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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 Slovakia) and by the European Parliament (where the democratically elected Slovak 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 v 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 Slovakia, EU funding represents 2.9 % 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 a spending plan setting maximum annual amounts which the EU can spend in different fields of activity 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, Slovakia’s public expenditure amounted to around EUR 28 billion – much less than the EUR 144 billion EU budget for the same year. However, it represented 40 % 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 Slovakia’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 an effective transport network is essential for a successful economy, the EU is co-financing the construction of a motorway linking Slovakia to Poland and the Czech Republic.
Slovakia is one of the EU member countries that receives more from the EU budget than it contributes, and will remain so throughout the next budgetary period (2014-20). 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. Through the internal market, Slovakian companies have unlimited access to 508 million consumers. With more than 80 % of its exports going to EU countries in 2013, this is of significant benefit for Slovakia. The country is also quickly catching-up with the European average in terms of development: since it entered the EU, the Slovakian GDP per person rose from 57 % in 2004 to 76 % 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.
The largest share of the money that Slovakia receives from the EU budget goes to its regions (68 %). The EU regional policy aims to reduce the economic, social and territorial disparities between Europe’s regions and countries. It invests in projects supporting job creation, competitiveness, economic growth, improved quality of life and sustainable development. Transport infrastructure and the environment and are top priorities for Slovakia. Consequently, the EU has contributed to the modernisation of wastewater treatment facilities in the Trenčín region, and invested in new trains for the Slovakia Railway Company.
The second-largest area of EU expenditure in Slovakia is agriculture and rural development (28 %). EU agricultural policy promotes safe and good food and supports farmers – the income per agricultural worker increased by 83 % between 2004, when the country joined the EU, and 2012. Funding also looks after the environment and stimulates rural economies, for example by helping to renovate some tourist accommodation in the Žilina region.
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 like Slovakia, which receive lower direct payments than the EU average. At the same time, Slovakia will still receive higher funds for rural development.
The new four-lane section of the D3 motorway will stretch from the village of Hričovské Podhradie in the Žilina region, to the outskirts of Žilina. Once completed, some 696 000 people in the region around the town of Žilina are expected to benefit from improved connections and road safety. The new motorway section is of vital importance not only for the region, but also for the country as a whole, as it will improve connections with neighbouring countries. (EU funding: EUR 67.5 million)
The Slovakia Railway Company has replaced or modernised its trains in the Bratislavský Kraj, Západné Slovensko, Stredné Slovensko and Východné Slovensko regions. The new equipment is more environmentally friendly and safer, will make it possible to transport more passengers and will make journeys more comfortable. (EU funding: EUR 88.5 million)
Are you looking for a nice holiday rental? An enterprising local from Zuberec in the Zilina region – a popular holiday location surrounded by mountains and lakes – was able to use EU funds to restore an old cottage, turning it into modern tourist accommodation. This type of initiative not only supports the development of rural tourism – it also helps creating employment for local inhabitants. (EU funding: EUR 675 799)
The farming company Agrosev has thousands of hectares of land in the Žilina Region, but its outdated technology and machinery had prevented it from fully exploiting its potential. EU funds helped the farm to buy new equipment and significantly modernise its facilities. Competitiveness shot up as the quality and efficiency of crop and livestock production improved. (EU funding: EUR 1.3 million)
Some 3 008 Slovak students studied or worked abroad in 2012-13 thanks to the Erasmus exchange programme, and the country welcomed 1 553 students from other European countries. Erasmus student receive 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.
Košice is a European Capital of Culture in 2013. It is the first Slovak city to be awarded the prestigious title. With more than 200 cultural events organised in 70 locations, it is an excellent opportunity for the city to attract more tourists and rethink its development through culture. One of the key attractions is the Hall of Art, an old swimming-pool, transformed into an exhibition hall for contemporary art.
Slovak writer Jana Beňová was one of the winners of the 2012 European Union Prize for Literature for her books Café Hyena and Seeing People Off. 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 the book translated into other languages.
The rural Žilina region has suffered from a lack of qualified medical specialists in dentistry, anaesthesiology and intensive medicine, clinical oncology, clinical immunology and allergies. ‘The project increased and supported the skills of health workers reflecting regional needs,’ said Katarína Mičencová who coordinated the project. A total of 25 physicians – 6 dentists, 4 GPs and 15 anaesthetists and intensive-care specialists received training in their fields. (EU funding: EUR 55 610)
Discovered by scientists at Manchester University, Graphene is set to become the wonder material of the 21st century, becoming as important as steel or plastics. The Graphene project brings together academic and industrial research groups, including a Slovak research company, to investigate and exploit the unique properties of the material. (EU funding: EUR 54 million)
The six agglomerations of Trenčín, Nové Mesto, Trenčianska Teplá, Trenčianske Teplice, Trenčianske Stankovce and Chocholná Velčice will see their wastewater treatment facilities improved thanks to EU funds. New or upgraded wastewater treatment plants and sewage systems will reduce water pollution, leading to safer, healthier water for inhabitants. (EU funding: EUR 48.3 million)
Several villages from the Poľana region came together to replace the coal boilers used to heat municipal premises with boilers using local wood waste. The project slashed energy bills, reduced pollution and gave the region greater energy independence. EU funding: EUR 6.7 million)
Several ‘green bridges’ enabling wild animals to cross motorways have been built in the alpine area separating the Austrian Alps and the Carpathian mountains. The infrastructures help to protect local biodiversity and prevent collisions with cars. The area is home to some of Europe’s rarest species, such as the brown bear, wolf, lynx and red deer. (EU funding: EUR 1.5 million)