The EU budget is enormous!
No, actually it isn't.
The EU budget was about €144 bn in 2013 - very small compared to the sum of the 28 EU countries' national budgets (over € 6,400 bn). Total government expenditure by the 28 EU countries is almost 50 times the EU budget!
To put this into perspective, in 2013 the average EU citizen paid only 89 cents a day towards the EU budget. That's less than half the price of a cup of coffee - hardly very expensive given the benefits that the EU brings its citizens.
In fact, the EU budget is smaller than the Austrian or Belgian budgets.
The EU budget stands at about 1% of the 28 EU countries' gross domestic product (GDP) – the total value of all goods and services produced in the EU. By contrast, the budgets of EU countries represent 49% of GDP on average.
The EU budget is always balanced, so there is no deficit or debt. And 94% of what is paid into the EU budget is spent in the EU countries on policies and programmes that benefit citizens directly.
The EU budget is constantly on the rise, whereas national governments are cutting their spending!
As a rule, the EU budget is not more than about 1% of the wealth of the entire EU. National budgets are NOT cutting their spending, they are increasing it.
- In 2012, 20 national budgets out of 28 increased.
- In 2013, 21 national budgets out of 28 have increased.
The bulk of EU expenditure goes on administration!
This is absolutely wrong. Over 94% of the EU budget goes to citizens, regions, cities, farmers and businesses. The EU's administrative expenses account for under 6% of the total EU budget, with salaries accounting for around half of that 6%.
Salaries are paid to staff managing useful EU policies that benefit citizens directly, e.g. air traffic liberalisation, passenger rights or cheaper roaming charges. Commission staff negotiate trade agreements that help bring down the price of consumer goods and offer a wider choice of affordable products. They are also helping the EU to draw the right lessons from the financial and economic crisis, by ensuring that financial markets are regulated and supervised better.
Administrative costs have been stable for a long time. Over the past 5 years every effort has been made to keep them low. The Commission has conducted a zero growth policy as regards staff numbers. It has coped with new responsibilities and priorities by redeploying existing staff and has asked for no extra staff beyond those needed in connection with the countries that have recently joined the EU. In 2012 it also decided to freeze its administrative expenditure.
In 2004 and 2011 the Commission undertook major reforms of its administration, including:
- lower entry-level salaries
- establishing a contract agent category with lower salaries
- raising the retirement age
- reducing pension rights
- increasing pension contributions.
The 2004 reform has already saved the EU taxpayer €3 bn, and is expected to save another €5 bn by 2020. Most recently, the standard working hours of EU staff went up to 40 a week, and various items of administrative expenditure were cut further. Together, these reforms will save an extra €1 bn by 2020 - and a further €1 bn a year in the long term.
The EU budget is riddled with fraud!
The Commission has a zero-tolerance policy on fraud, which affects just 0.2% of annual spending. The estimated financial impact of fraudulent irregularities fell from €315 mn in 2012 to €248 mn in 2013.
For many years now, the European Court of Auditors has been giving our accounts a clean bill of health, saying that they correctly reflect EU budget spending.
The Court of Auditors has not yet given its seal of approval to our payments in certain policy areas. However, errors in EU spending are essentially administrative mistakes. They are not the same as fraud. In cohesion policy, for example, the error rate is still slightly above 5%, which represents a considerable reduction from past levels. The Court estimates the Commission's error rate as regards payments at 2% to 5%, depending on the policy area, whereas the Court's threshold is a 2% error rate.
However, a 2% to 5% error rate means that over 95% of all EU spending is in line with the rules. Moreover, when financial corrections are taken into account, the average error rate for 2009-2012 falls below 2%, the threshold required for the Court's green light. Although the Court does not take full account of corrections in its calculation, they do indicate sound financial management.
Under the Treaty, the Commission is responsible for implementing the EU budget, in cooperation with national governments. However, the national governments have primary responsibility for managing and controlling some 80% of all EU funds, and they have a key role to play in ensuring that EU money is spent wisely and in line with the rules. The latest review of the Financial Regulation gave the Commission more preventive and corrective powers and made the EU countries more accountable (by introducing management declarations of assurance on EU funds).
The EU budget is decided by Eurocrats without any democratic procedures!
The annual EU budget is determined by a budgetary authority comprising the European Parliament and the Council. The Commission only proposes the budget, and has to abide by the limits which the 2 institutions set for a given period - the multiannual financial framework. The current multiannual financial framework covers 2014-2020.
The Commission proposes the multiannual financial framework. It is then negotiated and adopted using transparent and democratic procedures that take full account of national sovereignty and democratic rights.
For expenditure, the decision on the regulation defining the 2014-2020 multiannual financial framework was taken by the European Council acting unanimously. To do this, it required the European Parliament's consent, given by a majority of its members.
For the own resources that finance the budget, the Council must make an unanimous decision after consulting the European Parliament. This decision enters into force only when all EU countries have approved it in line with their constitutional requirements.
The annual EU budget
For the annual EU budget, EU decision-making also follows strict democratic procedures similar to those of most national governments. The initial proposal for the annual budget comes from the Commission. The budget is examined and agreed by the Council and the European Parliament. The final agreement is usually reached in December each year.
Every citizen can follow the process of budgetary negotiation. The documents are on our website and detailed discussions in the committees of the European Parliament can be watched online.
The EU costs too much!
A Tax Freedom Day comparison is telling. This is the amount of time during the year that people have to work to pay their total tax burden. In most EU countries, citizens have to work well into the spring and summer until they have paid their contribution. In contrast, the average EU citizen has to work only 4 days to cover his or her contribution to the EU budget.
The EU funds silly projects like dog training centres or Elton John concerts!
This is another fallacy conveyed by some. The Commission is serious about ensuring that the EU budget is well-targeted and well-spent.
National and regional authorities in the EU countries generally select projects which they think meet their needs best in line with the strategies and priorities agreed with the Commission. Checks at project, national and EU level protect taxpayers' money to the best possible extent.
However, the occasional error is unavoidable when large sums are distributed to millions of recipients in 28 countries and beyond. The Commission insists that when an error is found, the money must be recovered or the amounts corrected (i.e. rechanneled into a healthy project).
The authorities responsible are required to pay back every cent wrongfully claimed. It is never the taxpayer who foots the bill.
The Commission wants to introduce a direct EU tax and increase the tax burden on citizens!
This is wrong.
The Commission has never floated the idea of a direct EU tax. National governments and local authorities will remain in control of raising taxes. Ideas for new own resources as presented in the budget review are not about extra money for Brussels. It is not about adding to the tax burden of citizens, but about changing the mix of resources that finance the EU budget. Every euro that is collected under a reformed system reduces EU countries' national contributions, making the new budget fairer and more transparent.
Did you know that any decision on EU financing requires the EU countries' unanimous agreement and subsequent ratification, in line with their constitutional requirements? In addition, implementing rules require the European Parliament to give its consent. This means that EU own resources are subject to strong parliamentary control and that EU countries' sovereignty and democratic rights are fully protected.
Most of the EU budget goes to farmers !
In 1985, around 70% of the EU budget went on agriculture. In 2013, direct aid to farmers and market-related expenditure amounted to just 30% of the budget, and rural development spending to 9%. Over the past decade, 13 countries - most of them with large farming sectors – have joined the EU. Yet the common agricultural policy budget has not risen to cover these extra costs. In fact, spending continues to fall.
Agriculture's relatively large share of the EU budget is entirely justified; it is the only policy funded almost entirely from the budget. This means that EU spending replaces national expenditure to a large extent.
The common agriculture policy is constantly developing. Successive reforms have replaced support for production by direct income support for farmers, provided they comply with certain health and environmental standards, and support to projects designed to encourage economic activity in rural areas.
The 2014 reform:
- makes direct payments fairer and greener
- strengthens the position of farmers within the food production chain
- makes the common agriculture policy more efficient and more transparent.
Because food and commodity prices are high, we can scrap our farm subsidies!
On the contrary.
Rising and fluctuating food and commodity prices highlight the importance of investing in agriculture in order to better match supply to demand. High prices mean that demand is stronger than supply. Global food demand is predicted to rise by 50% by 2030, as population growth is accompanied by changes in dietary patterns in many emerging economies. The issue is therefore a global one, which underlines the fundamental challenge of food security. The EU should maintain its agricultural production potential in all areas to avoid becoming over-dependent on food imports. Thus, the common agricultural policy guarantees the European public a dependable and plentiful supply of high-quality food, as well as a healthy environment and exceptional landscapes.
Furthermore, since in the EU there is little room for expanding the production area, productivity growth has to come through innovation and research. The rural development policy can help farmers embrace new production options and speed up technology transfer.
The common agriculture policy creates food surpluses and hurts farmers in the world's poorest countries!
Did you know that the average EU farmer receives less than half of what the average US farmer receives in public support? The days of 'wine lakes' and 'butter mountains' are long gone.
More than a decade of reforms have made agricultural policy more development-friendly. Today, over 2/3 of its imports of farm products come from developing countries. Bilateral agreements with many countries allow for low tariffs on farm imports, and the 50 poorest countries in the world can export unlimited quantities to the EU duty free.
Furthermore, export subsidies have been slashed. 20 years ago, the EU spent €10 bn a year on export subsidies; by 2011, the figure was only about €160 mn. Export subsidies target countries in the Mediterranean basin and the rest of Europe. Only a very small proportion of subsidised goods find their way to Africa. As of 2014, the export-subsidy mechanism will be triggered only in exceptional circumstances.
The EU has preferential tariff agreements with many developing countries. It provides more trade-related aid to developing countries than the rest of the world put together – almost €1 bn a year in the last 3 years.
Did you know that the EU is not only the biggest donor of development aid in the world but also Africa's largest trade partner? EU imports from Africa alone amount to over €12 bn (or 15% of all EU imports).
Cohesion policy is an expensive charity!
The cohesion policy is:
- a redistribution mechanism designed to help less developed regions and countries catch up with the Single Market and form links with it
- a future-oriented investment policy that clearly benefits the whole of the EU by creating growth and jobs across the board.
There is a clear link between cohesion policy and growth in the EU. By 2020, the return for investments made under Cohesion Policy over the 2000-2006 period is estimated at €4.2 per euro invested. Studies have shown that gross domestic product (GDP) in the EU-25 as a whole has been 0.7% higher in 2009 thanks to cohesion policy investments over the 2000-2006 period. This is estimated to rise to 4% by 2020. In the EU-15 alone, the estimate is a cumulative net effect on GDP of 3.3% by 2020.
The economic and financial crisis has demonstrated the need for a policy that invests in the competitiveness of all regions as well as continuing to support development in those lagging behind. According to the most recent figures, for the 2007-2013 period, the cohesion policy created almost 600,000 jobs and supported close to 80,000 start-ups. It invested in 25,800 km of roads and 2,700 km railway lines. It helped 5.7 million people find employment and 8.6 million to obtain qualifications.
In other words, regional investment is European development.
Looking ahead to 2014-2020, the cohesion policy focuses on its allocative role in targeting investment in key sectors essential to Europe’s economic success:
- low-carbon economy
- competitiveness among small and medium-sized businesses
- innovation and employment
- social inclusion. And most importantly, it will provide support to change in any region, whether under-developed or advanced, as is appropriate.
The Multiannual Financial Framework is another example of the EU's path towards a centralised planning economy!
This is not true.
The multiannual financial framework (MFF) defines the EU's long-term spending priorities in line with the agreed political priorities and sets annual maximum amounts to be spent on each priority. The financial framework stretches over several years to ensure sound and responsible financial planning and management. The current MFF covers 2014-2020, while the previous one covered 2007-2013.
The EU budget never runs a deficit, never builds up debt and only spends what it receives. It is always balanced.