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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 Greece) and by the European Parliament (where the democratically elected Greek 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 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 to 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 vs 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 Greece, EU funding represented 4 % 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 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, Greece’ public expenditure amounted to around EUR 107 billion – that is slightly less than the EUR 144 billion EU budget for the same year. However, it represented 59 % of the country’s GNI whereas the EU budget for the 28 Member States was 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 Greece’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 upgrading of motorways in the Peloponnisos region will improve connections with the rest of Greece and Europe, and will greatly benefit the tourism industry.
Greece is one of the EU Member States which receives more from the EU budget than it pays, which will remain the same in the next budgetary period (2014-20). Bear also in mind that 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, as European funding in one country can benefit other EU members as well.
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.
The largest share of the money that Greece received from the EU budget in 2013 went to its regions (59 %). EU regional policy aims to reduce the economic, social and territorial disparities between Europe’s regions and countries. Regional funds invest in projects supporting job creation, competitiveness, economic growth, improved quality of life and sustainable development. Transport infrastructure and the environment are top priorities for Greece. As an example, the EU is helping the city of Athens to improve its public transport by co-financing the renovation of the city’s metro system.
The second largest area of EU expenditure in Greece is agriculture and rural development. EU agricultural policy supports farmers and promotes safe and good food, but it also looks after the environment and stimulates rural economies. A dairy business in the Thessaly region is one example of EU funding in action: the farm was able to modernise its equipment and make its production more environmentally friendly.
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.
Over 200 km of motorway will be built or upgraded in the Greek region of Peloponnisos. Seven tunnels will be constructed, dangerous curves will be straightened, and lighting added. This will improve safety and travel times, benefiting local people, businesses and tourists alike. (EU funding: EUR 252.2 million)
A huge project renovating the main line of the Athens metro, linking Piraeus and Kifisia – Athens’ northern suburb – is entering the completion phase. Work has involved renovation of the above-ground infrastructure; replacement of the electric track in certain sections and installation of an ATS (automatic train supervision) system for traffic control and anti-noise barriers in highly populated areas. Some 440 000 commuters will benefit from this project. (EU funding: EUR 50.9 million)
The EU will invest EUR 33 billion in 2014-2020 in its new Connecting Europe Facility to improve Europe’s transport, energy and digital networks, thus creating jobs and boosting Europe’s competitiveness. This funding will make Europe’s economy greener by promoting cleaner forms of transport, high-speed broadband connections, and the use of renewable energy.
In 2009, a milk processing and dairy business in Trikala (Thessaly region) decided to modernise its infrastructure, to improve production lines and to upgrade internal production processes. The investment created jobs, reduced costs and enhanced quality, thereby improving competitiveness. The project also benefited the local economy, as homes and businesses use milk produced by local farmers. The environment is better off thanks to investment in waste treatment and new energy savings. (EU funding: EUR 2.8 million)
Chestnut blight is a disease caused by a fungus that enters through wounds and grows under the bark. To preserve biodiversity and the countryside in five Greek regions, this project, started in 2011, funds the anointing of affected trees with a biological paste. It is hoped this will save 2 260 ha of chestnut trees. The forest ecosystem will be restored, thus helping to mitigate climate change. The project will also benefit the inhabitants of the mountain regions, whose living standards are linked to forest productivity – along with other users of natural resources, such as farmers. (EU funding: EUR 1.5 million)
In central Athens, a ‘day centre’ project involving a dedicated team of psychologists, social workers and therapists is working on the psycho-social rehabilitation of disadvantaged people. The centre offers activities to build up communication skills and creativity, and prepare for employment. Staff also help with job applications and guide participants throughout the job-seeking process. (EU funding: EUR 262 500)
Some 4 249 Greek students studied or worked abroad in 2012-13 thanks to the Erasmus exchange programme. Erasmus students receive a grant from the European Commission towards the extra costs of living abroad. Eirini Komninou from Crete did a traineeship at the European Space Agency astronomy centre in Madrid: 'It was one of the most valuable experiences so far. It helped me to develop my communication skills, and to become inventive and stronger as a person.'
The EU MEDIA programme helped the European film and audiovisual industry develop, distribute and promote their work. In Greece, the filmmaker Theo Angelopoulos received funding for his film Mia eoniotita ke mia mera (Eternity and a Day).
Many hotels and tourism facilities in Greece are without access to the Internet and have no website, which is harmful for tourism. Digi-lodge is a state-supported initiative in Greece designed to accelerate ‘digital’ investments in the country’s tourism sector. It helps smaller lodges and family-run hotels across Greece to improve their Internet presence and international exposure, increase online bookings and give their clients access to Wi-Fi and digital entertainment. (EU funding: EUR 36 million)
The ‘Corallia Clusters’ inititative connects industry representatives, suppliers, buyers, researchers, infrastructure providers, financial institutions, public sector organisations and the media. In order to promote an ‘Innovation made in Greece’ brand, one key action has been to link up the Greek nano-microelectronics, space and gaming technologies industries with academic and research institutions. This helped to support start-ups while boosting Greek competitiveness, entrepreneurship and innovation . (EU funding: EUR 3.1 million)
Greek scientists from the National and Kapodistrian University of Athens participate in the ‘Human Brain Project’, which is developing the most detailed model of the brain by using new computing technologies. The results will ultimately help the development of new treatments for brain diseases and revolutionary new computing technologies (EU funding: EUR 54 million)
Greek scientists participated in an EU-funded project which developed a portable device for locating earthquake victims trapped under rubble. The new technology measures air levels beneath rubble and detects specific chemicals emitted only by human beings. Demonstration tests taking place in 2012 were considered a success. (EU funding: EUR 4.9 million)
The city of Athens is modernising its urban transport network with the purchase of more than 500 new buses – 40 % of which run on natural gas – helping to tackle its air pollution problem. (EU funding: EUR 48.3 million)
Funded by the EU, the MIRTO project is raising awareness of forest fires and prepares people to react in Greece, France, Croatia and Italy. The target population is tourists and tourist operators (summer camp managers, ferry companies and municipalities). Information material, including handbooks for summer camp visitors, holiday house owners and an information video for ferries connecting the Mediterranean islands has been distributed in different languages. (EU funding: EUR 306 562)
The EU invested EUR 2.1 billion in 2007–13 to support environmental and nature conservation projects via its LIFE+ programme. Projects raised awareness of important environmental issues, and funded the protection of Europe’s most valuable natural sites (Natura 2000 sites), such as the Sporades archipelago along the east coast of Greece, and the White Mountains (Lefka Ori) located in western Crete.