Did you know that the EU budget...
The EU budget is an important tool that puts EU policies into practice. It finances actions that Member States cannot fund on their own or that they can fund more economically by pooling their resources.
The EU budget is adopted through a democratic procedure: it is prepared by the European Commission (the EU’s executive body) and is then discussed and agreed by the Council of the EU (representing EU Member states, including Austria) and by the European Parliament (where the democratically elected Austrian representatives sit).
Once adopted, the budget is then managed either by the EU Member States and the Commission together, or by the Commission.
In practice, 80 % of the EU budget is managed by national or regional governments. Through grants, loans and other forms of financing, the EU budget provides financial support to hundreds of thousands of beneficiaries such as students, scientists, NGOs, SMEs and towns and regions.
The EU budget is largely financed by ‘own resources’ which are based on three kinds of sources:
This system has been unanimously decided on by EU Member States for a 7-year period, and has been ratified by all national parliaments. Its aim is to provide a reliable and sufficient level of revenue for the EU budget, while at the same time taking into account the Member States’ ability to pay. Each Member State thus contributes in line with its wealth.
The other sources of revenue for the EU budget include taxes on EU staff salaries, fines on companies for breaching competition laws and bank interest, etc. There is no direct EU tax. EU countries remain in control of their taxes.
Some 94 % of EU money is spent on the various EU policies, and most of it goes back to the Member States. In many cases the EU budget supports large and complex projects. One of them is the European Partnership Action against Cancer, where collective European effort helps to prevent the disease and find a cure for it.
Approximately 6 % of the EU budget is spent on the functioning of the EU institutions. This is used to pay for the salaries and pensions of EU employees, translation and interpretation, security, buildings and IT systems, etc. This expenditure is necessary in order to allow the EU to work.
There are around 55 000 EU civil servants and other employees serving 508 million Europeans and countless people in need around the world. By comparison, the city of Vienna alone employs 60 000 employees.
Furthermore, in order to adapt to the harsh economic situation in Europe, the EU institutions are also cutting costs: the Commission’s wide‑ranging staff reform is expected to save EUR 8 billion by 2020, reducing its staff by 5 %, while at the same time increasing its working hours.
The charts below provide an overview of how much the EU invested in each of its Member States in 2013, and shows the contribution of European funding to each country’s wealth. In Austria, EU funding represents 0.6 % of the country’s GNI.
The Commission has put into place robust internal control measures in order to ensure that funds are spent efficiently and effectively.
As 80 % of the EU budget is managed by national or regional governments, Member States also play an important role in ensuring that rules are observed, and in detecting and addressing irregularities and fraud.
Additionally, the European Court of Auditors reviews the EU accounts every year. For several years the Court has confirmed that the EU accounts are properly kept, but also points out errors in procedures (e.g. accounting errors by national programme participants or claims for non-eligible costs). Errors do not mean that EU money is lost, wasted or affected by fraud. A large part of the money spent in error is recovered.
In addition, the European Parliament approves how the Commission has spent the budget following the end of every financial year.
If you want to see which entities have received EU funding, the Financial Transparency System will show you who has received payments from the EU budget.
Although the EU budget is adopted every year, it must be established within the limits of the multiannual financial framework (MFF). The MFF is an expenditure plan setting the maximum annual amounts which the EU can spend in different fields of activities over a given period (normally 7 years). It therefore shapes the EU’s political priorities for 7 years.
For the 2014-20 funding period, the EU wants to meet the targets of the Europe 2020 growth strategy, focusing on what Europe needs in order to overcome the economic and financial crisis and concentrating on areas where it can make a genuine difference. Some of the Commission’s proposals for radical reform were watered down by the Member States, but very important changes remain. Key elements of the 2014-20 MFF include:
In 2013, Austria’s public expense amounted to around EUR 160 billion – which is 52 % of the country’s GNI. On the other hand, the EU budget for the 28 Member States was around EUR 144 billion, roughly 1 % of the Union’s GNI.
The EU and national budgets serve different yet complementary purposes. The EU budget targets areas where EU money can generate added value. For example, a project of such magnitude as the European satellite navigation system Galileo could not be financed by a single Member State alone.
Unlike Austria’s budget – or any other national budget – the EU budget does not fund defence expenditure or social protection, but is mostly investment spending. For example, the EU is contributing EUR 12.5 million to the upgrading of Austria’s western railway line, which will greatly improve traffic between Vienna and Salzburg, and will also form a crucial link in the Paris-Bratislava route across Europe.
In 2013, the three main spending areas of Austria’s federal budget were social security, pensions and education and culture.
Austria pays more into the EU budget than it receives from it. However, this net balance does not accurately reflect the many benefits of EU membership. Many of them, such as peace, political stability, security and freedom to live, work, study and travel anywhere in the Union, cannot be measured.
In addition, European investments are intended to benefit the EU as a whole, and European funding in one country can benefit other EU members as well. For example, Austrian construction company Strabag has been involved in several transportation network projects in Bulgaria, Hungary and Slovenia, including the reconstruction of Bulgaria's Sofia airport, for which it received EU funding of EUR 174 million. The Austrian contribution to the EU budget is therefore an investment that brings major returns.
Thanks to the single market, which makes it easier for EU countries to do business with each other, 69 % of Austrian exports went to European countries in 2013. This represents some EUR 87 billion.
Moreover, in response to claims that Austria was paying too much towards the EU budget compared to other countries, the country receives a rebate on its contribution (EUR 60 million in 2014-16).
Operating budgetary balance: the difference between what a country receives from and pays into the EU budget. There are many possible methods of calculating budgetary balances. In its financial report, the Commission uses a method based on the same principles as the calculation of the correction of budgetary imbalances granted to the United Kingdom (the UK correction). It is, however, important to point out that constructing estimates of budgetary balances is merely an accounting exercise of the purely financial costs and benefits that each Member State derives from the Union and it gives no indication of many of the other benefits gained from EU policies such as those relating to the internal market and economic integration, not to mention political stability and security.
Most of the money that Austria receives from the EU goes to agriculture, rural development and nature conservation (68 % in 2013). EU agricultural policy supports farmers and promotes safe and good food, but it also looks after the environment and stimulates rural economies. With 39 % of the Austrian population living in rural areas in 2012, the EU fund for rural development has strategic importance. This fund finances a diverse range of projects to help keep rural populations economically active, support mountain farmers and protect the environment. For example, it helped farmers from the Montafon valley promote their products to tourists and increase their sales.
EU countries have made agriculture a European rather than a national policy. It is the only policy almost entirely funded by the EU. That is why it represents a large proportion of the EU budget. It is also less costly for EU countries as a whole, than implementing 28 different national policies.
The common agricultural policy has undergone a major reform, whereby its share of the EU budget has fallen from 70 % in 1985 to around 40 % today, and is set to continue falling to 33 % in 2020. A new reform which came into force in 2014 further strengthens European agricultural competitiveness, making it more environmentally friendly and reducing the gap for countries receiving less money than the EU average.
Aimed at reducing economic, social and territorial disparities between Europe’s regions, this policy invests in projects supporting job creation, competitiveness, economic growth, improved quality of life and sustainable development. For instance, regional funds helped long-term unemployed people in Graz find their way back to the labour market thanks to a three-step training programme. They also helped make Styria a global centre for clean-technology and supported an initiative to protect wild animals in the Alps.
The third largest share of the money Austria receives goes to research, an area crucial for its competitiveness and economic development. In 2012, the country dedicated 2.84 % of its GDP to research and development, and aims at reaching 3.76 %, which would make it a world leader. Some 3 484 participants – be they universities, research institutes or SMEs – have already received funding through the EU's 2007-13 research programme. Thanks to EU investment, and in collaboration with European researchers, Austrian scientists have helped develop a new technique to implant heart valves in children born with a heart defect without the need for open-heart surgery.
The EU is co-financing the upgrade of the western Railway Line between Vienna and Salzburg. The upgrade will remove bottlenecks, shorten travel times between the two cities but also reduce noise pollution. The route is an essential link to the Paris-Strasbourg-Stuttgart-Vienna-Bratislava European railway axis. (EU funding: EUR 12.5 million)
Farmers and tourism professionals from the Montafon valley got together to promote local products such as Sura Kees cheese. Thanks to media events, promotional fairs and advertisements in tourist facilities, sales of this traditional regional food increased, thus improving the competitiveness of the businesses involved, and the region’s economy. (EU funding: EUR 26 520)
A farmers' cooperative in Reiteregg developed a biomass heating system enabling it to provide heat energy to commercial businesses, public and residential buildings. The initiative increased the incomes of the local farmers and foresters providing the biomass, and created new employment opportunities. It also made the region less dependent on imported fossil energy sources. (EU funding: EUR 80 132)
Thanks to EU funding which helped increase the number of clean technology companies setting up shop in the Styria region, this is now a ‘green-tech valley’, housing more than 180 such companies - one of the highest concentrations worldwide. Since the beginning of the project, eco-innovation has generated 5 000 new jobs. (EU funding: EUR 444 000)
The Mingo project helps new entrepreneurs to start their own businesses, and existing SMEs to further develop and grow. It provides a vast range of services, from rental space at affordable prices to personal coaching, workshops and assistance with drawing up a business plan, dealing with administrative procedures, assessing market opportunities, etc. (EU funding: EUR 645 600)
The ‘Graz-jobs’ project enabled 60 people who had been out of work for a long time to learn new skills and progressively get back to a working environment. Participants followed a three-step programme starting with training in areas such as bicycle repair, electrical skills or recycling, followed by a work placement and finally a temporary job of up to 12 months. (EU funding: EUR 460 230)
Some 5 714 Austrian students studied or worked abroad in 2012-13 thanks to the Erasmus exchange programme, and the country welcomed almost as many European students. The experience enriches students’ lives academically and professionally, and also improves language and intercultural skills, self-reliance and self-awareness. In addition, Erasmus students receive a grant from the European Commission towards the extra costs of living abroad.
The EU’s MEDIA programme helped the Austrian film and audiovisual industry develop, distribute and promote its work. International successes such as The White Ribbon directed by Michael Haneke and The Edukators directed by Hans Weingartner received funding from the programme.
Austrian scientists from Innsbruck Medical University are part of the ‘Human Brain Project’, which is developing the most detailed model of the brain yet using supercomputing technologies. The results will ultimately help the development of new treatments for brain diseases and revolutionary new computing technologies (EU funding: EUR 54 million).
The LifeValve project is helping children born with a congenital heart defect. Along with researchers from other European countries, scientists from the Vienna Medical University are developing a heart valve made from the patient’s own cells that can be implanted without open-heart surgery. This valve will then grow with the children and thus minimise the need for future surgical intervention. (EU funding: EUR 9.9 million)
...that the EU invests EUR 180 million per year in cancer research? A major part of this budget is used to encourage key players from across Europe and beyond to join forces in collaborative research projects, to find new ways to fight cancer and help patients.
Experts in the building industry have come together for collaborative projects improving the energy efficiency of buildings in Lower Austria. Projects included the refurbishment of old buildings to meet low-energy standards and the construction of passive houses. Since 2001, 230 projects have been undertaken, involving 463 companies. (EU funding: EUR 937 400)
Several ‘green bridges’ enabling wild animals to cross motorways have been built in the alpine area separating the Austrian Alps and the Carpathian mountains. These constructions help protect local biodiversity and prevent collisions with cars. The area is home to some of Europe’s rarest species, such as the brown bear, wolf, lynx and red deer. (EU funding: EUR 1.5 million)
Fifteen European countries, including Austria, participated in the FLAPP project ('flood awareness and prevention policy in border areas'). The project enabled experts from regions hit by regular flooding to share knowledge and experience on how to prevent and forecast floods, evacuate people and limit damage. The project received EUR 1.1 million from the EU.