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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 Ireland) and by the European Parliament (where the democratically elected Irish 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. In comparison, the German Finance Ministry alone employs more people than the European Commission’s services responsible for financial affairs, taxation and budget. (1 850 staff compared with 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 Ireland, EU funding represents 1.4 % of the country’s GNI (Gross National Income).
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 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, Ireland’s public expenditure amounted to around EUR 70 billion – which is much less than the EUR 144 billion EU budget for the year. However, it represented 51 % 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 Ireland’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 co-financing a project aiming at making high-speed Internet available everywhere in Ireland.
Ireland is one of the EU Member States which receives more from the EU budget than it contributes, and this will remain so throughout the next budgetary period (2014-20). It should be borne 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 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 Member States as well. For example, Irish companies have unlimited access to a single market of 508 million consumers. With about 57 % of its exports going to EU countries in 2013, this is of significant benefit for the country.
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.
A major part of the money that Ireland receives from the EU goes towards agriculture, rural development and conservation (82 % in 2013). EU agricultural policy supports farmers and promotes safe and good food, but it also looks after the environment, stimulates rural economies and improves life in the countryside. For instance, EU funds have enabled computer training for rural communities on Ireland’s east coast.
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 that Ireland receives goes to research (10 %) – 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 for tackling some of the biggest issues of our time, such as energy, food security, climate change and an ageing population. About 1 939 Irish participants – be they universities, research institutes or SMEs – have already received funding through the EU’s 2007-13 research programme. For example, scientists from Trinity College Dublin are taking part in an EU-funded research project investigating a new treatment for strokes.
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.
Since 1995, the EU has provided financial assistance to strengthen the peace process in Northern Ireland and the Border Region of Ireland (Cavan, Donegal Leitrim, Louth, Monaghan and Sligo). The Peace Programme supports projects which help to reconcile communities and build a shared society.
A new bypass around the town of Tullamore in Ireland was completed in October 2009. The 14 km road eases local traffic congestion considerably and facilitates the transport of goods and services beyond the region, thus increasing local competitiveness. Further benefits include greater traffic safety for local residents and the capacity for future road traffic growth – to between 7 000 and 16 000 vehicles a day by 2020. (EU funding: EUR 21.3 million)
The aim of the ‘Gateways and Hubs Investment Scheme’ was to enhance the attractiveness of major towns and cities throughout Ireland by providing funding for a wide range of infrastructure, regeneration, transport, cultural and energy projects. Initiatives that have received financial support include the redevelopment of Dundalk’s market square, the addition of bus and cycle lanes in Galway city, and the construction of art galleries in Sligo and Athlone. (EU funding: EUR 28.2 million)
Ireland’s national broadband scheme brings affordable, quality broadband to all parts of the country. In the past, broadband was not accessible to approximately 10 % of Ireland’s population. This scheme has had a positive effect on the rural economy, making the regions involved more attractive and competitive destinations for investment. Furthermore, the quality of life has improved for citizens in most areas. Regular use of the Internet is now higher in Ireland than the EU average. (EU funding: EUR 36 million)
The EU Safer Internet programme supports projects informing parents, teachers and children of the potential risks that youngsters may encounter online. The programme also fights illegal content and harmful conduct such as grooming and bullying.
This project aims to deliver computer training to isolated rural communities on the east coast of Ireland, in the rural Dublin region, using a vehicle which travels from village to town. Over 250 local people (mainly women) aged between 15 and 87 have been trained to varying levels. A few participants have now become computing tutors at the local level. (EU funding: EUR 32 186)
The Business Development Centre (BDC) at the Letterkenny Institute of Technology (LYIT) has been extended to form a state-of-the-art incubation, research and enterprise centre named CoLab. It comprises 23 business centres spread over 2 500 m2, provides campus-based incubation facilities to start-up companies, along with facilities for industrial research – all with the aim of supporting entrepreneurs at every stage of their business development. It has become a very attractive location for the business community of the North West region. (EU funding: EUR 1.3 million)
In 2009, the South East region of Ireland was hit hard by the closure of the Waterford Crystal manufacturing facility. The City Council responded by re-establishing a crystal manufacturing visitor centre in Waterford, keeping heritage and craftsmanship firmly rooted in the city. The new installation – both attractive and educational – has already become the second-biggest visitor attraction in the South East, and is the single greatest attraction for American tourists in the region. (EU funding: EUR 2.760 million)
The European Progress Microfinance Facility provides micro-loans (less than EUR 25 000) to micro-entrepreneurs, and to people who have lost or are at risk of losing their jobs and want to set up their own micro-enterprise. The initiative is designed for groups with limited access to conventional credit, such as women, young people, minority groups and people with disabilities.
Christchurch, a neoclassical Georgian building dating back to the 18th century, ceased to function as a church in 1978. Since 2008 it has undergone extensive refurbishment, preserving the original structure. The church was maintained as a city landmark, but is now in use as a space for theatre, visual arts, an independent record shop, a café and an art-house cinema. The centre is connected to the Triskel Arts Centre, and thus forms part of one single large arts centre. (EU funding: EUR 2.18 million)
Some 2 762 Irish 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. Peter Murphy from Dublin spent 5 months in Lahti (Finland) studying industrial design. 'My studies and my development got a great boost from my Erasmus exchange. It strengthened my practical skills and opened my eyes to a whole new world of art and design,' he says.
Irish writer Kevin Barry was one of the winners of the 2012 European Union Prize for Literature for his book City of Bohane. Every year the European Union Prize for Literature rewards the best new or emerging authors in the EU. Each winner receives EUR 5 000 and priority funding from the EU Culture Programme to get their book translated into other languages.
Scientists from Trinity College Dublin 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: EUR 10.9 million)
EU-funded researchers have developed a smart irrigation system that saves 1 500 trillion litres of water annually. The WaterBee system gives greater control over irrigation and makes water use more efficient. It gives accurate and complete information on crop and field conditions and comes with easy-to-use smartphone and web apps that support crop irrigation decisions with real-time data. The system has been installed and is in use at 14 sites across Europe, including Ireland. (EU funding: EUR 2.2 million)
An EU-funded research team led by Daithi O’Mhurchu Marine Research Station (DOMRS) in Bantry, Ireland, is developing biofuel from algae. This will reduce greenhouse gas emissions and create new knowledge on a renewable energy source that can be produced around Europe. The team has identified two algae species with high oil content and fast growth rate which are expected to be suitable for the production of commercial biofuel within 15 years. (EU funding: EUR 1.4 million)