Introduction

A Comprehensive Review of Spending and Resources

In May 2006, the European Parliament, the Council and the Commission agreed that the Commission should undertake a fundamental review of the EU budget. The Commission was invited

"to undertake a full, wide ranging review covering all aspects of EU spending, including the CAP, and of resources, including the UK rebate, to report in 2008/9."[1]

The European Union's policy agenda is in a phase of profound modernisation. Globalisation has brought about new challenges and issues like climate change, energy and migration have come to the centre of the European debate. Innovation, skills and the right business environment are more than ever at the core of the growth and jobs strategy. Citizens' desire to see European interests and European values projected worldwide has never been stronger. Enlargement has reinforced the need to promote social, economic and territorial cohesion.

The budget is an important lever for the EU to deliver existing policy goals, to bring about change and to maximise the long-term impact of EU action. Twenty years after the first financial framework, it is time for a Europe-wide reflection preparing the ground for a renewed consensus about the direction of EU spending policies able to meet the challenges of the next decade and beyond.

The budget review is a unique opportunity for a thorough assessment of the EU budget and its financing, free from the constraints of a negotiation on a financial framework. It will take a long time horizon, to see how the budget can already be shaped to serve EU policies and to meet the challenges of the decades ahead. It will therefore not propose a new multi-annual financial framework for the period from 2014 – this task will be for the next Commission – nor the overall size and detailed breakdown of the EU budget. It will rather set out the structure and direction of the Union's future spending priorities, assessing what offers the best added value and most effective results. It will also examine how the budget works, how to get the right balance between continuity and responding to new challenges, and whether it should be managed differently. Finally, the review will take a fresh look at the best way of providing the resources necessary to fund EU policies.

Preparing the Review

The aim of this paper is to launch a broad consultation with interested parties at local, regional and national levels, as well as at the European level, to stimulate an open debate on EU finances.

Section 1 puts the EU budget in perspective and shows how the budget can be used as a tool to reflect changing political priorities. Section 2 presents some key elements for exploring how a modernised EU budget can provide the greatest added value in meeting the long-term challenges facing the Union. Section 3 deals with the financing of the budget.

The consultation will form an important basis for the Commission's work on the review. It will be complemented by preparatory action in key spending areas where the Union has made a major investment and where effective use of the budget is particularly important to the success of the policy. The Common Agricultural Policy will undergo a "health check" to fine-tune the 2003 reforms and contribute to the discussion on future priorities in the field of agriculture. The fourth Cohesion Report adopted in May looked at progress in reducing regional disparities and evaluated the results of Cohesion Policy to date. Reviews will also take place in other policy areas. These policy assessments are intended to check whether policies are working as they should in a Union of 27 Member States. In some instances they will lead to immediate adjustments, but they will also feed into the longer-term perspective of the review. In addition, the Commission has engaged in a dialogue with a number of distinguished academics and launched a series of horizontal and sectoral studies to enrich the results of the consultation. With the help of its Representations in the Member States, it will accompany the consultation process by encouraging and supporting discussion at the national, regional and local level.

As set out in the Inter-institutional Agreement of May 2006 setting up the current financial framework the European Parliament will be associated with the review at all stages of the procedure and the review will also be accompanied by an assessment of the functioning of the current Interinstitutional Agreement.

This consultation invites input to the Commission's budget review 2008-2009, which will itself be the subject of a fundamental debate in the EU institutions and the Member States. The Commission's approach is one of openness and no taboos: it will prepare this review with no preconceptions and encourages all interested parties to contribute to the consultation.

[1] Declaration n° 3 annexed to the Interinstitutional Agreement between the European Parliament, the Council and the Commission on budgetary discipline and sound financial management, OJ C 139 of 14 June 2006.

Consultation paper
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