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 Poland) and by the European Parliament (where the democratically elected Polish 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 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 Poland, EU funding represents 4.36 % 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 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, Poland’s national budget amounted to around PLN 689 billion (EUR 163 billion) – that is 44 % of the country’s GNI. On the other hand, the EU budget for, the 28 Member States was around PLN 609 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 Poland’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 the development of an effective transport network is essential to a successful economy, the EU contributed PLN 5.4 billion (EUR 1.3 billion) to extend the A1 motorway and improve links between Polish regions, but also improve connections between Poland and its European neighbours. EU funding in transport finance trans-European connections that would not otherwise exist and helps reduce costs by pooling resources. In addition, increased road safety is essential for Poland as it is one of the EU country with the highest number of road deaths.
Poland is the biggest beneficiary of the EU budget and will keep this position throughout the next financial period. However, bear 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. In addition, thanks to the internal market which makes it easier for companies to do business with counterparts in European countries, 75 % of Polish exports went to EU countries in 2013.
The country is also steadily catching-up with the European average in terms of development: since it entered the EU, the Polish growth rate increased from 51 % in 2004 to 68 % of the EU average in 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.
More specifically, Poland is the main recipient of EU regional funds, which aim to reduce the economic, social and territorial disparities between Europe’s regions and countries. For example, regional funds are helping improve the public transport network in Kielce. They are boosting competitiveness and employment in Podkarpackie thanks to a new science and technology park where 16 companies are already up and running. Regional funds are also helping Świętokrzyskie to create a cleaner environment with a modernised sewerage system, and ensuring Polish researchers are at the forefront of key research through a new central European biomedical research centre in Warsaw.
Poland also receives a large share of the European funds for agriculture, and is the top beneficiary of EU funds for rural development. Every year, around 1.4 million Polish farmers receive income support from the EU budget, and the agricultural income per worker increased by almost 45 % between 2004, when the country joined the EU, and 2012. A young fruit farmer from Łódzkie is just one example of this EU funding in action: he was able to purchase new fruit harvesting equipment, thus making his holding more competitive.
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.
All values in national currencies have been converted using exchange rates from October 2013.
The EU is funding more than 60 % of the investment needed to build a section of the A1 motorway between Toruń and Łódź. Once complete, the project should cut journey times between the two cities by 97 minutes, improve connections between Polish regions and thus boost their economies and competitiveness. The new motorway is also expected to help reduce traffic accidents on the entire road network by about 81 incidents (0.61 %) during its first year. It forms part of the European axis linking Poland to the Czech Republic, Slovakia and Austria. (EU funding: PLN 5.5 billion – EUR 1.3 billion)
Some 5 186 km of roads will be laid or re-laid, along with new bus stops and bus stations to improve public transport service in the city of Kielce. The improved and more eco-friendly network will enhance the region’s competitiveness. (EU funding: PLN 228 million – EUR 54 million)
A 58-km stretch of track from Wrocław to Poznań is being modernised to reduce journey time for both passengers and freight trains, increase safety, limit environmental impact and ensure the line meets European standards. (EU funding: PLN 863 million – EUR 204 million)
A damaged farm building in the city of Międzychód was modernised and transformed into an environmental education centre. Previously perceived as a disadvantaged rural community, the town receives now more than 8 000 visitors every year and the local population is actively engaged in tourist services. (EU funding: PLN 169 120 – EUR 40 000)
A young Polish fruit farmer received PLN 55 717 (EUR 13 178) from the EU to purchase advanced fruit harvesting equipment. The new equipment made his holding more competitive and viable, and preserved jobs on the farm. The farmer believes that EU support was essential to making the project work.
A youth NGO organised computer courses where young people from local villages taught older people how to use a computer and surf on the Web. Some 192 people participated, helping develop common interests between generations, giving youngsters professional opportunities in their region and increasing computer skills in rural areas. (EU funding: PLN 307 422 — EUR 72 711)
Warsaw University of Technology is taking part in the 'Human Brain project', which is developing the most detailed model of the brain by using supercomputing technologies. The project results will ultimately allow scientists to develop new treatments for brain diseases and build revolutionary new computing technologies. (EU funding: PLN 228 million – EUR 54 million)
The EU is contributing 85 % of the costs of building a biomedical research centre in Warsaw. The centre will carry out research on some of the most prevalent human diseases, such as cancer and heart disease, but will also focus on new diagnostic methods and therapeutic approaches. (EU funding: PLN 329 million – EUR 77.8 million)
A major share 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.
The Individual Employment Paths project helps people over 45 who have been unemployed for some time, or have disabilities or health problems, to find a job. The project helped 61 year-old Henrych Chudzinski find a job as a school caretaker after 4 years of unemployment. The scheme has been so successful that it is being extended to other areas of Poland. (EU funding: PLN 1.7 million – EUR 393 700)
Poland received EUR 10 billion from the European Social Fund (ESF) in 2007-13. The ESF supports employment and helps people enhance their education and skills. Investing in people is essential to face today’s challenges such as the need for new skills, computer technologies, globalisation, difficulties for the young to find a first job and the ageing of European societies. It is a long-term investment bringing back major returns.
A new science and technology park in Rzeszów was made possible with PLN 42 million (EUR 10 million) in EU funding. The region was already known for its aviation expertise, and now has more than a thousand people working on the new site. Some 16 companies have moved in, including a world-class aircraft engine maker.
An EU-funded project will build and renovate sewer and water supply networks in Kielce, connecting almost 20 000 inhabitants to safe drinking water. The modernisation will also reduce the number of pollutants entering the local ecosystem. (EU funding: PLN 320.5 million — EUR 75.8 million)
A new gas pipeline between Szczecin and Gdańsk will secure gas supplies in the region by allowing distribution from new sources and making it easier to store surpluses. (EU funding: PLN 282 million — EUR 66.7 million)
Poland received PLN 448 million (EUR 106 million ) to help it recover from the severe floods of May and June 2010. During the floods, Poland also benefited from the Civil Protection Mechanism, the European disaster response system through which several EU countries sent pumps and rescue teams.
All values in national currencies have been converted using exchange rates from October 2013.