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Did you know that the EU budget...

  • ...returns much more to Portugal than the country pays into it.
  • ...focuses on overcoming the crisis by investing in growth and jobs, for example through the new multi-billion-euro fund to tackle youth unemployment around Europe in the Union’s hardest-hit regions.
  • ...contributes to the development of the potential of Portuguese regions, for example by providing the Centro region with state of the art waste treatment and the Porto area with better public transport.
  • ...is not for Brussels but for all Europeans and Portuguese, from Porto to Faro, from Madeira to the Azores.

What is 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 Portugal) and by the European Parliament (where the democratically elected Portuguese 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.

Where does the money come from?

The EU budget is largely financed by ‘own resources’ which are based on three kinds of sources:

  • customs duties on imports from outside the EU and sugar levies,
  • a small part of the value added tax (VAT) levied in the EU,
  • gross national income (GNI): each Member State transfers a standard percentage of its GNI to the EU. This forms the largest source of income to the EU budget (74% in 2013).

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.

Where does the money go?

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.

Too many EU civil servants?

There are around 55 000 EU civil servants and other employees serving 508 million Europeans and countless people in need around the world. Take a look at this comparison: the Portuguese Ministry for Foreign Affairs is staffed with 3 315 people, whereas its European counterpart, the European External Action Service, counts 1 800 employees.

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 (Gross National Income) – 3.8 % for Portugal.

Who keeps an eye on EU spending?

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.

The EU multiannual framework 2014-20 in brief

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:

  • A focus on growth, jobs and competitiveness with increased investment in education and research, and a new Connecting Europe Facility fund to boost pan-European infrastructure projects for transport, energy and information and communication technologies.
  • A higher quality of spending thanks to simpler rules for EU funds, a clear focus on investments producing tangible results, as well as the possibility of suspending EU-funding if a country fails to implement sound economic and fiscal policies.
  • A reformed common agricultural policy for a more competitive and environmentally friendly European agriculture.
  • The fight against climate change as a key component of all major EU policies and devoting 20 % of the 2014-20 MFF to actions against climate change.
  • Solidarity with the poorest EU countries and regions by concentrating the largest portion of regional funding in those parts of the EU and by introducing a new youth employment fund.
  • Reduced administrative expenditure growth thanks to cuts in staffing numbers at European institutions.

The EU budget and Portugal

In 2013, Portuguese public expenditure amounted to around EUR 81 billion– that is much less than the EUR 144 billion EU budget for the same year. However, it represented 50 % 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 Portugal’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 a key ingredient in a successful economy is an effective transport network – even more so for an island – the EU contributed more than EUR 2.2 billion to the expansion of João Paulo II airport on the Azores island of São Miguel.

In 2013, Portugal received more from the EU budget than it contributed to it. 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.

Regional policy

In 2013, 72 % of the money Portugal received from the EU went to its 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 Portugal: from the renovation of the historic centre of Vila do Conde to the construction of a new paediatric hospital in Coimbra and the training of food-sector professionals.

Agriculture, fishery and rural development

EU agricultural policy supports farmers and promotes safe and good food. It also looks after the environment, stimulates rural economies and quality of life in the countryside by supporting, for instance, an association providing services to the elderly living in rural areas. Those working in agriculture still represented 25 % of Portugal’s active population in 2010. In addition, 38 % of the population reside in rural areas. Maintaining and enhancing the competitiveness of the countryside is therefore crucial, and agriculture has an important role to play.

Too much money spent on agriculture?

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.

EU projects near you

Health and research

A state-of-the art hospital for Coimbra

The new paediatric hospital in Coimbra will replace the old hospital, meeting the needs of a younger population and providing world-class services. The hospital is likely to become the reference hospital in the region, with better conditions for patients, increased surgery capacity, improved working conditions for staff and a department of education and research. (EU funding: EUR 42 million)

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European researchers delve deep into the mysteries of the human brain

Portuguese scientists are part of the ‘Human Brain Project’, which is developing the most detailed model of the brain yet using supercomputing technologies. The results will ultimately help the development of new treatments for brain diseases, as well as revolutionary new computing technologies. (EU funding: EUR 54 million)

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Reducing earthquake fatalities

Portuguese scientists were part of an EU-funded team that developed a portable device for locating earthquake victims trapped under rubble. The new technology measures air levels beneath rubble and detects specific chemicals released only by humans. Tests were considered a success. (EU funding: EUR 4.9 million)

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Did you know?

In 2007-13, the EU invested EUR 250 million in HIV/AIDS, malaria and tuberculosis research. Projects are developing new therapies as well as diagnostic and preventive tools, such as vaccines and HIV microbicides. The EU’s research programme sponsors research across the full spectrum, from basic molecular research to pre-clinical tests and drug development.

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Growth and jobs

Training for aspiring chefs

The Centre of Professional Training for the Food Sector provides courses in meat, food and agricultural quality control, food management, pastry and catering. The organisation trains both youngsters seeking first-time employment and those wishing to develop their skills. The initiative has already extended the professional skill set of around 100 000 people, and almost all participants found a job after their training. (EU funding: EUR 6.8 million)

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Women replacing women

An EU-funded undertaking in the Azores is providing unemployed women with temporary positions to cover for women on maternity leave, thus encouraging employers to hire young women. Between the projects launch in 2008 and 2012, the initiative involved over 554 women, approximately half of whom have since found regular work. (EU funding: EUR 1.23 million)

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Did you know?

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 job who want to set up their own micro-enterprise. It focuses especially on groups with limited access to the conventional credit market, such as women, young people, minority groups and people with disabilities. Several Portuguese banks are participating in the initiative. They will provide over EUR 3 million of micro-loans.

Education and culture

The Erasmus programme

Some 7 041 Portuguese 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. The experience enriches students' lives academically and professionally, but also improves language and intercultural skills.

Did you know?

Portuguese writer Afonso Cruz Portugal was one of the winners of the 2012 European Union Prize for Literature for his book The Kokoschka’s Doll. The European Union Prize for Literature rewards each year the best new or emerging authors in the EU. Each winner receives EUR 5 000 and priority for funding from the EU Culture programme to get their book translated into other languages.

Infrastructure and transport

An extra line for Porto metro

A new metro line now connects Porto with the city of Gondomar. The 7 km extension includes 10 new stations, ensuring a rapid travel option for the 125 000 additional residents covered by the network. The move from cars to metro has also cut CO2 emissions. (EU funding: EUR 74 million)

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Lisbon inner ring road open to traffic

The EU contributed EUR 95.8 million to the completion of the Lisbon inner ring road between Buraca and Pontinha. The new link takes traffic away from the centre, reducing traffic jams and pollution. (EU funding: EUR 95.8 million)

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New look for historical city

The renovation of the city centre in Vila do Conde was awarded the prestigious ‘Novo Norte’ prize in 2011 for its improvements to the historical centre, the waterfront and the seafront. Vila do Conde is home to a wide range of remarkable historical monuments previously in danger of irreparable damage due to the city’s economic difficulties. (EU funding: EUR 8.9 million)

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Environment and energy

Cleaning up waste in the coastal region

The coastal area of central Portugal will soon be a flagship region when it comes to dealing with solid waste generated in urban areas. New facilities for transporting, processing and recycling waste will enable the region to treat 100 % of its urban biodegradable waste by 2015. (EU funding: EUR 80.3 million)

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Agriculture and rural development

Help at hand in remote areas of southern Portugal

Elderly people living in the Sousel region are now able to call for help when needed. Services range from a taxi cab service to home maintenance and repair services at affordable prices. This helps ensure elderly people in this rural region are not isolated. (EU funding: EUR 23 178)

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From liqueurs to jam

The launch of new company ‘Nobre Terra’, producing traditional liqueurs from local products in the Setúbal Peninsula, was made possible with EU funding. After finding success with liqueurs, the company decided to add another delicacy to its shelves: jam. (EU funding: EUR 75 749)

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European Social Fund: a personal story (video)

Eastern promise
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