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 Belgium) and by the European Parliament (where the democratically elected Belgian representatives sit).
Once adopted, the budget is then managed either jointly by the EU Member States and the Commission, or directly by the Commission.
In practice, 80 % of the EU budget is handled 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 the EU Member States for a 7-year period, and ratified by all the 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 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, more than 28 000 people work for the Belgian Federal Public Service Finance, whereas the three services of the European Commission dealing with financial affairs, taxation and budget have only 1 542 employees between them.
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 show the contribution of European funding to each country’s wealth. In Belgium, EU funding represents 1.9 % 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 for yourself who has 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 7-year period. 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, Belgium’s public expenditure amounted to around EUR 209 billion – that is 55 % 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 Belgium’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 contributed EUR 13 million to connect Brussels national airport to the rail network and, in this manner, indirectly contributed to the development of the regional/Brussels express network (RER).
A comparison of the share that Belgium has in the total allocated EU operating expenditure with its share in the ‘national contributions’ to the EU budget shows that Belgium 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 the 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, the Belgian company Dredging International was paid EUR 3.6 million for dredging the navigation channel leading to the port of Avilés (Spain), a project co-funded by the EU.
Moreover, thanks to the single market, which makes it easier for EU countries to do business with one another, 70 % of Belgian exports go to European countries; this generated about EUR 247 billion in 2013. The Belgian contribution to the EU budget is therefore an investment that brings major returns.
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.
Because Brussels hosts most of the EU institutions, Belgium receives the biggest share of the administrative expenditure. It covers costs such as the organisation of European Council meetings, security and the institutions' buildings. Being the 'capital of Europe' has strengthened the international influence of Brussels and the estimated 100 000 to 120 000 people working in the city because of the EU (civil servants, European associations, lobbying offices, NGOs, big international companies, regional offices, journalists etc.) generate considerable economic spin-offs. Consequently, the economic benefits of hosting the EU institutions are far higher than the spending in Belgium coming from the EU’s administrative expenditure.
With its high-quality research system and international openness, Belgium is one of the top recipients of EU funding for research – an area crucial for its competitiveness and economic development. The country is among those with the highest number of patent applications at the European Patent Office in the field of high-technology. For example, a Belgian company was part of the EU project which developed the first portable X-ray scanner. Research and innovation are at the top of the EU’s agenda for growth and jobs and the Union wants 3 % of its wealth to be invested in research and develoment by 2020. This investment will not only create jobs and growth, but is also essential to tackle the biggest issues of our time, such as energy, food security, climate change and an ageing population.
The rest of the money goes mostly to agriculture and to the Belgian regions. EU agricultural policy supports farmers and promotes safe and good food, but it also looks after the environment and stimulates rural economies. Thanks to the EU fund for rural development, a historic building in Scherpenheuvel has been transformed into a visitor centre, attracting tourists to the region.
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.
European regional policy aims at reducing the economic, social and territorial disparities between Europe’s regions. It invests in projects supporting job creation, competitiveness and economic growth, such as the transformation of a former coal-mining site in Genk into C-Mine a prize-winning centre for art, recreation, tourism and entrepreneurship, and the Technofutur 'competence centres' in Wallonia, providing training in areas crucial to the local economy.
Improved quality of life and sustainable development are also priorities for EU regional policy, and the restoration of the Liereman nature reserve was financed in part (almost 50 %) by the EU budget.
In addition, Limburg and Wallonia will each benefit from a EUR 66.5 million allocation for the next financing period (2014–20), to help them adjust to a difficult economic context.
The EU has contributed EUR 13 million to the costs of connecting Brussels’s national airport to the Belgian rail network’s major axes, as well as to several European cities including Amsterdam, Cologne, London and Paris via the high speed rail network. The project has improved access to the airport and reduced congestion. It has also enhanced Europe’s high speed railway network.
The former Winterslag coal-mining site in Genk has been transformed into a centre for the arts, recreation, tourism and entrepreneurship, mainly for the creative economy and the gaming industry. The project is expected to have a lasting impact on the city and the region in terms of employment, innovation and tourism. In 2013, it was awarded the Flemish Monument Prize by the Flemish regional government. (EU funding: EUR 317.8 million).
EU agricultural funds helped a young farmer from West Flanders province to become the owner-manager of the family farm. The project assisted him during the transfer of ownership and helped him improve the farm’s competitiveness. The farm now has higher productivity and greater economic security. (EU funding: EUR 27 500)
A historic building in Scherpenheuvel was renovated to create a visitor centre and promote regional tourism, local produce and traditions. The centre will encourage the development of new tourist attractions and services, increase tourism in the region and thus create new opportunities for employment and income for local businesses. (EU funding: EUR 180 000).
Some 7 091 Belgian students studied or worked abroad in 2011-12 thanks to the Erasmus exchange programme. The experience enriches students’ lives academically and professionally, and also improves their language and intercultural skills, self-reliance and self-awareness. Young Belgians received an average monthly grant of EUR 256 from the European Commission towards the extra costs of living abroad.
The EU’s MEDIA programme helped the Belgian film and audiovisual industry to develop, distribute and promote its work. International successes such as The Kid with a Bike by Jean Pierre and Luc Dardenne and Ben X by Nic Balthazar each received funding from the MEDIA programme.
The Enterprise Europe Network helps companies to start trading abroad, find partners and access EU funding. After years of laboratory testing, Belgian company FOS&S was ready to commercialise its cutting edge fibre optic technology. With the network’s help, the company found a partner to commercialise its technology in north Africa. ‘For us, the network turned out to be the perfect tool to get in touch with the right person at the right moment,’ says the FOS&S sales manager. Financed by the EU, the network’s budget is EUR 320 million for 2007–13.
The ‘Competence centres’ provide training to highly skilled technicians, meeting industry demands in sectors lacking qualified workers. They cooperate with industrial partners and research institutions to ensure that the region’s workforce can acquire the skills needed to take the economy forward. In 2011 alone, the centres provided training to 600 teachers and 3 000 students. (EU funding: EUR 1.3 million)
Belgium received EUR 1.1 billion from the European Social Fund (ESF) in 2007–13, benefiting 293 158 people in 2013. The ESF supports employment and helps people enhance their education and skills. Investing in people is essential to face today’s challenges such as the need for new skills, computer technologies, globalisation, young people’s difficulties in finding a first job and the ageing of European societies. It is a long term investment bringing back major returns.
Belgian scientists 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)
Set up in 2002 in Charleroi, the Cenaero research centre provides digital simulation software to the aeronautical industry. The centre has become a reference point at the European level and has signed partnership agreements with major international groups. Employing more than 75 people, it is expected to create 50 more jobs by 2015 as well as two start-up companies. (EU funding: EUR 4.13 million)
Belgian company Nanocyl was part of the consortium that developed the first portable X-ray scanner. Less expensive than traditional machines, the portable scanner can fit inside an ambulance, offers higher image resolution and quicker scanning and emits less radiation. (EU funding: EUR 1.03 million)
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.
The ‘LIFE Liereman’ project helped restore the Landschap De Liereman, a nature reserve situated in the north of Antwerp province. Thanks to the project, important fauna and flora returned, visitors’ facilities were improved and farmers were involved in management decisions concerning the nature reserve. (EU funding: EUR 1.5 million)
Fifteen European countries, including Belgium, participated in the FLAPP project (Flood awareness and prevention policy in border areas). The project enabled experts from regions experiencing 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.