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 Denmark) and by the European Parliament (which has, directly elected, Danish members).
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 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 the EU Member States for a 7-year period, and has been 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, the German Finance Ministry alone employs more people than the European Commission’s services responsible for financial affairs, taxation and budget (1 850 v 1 542).
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 Denmark, EU funding represents 0.55 % 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, Denmark’s public expenditure amounted to around DKK 1 062 billion (EUR 142 billion) – that is 55 % of the country’s GNI. The EU budget for the 28 member States on the other hand was around DKK 1 074 billion (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 Denmark’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, as an effective transport network is essential for a successful economy, the EU is co-financing a tunnel under the Fehmarn Belt that would link Denmark to Germany as well as connecting rail road works over Zealand, Falster and Lolland.
Denmark pays more into the EU budget than it receives directly. 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, the Danish company COWI drew up the railway reconstruction plans for the line linking Székesfehérvár to Boba in Hungary, for which it received around DKK 7.5 million (EUR 1 million) in EU funding.
Moreover, thanks to the single market, which makes it easier for EU countries to do business with each other, 63 % of Danish exports went to other EU countries in 2013. This represents some DKK 388 billion (EUR 52 billion).
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 Denmark receives from the EU goes towards agriculture, rural development and conservation (73 % in 2013). EU agricultural policy supports farmers, promotes safe and good food and stimulates rural economies. But it also looks after the environment, for example by encouraging farmers to use new technologies for more sustainable farming. This is how a farmer from the Midtjylland region transformed his piggery so that it has now zero impact on the environment.
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.
The second largest share of the money Denmark receives goes to research – an area crucial for its competitiveness and economic development. The Union wants 3 % of its wealth to be invested in R & D by 2020. This investment will not only create jobs and growth, but is also essential to tackling some of the biggest issues of our time, such as energy, food security, climate change and an ageing population. Denmark is among the world’s research and innovation leaders, and over 2 000 participants – be they universities, research institutes or SMEs – have already received funding through the EU’s 2007-13 research programme. For example, Danish researchers are taking part in an EU-funded research project into graphene – an ultra-light and flexible material expected to become as important as steel and plastics.
This policy aims at reducing the economic, social and territorial disparities between Europe’s regions. Regional funds invest in a wide range of projects supporting job creation, competitiveness, economic growth, improved quality of life and sustainable development.
Denmark takes part in the EU Baltic Sea strategy, which is an organised cooperation between Baltic countries helping them to face common challenges together: cleaning-up the Baltic Sea, improving transport networks, developing the economy and combating trafficking and organised crime.
All values in national currencies have been converted using exchange rates from October 2013.
After a storm damaged the main building within Jorgen Berth’s pig farm, the farmer decided to use the opportunity to invest in innovative technologies that would reduce his farm’s impact on the environment. With EU help, he introduced slurry management procedures and new methods for air cooling, air circulation and air purification. The project was awarded the Danish Agriculture and Food Council’s Environmental Technology Prize in 2007. (EU funding: DKK 924 705 – EUR 124 000).
The ‘Green business growth in SMEs’ project in the southern Denmark region is creating new jobs by helping small businesses carry out energy efficiency renovations in homes and offices. SMEs showing an interest are offered a full support package, developing their energy renovation skills and helping them market their services. (EU funding: DKK 5.73 million – EUR 768 485)
The Danish EU-supported project ‘From unskilled to skilled in record time’, involving for example. Region Hovedstaden and Erhvervsskolen Sjælland, trains workers in sectors likely to suffer a lack of skilled labour in the coming years, such as food and construction, as well as industrial and service sectors. The project recognises experience – whether acquired in working life, leisure time or volunteer work – so participants receive accreditation faster, and spend less time in the classroom. (EU funding: DKK 15 million – EUR 2 million)
The Enterprise Europe Network helps companies start trading abroad, find partners and access EU funding. With the network’s help, Danish entrepreneur Martin Dufresne teamed up with a German company making wooden patio decks, Martin was able to start his own business as a wholesaler representing the company in Denmark. Financed by the EU, the network’s budget is DKK 2.4 billion – EUR 320 million for 2007-2013.
The Student Incubator at Aarhus University is designed to encourage more students to see entrepreneurship as an alternative career path. The project helps students develop a business idea, set up their own business and meet other students with interesting skills. It provides personal and business coaching as well as office space. Since 2009, the incubator has helped create more than 50 student-founded companies. (EU funding: DKK 3.3 million – EUR 435 900)
Some 3 646 Danish students studied or worked abroad thanks to the Erasmus exchange programme in 2012-13. They received a grant from the European Commission towards the extra costs of living abroad. Just one of many examples is Nina Siig Simonsen from Roskilde, who spent 4 months studying political sciences in Vilnius (Lithuania). 'It was a great opportunity to meet new friends from all over Europe and I feel more European today than I did before leaving for Vilnius,' she says of her experience.
The EU MEDIA programme helped the Danish film and audiovisual industry develop, distribute and promote its work. International successes such as Dancer in the Dark by Lars von Trier, Brodre and In a Better World, both by Susanne Bier, and recently A Royal Affair by Nikolaj Arcel, received funding from the MEDIA programme.
Danish scientists at the Technical University of Denmark and the Danish Board of Technology 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, as well as revolutionary new computing technologies. (EU funding: DKK 403 million – EUR 54 million)
Scientists from the Copenhagen Trial Unit are taking part in an EU-funded research project investigating a new treatment for strokes. The new technique involves cooling the patient’s brain and could significantly reduce the number of stroke-related deaths and disabilities. (EU funding: DKK 81.3 million — EUR 10.9 million)
Graphene is set to become the wonder material of the 21st century, becoming as important as steel or plastics. The graphene project brings together academic and industrial research groups, including several Danish universities, to investigate and exploit the material’s unique properties. (DKK 403 million – EU funding: EUR 54 million)
In 2007–13, the EU invested DKK 1.9 billion (EUR 250 million) in HIV/ AIDS, malaria and tuberculosis research. Research focused on developing new therapies and diagnostics as well as preventive tools, such as vaccines and HIV microbicides. The programme sponsored research across the full spectrum, from basic molecular research to preclinical tests and drug development.
FleksEnergi is a cooperative project involving the municipalities in North Jutland. It aims at making heating greener by replacing coal and gas with energy from sustainable sources, such as wind, sun, biomass and geothermal. In addition to cutting emissions, the project is expected to boost growth for the region’s heating sector and encourage scientific research into new technologies. (EU funding: DKK 5.9 million – EUR 784 517)
The city of Odense has taken part in a project encouraging older people – who often prefer to travel by car – to use ‘green’ modes of urban transport. The city tested three concepts: guided cycle trips, safe walking tours and walking campaigns. Many participants say they now regularly ride bikes and take part in other organised tours. (EU funding: DKK 10.4 million – EUR 1.4 million)
Danish SME OSIS developed and tested sensor systems to detect, identify and monitor oil spills from offshore installations and ships. The system is very cheap compared to traditional aerial surveys, and much more accurate than a satellite imagery system. Ships and offshore structures are major sources of the more than 500 000 tonnes of oil spilled into the sea every year in the world. (EU funding: DKK 9 million - EUR 1.2 million)
All values in national currencies have been converted using exchange rates from October 2013.