skew EU spending to the disadvantage of new members, in particular by preventing the steady decline in CAP expenditures in favour of structural spending. This essay starts by describing what Baldwin believes is the heart of the budget battle and then argues that the newcomers’ voting power will be the key to budget priorities set in next Financial Perspective. The essay concludes with some proposals for radical changes that would help the EU avoid episodic budget crises, and a prediction as to what will actually occur.