Did you know...
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 Italy) and by the European Parliament (where the democratically elected Italian 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. For comparison, there were 2.8 million people working in the entire Italian public sector, serving 59 million Italians in 2012.
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 Italy, EU spending represents 0.8 % 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, Italian public expenditure amounted to EUR 789 billion – that is 51 % 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 Italy’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 broadband Internet can help to boost economic growth and thus help countries lift themselves out of the current economic crisis, the EU is co-financing a project aiming at providing almost every household in Lombardia with high-speed Internet.
In cash terms, Italy pays more into the EU budget than it receives from it in direct payments. The country is the third largest contributor to the EU budget after Germany and France. 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. For instance, Italian company Astaldi received EUR 112 million in contracts to upgrade a railway line in Bulgaria. The project was partly funded by the EU.
Thanks to the single market, which makes it easier for EU countries to do business with each other, 53 % of Italian exports went to European countries in 2013. This represents some EUR 207 billion — or around 50 times the Italian net contribution to the EU budget for 2013.
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.
As one of the largest producers of agricultural products in the EU, Italy is also one of the top recipients of EU agriculture funding. The policy supports farmers and promotes safe and good food, but it also looks after the environment and stimulates rural economies. For example, EU funds helped a family farm producing pecorino cheese in the province of Pescara to purchase new equipment.
Aimed at reducing economic, social and territorial disparities between Europe’s regions, this policy invests in projects supporting job creation, competitiveness, economic growth, improved quality of life and sustainable development. For instance, regional funds are helping Naples to improve public transport by extending its metro lines. They are also supporting the business of wool production in Sardinia and Tuscany by applying technology and modern marketing to this traditional industry.
Research and innovation are at the top of the EU’s agenda for growth and jobs, and are also essential to tackling some of the biggest issues of our time, such as energy, food security, climate change and an ageing population. Thanks to EU investment, and in collaboration with European researchers, Italian scientists helped to develop a device for locating earthquake victims trapped under rubble.
Thit 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.
Works are ongoing to add five new stations to Naples’ metro line 1, extending the line between Dante and Garibaldi and Centro Direzionale. The project will improve commuting journeys, increase public transport capacity and reduce congestion on the roads. (EU funding: EUR 200.3 million)
Some 707 municipalities, home to 1 million people, are now connected to broadband in Lombardy. Access to e-medicine, e-learning and e-commerce means more opportunities for Lombards. Broadband also gives companies a competitive boost, pushing up computer literacy levels and encouraging people to remain in the region, rather than moving elsewhere. (EU funding: EUR 7.9 million)
In recent years, Italy has made significant progress in the field of EU funding transparency, especially by creating the opencoesione.gov.it open-data portal, where every single project co-funded by the EU budget (European Regional Development Fund and European Social Fund) can be detected and followed throughout its implementation.
The Martinelli farm in Pescara province was facing major economic challenges until EU funding stepped in to help. Specialising in pecorino cheese, the farm was able to upgrade its equipment, improving the quality of the cheese as well as productivity. The farm now sells its cheese in supermarkets. (EU funding: EUR 619 056)
Over 5 000 farmers and foresters are members of Maschinenring in the region of Bolzano. It enables the exchange of agricultural machinery and labour between producers and provides training services. It is an efficient way to get farmers to use innovative and modern equipment without having to buy it. (EU funding: EUR 200 000)
The ailing business of wool production in Sardinia and Tuscany has been rejuvenated with modern technology and marketing. And the wool is no longer destined only for winter jumpers – all sorts of novel applications are under investigation, including in the green buildings sector. EU funding was also used to promote the use of local and native plants for natural textile dyeing and medicinal applications. (EU funding: EUR 642 750)
The Enterprise Europe Network helps companies to start trading abroad, find partners and access EU funding. Thanks to the network, the Tolin family, which runs a home textile and flooring company in Saluzzo, was able to find suppliers of quality materials. It is now selling Croatian-made oak floors and Portuguese-made tablecloths, towels and baby linens in Italy. Financed by the EU, the network’s budget is EUR 320 million for 2007-2013.
The European Progress Microfinance Facility provides micro-loans (less than EUR 25 000) to micro-entrepreneurs, the unemployed and those at risk of losing their jobs who want to set up their own micro-enterprises. It targets groups with limited access to the conventional credit markets, such as women, young people, minority groups and people with disabilities. Italian bank Emil Banca is participating, and will provide up to EUR 3 million in micro-loans to approximately 150 local micro-entrepreneurs in the Emilia Romagna Region.
Some 25 805 Italian students studied or worked abroad in 2012-13 thanks to the Erasmus exchange programme. They received a grant from the European Commission towards the extra costs of living abroad. Just one of many examples is Maurizio Oliviero from Perugia, who says that his 9 months studying law in Alicante (Spain) were 'unique, vital and colourful'. Thanks to the news skills acquired there, he is now a professor in comparative law.
The EU MEDIA programme helps the Italian film and audiovisual industry to develop, distribute and promote its work. International successes such as La vita è bella by Roberto Benigni and Gomorra by Matteo Garrone each received funding from the MEDIA programme.
A group of Italian scientists are taking part in FORBIOPLAST, a pan-European project coordinated by the Universita di Pisa in Italy, which aims to investigate the use of raw forest resources or by-products from forest-related industries for the production of eco-compatible foams and composites suitable for many practical applications. Results from this project should help to develop new markets for the forest industry and offer consumers alternatives to petrochemical based products. (EU funding: EUR 4.317 million)
Thanks to a grant from the European Research Council (ERC), Dr Antonella Bogoni, researcher at CNIT (Consorzio Nazionale Interuniversitario per le Telecomunicazioni – Pisa) has been developing a new generation of digital radars based on photonics. The laser should improve the control of heavy air traffic, even in bad weather conditions, thus reducing the number of accidents due to congested air traffic. (EU funding: EUR 1.6 million)
Italian SME Electronic Machining, the research institute Bruno Kessler Foundation and Politecnico di Milano are all taking part in the EU-funded DIGESPO project to develop mini solar-power systems allowing homes and workplaces to generate their own electricity and meet their heating and cooling requirements. (EU funding: EUR 3.3 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.
Several hydrogen-powered buses are in circulation in Bolzano, Milan and other European cities thanks to the Clean Hydrogen in European Cities Project. The project promotes clean urban transport and aims at moving these demonstration vehicles towards full commercialisation. (EU funding: EUR 25.9 million )
Support from the EU has enabled municipal waste from the city of Salerno (Campania) to be processed to higher environmental standards. According to project manager Domenico Barletta the new plant is highly efficient and has a low environmental impact, achieved through a combination of good design and the plant’s ability to generate its own energy. (EU funding: EUR 12 496 741)
Italy received EUR 494 million from the EU Solidarity Fund to help it deal with the consequences of the earthquake which struck the Abruzzo region in April 2009. Immediately after the disaster, Italy also benefited from the Civil Protection Mechanism, the European disaster response system through which several EU countries sent engineers to support Italian engineers assessing the stability of buildings. The biggest sum ever (EUR 670 million) was paid of the EU Solidarity Fund following the earthquake in Emilia Romagna in 2012.
Meanwhile, Italian scientists were part of an EU-funded team 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. Demonstration tests were considered a success. The project was funded with EUR 4.9 million by the EU.