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 Spain) and by the European Parliament (where the democratically elected Spanish 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 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 Spanish Ministry of Economy and Finance alone employs over 10 000 people whereas, taken together, the three European Commission services dealing with financial affairs, taxation and budget have about 1 500 employees between them – for all 28 EU Member States.
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 spent in each of its member countries in 2013, and shows the contribution of European funding to each country’s GNI – 1.4 % for Spain.
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 who has received EU funding, the financial transparency system will show you which entities have 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, the Spanish public expenditure amounted to around EUR 458 billion – that is 45 % of the country’s GNI. The EU budget for the 28 member States on the other hand 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 Spain’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 more than EUR 3.3 billion (over 70 % of the total cost) to a high-speed railway line between Madrid and the French city of Perpignan, thus closing an important gap in the trans-European network.
In 2013, Spain received more from the European budget than it contributed. 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, and 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.
Spain is one of the main beneficiaries of the EU’s agricultural policy after France. Those working in agriculture still represented 9.8 % of the country’s economically active population in 2010. EU agricultural policy supports farmers and promotes safe and good food: almost 900 000 Spanish farmers received direct payments from the EU in 2012, amounting to a total of EUR 5.2 billion. But the common agricultural policy also looks after the environment and stimulates rural economies by financing projects such as an e-training website where farmers from remote areas can access state of the art training and the latest knowledge.
Spain also has one of the largest fishing fleets in the EU and was among the top beneficiairies of the European fisheries fund in 2013 (EUR 67 million). This helped shellfish gatherers from Galicia diversify their activities and increase their incomes.
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 goes to Spain’s regions through the European regional policy. This policy aims at reducing economic, social and territorial disparities between Europe’s regions and invests in projects supporting job creation, competitiveness, economic growth, improved quality of life and sustainable development. Regional funds thus finance very diverse projects in Spain: from the construction of a new irrigation channel in Castilla y León to the implementation of dual vocational training for youngsters and unemployed youth all over the country.
Spain is also one of the top recipients of EU funding for research, an area crucial for its competitiveness and economic development. 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 R & D by 2020. This investment will not only create jobs and growth but is also essential for tackling the biggest issues of our time, such as sustainable energy, food security, climate change and the ageing population.
The Graphene project, for example, is one of the EU’s most ambitious and largest research projects and involves the Catalan Research Institute. It is studying the properties of Graphene, an extremely thin and light, but strong material expected to become as important as steel or plastics.
A 21 km stretch of motorway was constructed to bypass the city of Malaga. The project has reduced traffic congestion and improved connections with the rest of the country. The new section also helps reduce noise, pollution and greenhouse gas emissions. (EU funding: EUR 190.3 million)
The expanded facilities will almost double the airport capacity, allowing it to handle 7.5 million passengers per year by 2015 and to meet the growth in traffic from international destinations. Over the long term, more than 20 000 new jobs are expected as a result of the project. (EU funding: EUR 27.9 million)
The EU contributed more than EUR 3.3 billion (over 70 % of the total cost) to linking Madrid via Barcelona-Figueras with the French city of Perpignan in just 3.5 hours. The final stretch from Barcelona to Perpignan now takes just 50 minutes instead of more than 3.5 hours . The whole axis is a crucial link of the trans-European network.
The Research and Training Institute for Agriculture, Fishing, Food and Organic Production has developed a web platform providing training for farmers in remote areas who are unable to attend courses at the institute. This increased training should, in the long run, contribute to improving the region’s competitiveness. (EU funding: EUR 225 000)
EU agricultural funds helped set up a ‘business incubator’ in Barberà, equipped with the expensive technology needed to start a winery business. The facility can be used by six entrepreneurs at the same time at low cost. ‘Had we not had this initial opportunity, we would not have been able to launch our products on the market in the same way that we have done,’ says one of the entrepreneurs. (EU funding: EUR 100 000)
Thanks to EU funding, a group of shellfish gatherers from Baiona and A Guardia set-up a company to develop and launch new products such as canned barnacles and barnacle pâté made from smaller sized barnacles usually sold for a lower price. The project increased the shellfish gatherers’ income and provided new employment opportunities for the region. (EU funding: EUR 28 000)
Some 39 249 Spanish students studied or worked abroad thanks to the Erasmus exchange programme in 2012-13. They also received a grant from the European Commission towards the extra costs of living abroad. Just one of many examples: Fernando Acosta Martínez from Las Palmas de Gran Canaria spent 9 months studying in Budapest (Hungary), working on the final project for his industrial engineering degree. Thanks to the news skills acquired there, he later took second place in a competition for Formula 1 engineers.
The EU MEDIA programme helps the Spanish film and audiovisual industry develop, distribute and promote their work. International successes such as Mar adentro by Alejandro Amenábar and Hable con ella by Pedro Almodovar each received funding from the MEDIA programme.
With the support of EU funds, the Acceder programme is helping members of the Roma community, in particular unskilled young Roma, to find work. The project organises training courses and establishes links between Roma workers, employers and the government. Between 2007 and 2009, some 6 680 people found a job through the programme. (EU funding: EUR 30.9 million)
The European Partnership for Action Against Cancer (EPAAC) brings together different stakeholders from all over Europe, including Valencia’s Center for Public Health Research, in a joint effort to prevent and control cancer. The partnership facilitates the transfer of knowledge and best practices between EU countries. It should help reduce cancer incidences by 15 % by 2020, and ensure all EU countries have national cancer plans. The partnership received EUR 3.15 million from the EU.
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.
Graphene is set to become the wonder material of the 21st century, becoming as important as steel or plastics. Key applications include fast electronic and optical devices, flexible electronics, functional lightweight components and advanced batteries. The Graphene project brings together academic and industrial research groups, including the Catalan Research Institute, to investigate and exploit the material’s unique properties. (EU funding: EUR 54 million)
A new 30 km irrigation channel will not only allow Castile-Leon to better irrigate some 39 600 hectares of agricultural fields, but it will also save 217 million m3 of water a year — equivalent to the drinking water supply required for a city of 2.4 million inhabitants. (EU funding: EUR 60 million)
Four European countries, including Spain, participated in the FireSmart project. It enabled experts from regions experiencing regular forest fires to share knowledge and experience on how to prevent them and identify the obstacles reducing the effectiveness of current prevention measures. The project received EUR 920 000 from the EU.