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FACT CHECK

on the EU budget.

You have heard a lot of things about how the EU spends its money. Find out the facts about how the EU budget works and how it benefits you directly.

Why does the EU need a budget?
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© Pasko Maksim #342756205, source: stock.adobe.com 2022

The EU needs its own budget so it can deliver on its policy priorities and invest in big projects that most individual EU countries could not finance on their own. The EU budget has always been about pooling resources, standing together against common challenges and helping all EU countries, their citizens and beyond.

The EU budget is the tool to ensure that Europe remains a democratic, peaceful, prosperous and competitive force. Everyone benefits from being a part of the single market, and addressing common challenges like migration, terrorism and climate change together.

A prime example of how the EU budget helps is its response to the COVID-19 crisis. Resources from the budget and NextGenerationEU will help every EU country address the economic and social consequences and recover from the crisis.

How big is the EU budget and who decides on it?

The EU serves 27 countries with a total population of 450 million. With these figures in mind, the annual EU budget is actually quite small – around €160-180 billion annually in 2021-27. This is comparable to the national budget of Denmark, which serves 5.6 million people, and is about 30% smaller than the budget of Poland, which serves 38 million people.

The annual EU budget is part of the EU’s long-term budget, which currently covers 7 years.

This long-term budget, also known as the Multiannual Financial Framework or MFF, allows the EU to secure the resources to fund its political priorities. The size of the long-term budget and of the annual EU budget is decided by member governments and the European Parliament, with the objective of delivering on the EU’s policy priorities.

For 2021-27, the long-term budget is accompanied by a one-off, short-term recovery instrument – NextGenerationEU.

Together, the long-term budget and NextGenerationEU are worth €2 trillion (€1.211 trillion under the long-term budget and 806.9 billion under NextGenerationEU) in current prices. The 2 instruments seek to support Europe’s recovery from the COVID-19 pandemic while investing in our regions, farmers, companies, researchers, students, defence, and more.

€2 trillion
MFF and NextGenerationEU
€1.211 trillion under the MFF and 806.9 billion under NextGenerationEU.

What does the EU budget do for me?

The EU budget helps create jobs, supports projects that improve our health, education, transport and energy infrastructure, builds EU supercomputer capacity and energy links, improves the security of our borders and helps combat climate change, as well as easing the digital transition of society.

We asked EU budget opinion leaders what the EU budget brings to citizens. Watch the videos to see what they said. Keep reading to learn more.

Here are some examples of achievements the EU budget has made possible – and there are certainly many more around you!

  • The EU budget enabled the EU to secure a portfolio of up to 4.2 billion doses of COVID-19 vaccines. On this basis, 81% of the adult population in Europe had been fully vaccinated, with many having received boosters. Most recent figures can be found here.
  • Thanks to cohesion policy investments in the period 2014–2020, GDP per head will be 2.6% higher in less developed regions in 2023.
  • EU funding stands behind the European GPS Galileo, whose signals are used by more than 2.3 billion devices worldwide, from smartphones to emergency beacons. Thanks to the EU financing, Galileo provides freely accessible satellite data enabling positioning, navigation and timing determination.
  • Since 1987, 12.5 million young people and educational professionals have participated in the Erasmus+ educational exchange programme.
  • EU-funded researchers have won prestigious prizes. In 2021, 3 of the Nobel Prize winners had received EU funding, joining a list of at least 20 EU-funded researchers who won a Nobel Prize.
  • EU-funded films are regularly awarded prizes, thanks to Creative Europe MEDIA Programme, for their excellence. In 2021, 2 EU-funded movies, “The Father” and “Druk - Another Round”, received Oscars. The winner of the Golden Bear for Best Film the 72nd Berlinale Festival was the EU-funded movie “Alcarràs”. Another EU-supported film, “Everything Will Be Ok”, was awarded the Silver Bear for Outstanding Artistic Contribution.
  • The EU budget made direct payments to 5.6 million farmers in 2021, helping them ensure that Europeans enjoy healthy food at their tables.

The EU budget is responsible for many of the things we enjoy in our daily lives, maybe more than you know!

How much does my country pay in to the EU budget and how much does it receive?
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One of the biggest EU-funded projects in the EU and in Croatia, source: European Commission

The EU budget cannot and should not be reduced to a simple accounting exercise. The benefits from the EU membership significantly exceed the size of the EU budget contributions and the examples are many.

All Member States benefit from being part of the single market, a shared approach to the common challenges of migration, terrorism and climate change, and concrete gains like better transport infrastructure, modernised and digitalised public services and cutting-edge medical treatment.

NextGenerationEU and the Recovery and Resilience Facility (RRF) at the heart of it – are a good example of how EU spending brings immediate benefit across the entire EU. Beyond the direct impact of the money EU countries receive, there will also be significant positive spillovers across borders. Countries will benefit considerably from the effects of investment made in fellow members, as they can export more in those countries. The RRF investments and reforms are therefore laying the foundations for sustainable growth and resilient economies in Europe.

All other EU budget programmes achieve the same effects, making the EU budget a key tool to boost growth and support economic convergence across the EU.

Overall, it’s not possible to measure the added value of the budget just by looking at how big the numbers are. The EU budget is not about giving and taking – it’s about collectively contributing to making Europe – and the world – a better place for us all.

If you nevertheless want to learn how much your country contributed to the EU budget and how much of the EU budget was spent in your Member State, check EU spending and revenue.

Where does the EU budget come from?

About two thirds of the revenue for the EU budget currently comes from EU countries’ national budgets. The rest comes from own resources, such as customs duties paid on goods imported from outside of the EU, a small percentage of the VAT collected by each Member State, and other sources such as contributions from non-EU countries and fines on businesses for anti-competitive behaviour.

As of 2021, the EU has introduced a new source of revenue for the budget – a new contribution based on the amount of non-recycled plastic packaging waste each country produces. This supports our budget and our planet.

To finance NextGenerationEU, the European Commission is borrowing up to €800 billion on the capital markets, between 2021 and end-2026.

We asked EU budget opinion leaders what should the revenue look like. Watch the videos to see what they said.

How will the borrowing be repaid?

The grants will be repaid through the EU budget, while the loans will be repaid by the individual EU countries benefitting from them.

To finance the repayment of these grants without putting additional strain on EU countries or on their citizens, the Commission has proposed 3 new sources of revenue for the budget, called “new own resources”.

These new sources of revenue – linked to the EU policy priorities – are:

  • based on revenues from emissions trading system (ETS)
  • drawing on the resources generated by the proposed EU carbon border adjustment mechanism
  • based on the share of residual profits from multinationals that will be re-allocated to EU countries.

The Commission will propose further sources of revenue in the coming years. It is important to remember that NextGenerationEU will generate additional economic growth, thereby naturally helping to repay itself.

On which main policy areas will the EU budget be spent?

Funds from the EU budget are distributed in a way that supports the delivery of the different EU policy priorities. Between 2021 and 2027, the EU budget will mainly go to support the modernisation of our continent, to make it better able to address the challenges of today and tomorrow:

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VOLATILE project © Kletr #162162835, source: stock.adobe.com 2022
  • More than 50% of the long-term budget and NextGenerationEU will go to policy areas like:
  • 30% of the long-term budget and NextGenerationEU will be spent on fighting climate change – the highest share ever, from the largest EU budget ever. These funds are part of a major investment plan that the EU will put in place to green the economy. It will combine EU and national public funds, and public and private investment, to support the EU on its path to climate neutrality by 2050.
  • 20% of the Recovery and Resilience Facility funds will be invested in the EU’s digital transformation. These funds will help the EU invest more in supercomputing, artificial intelligence, cybersecurity, advanced digital skills and the wider use of digital technologies across the economy and society.
  • In 2026 and 2027, 10% of the annual spending under the long-term budget will contribute to halting and reversing the decline of biodiversity. Biodiversity is essential for life. Restoring forests, soils and wetlands and creating green spaces in cities will help the EU achieve its climate change mitigation and greening objectives.

How is the EU budget protected?

The European Commission is committed to protect taxpayer’s money and making sure that every euro from the EU budget is spent in line with the rules and generates added value. The Commission works closely with the authorities in EU countries and with the other EU institutions towards this goal.

The Commission relies on a robust internal control framework, including dedicated control strategies, to ensure that the EU funds are well managed and protected.

Before any payment is made, the Commission can interrupt, suspend or reduce payment if it discovers deficiencies in the way the EU budget is spent, or errors in the cost claims received from beneficiaries. Interruptions and suspensions mean temporarily stopping payments from EU funds, until the problems detected have been solved by the EU countries involved.

The Commission can also take action after the payments have been made, by introducing financial corrections and recovery orders for any funds already paid.

In the event of fraud, the European Anti-Fraud Office (OLAF) steps in to investigate, with the European Public Prosecutor’s Office (EPPO) looking into cases that involve more than one EU country.

All of these protective measures ensure our EU budget is very well protected.

How is the EU budget protected if rule of law principles are breached?

The rule of law is one of the founding values of the European Union.

A member country that breaches the rule of law principles in a way that affects or seriously risks affecting the EU budget is now subject to the general regime of conditionality.

This conditionality regime allows the EU to take measures – for example suspension of payments or financial corrections – to protect the budget. At the same time, the final recipients and beneficiaries of EU funds should continue to receive their payments, directly from the countries concerned.

In force since January 2021, this instrument complements other tools and procedures to protect the EU budget, for example checks and audits, financial corrections, or investigations by the EU's anti-fraud office (OLAF).

What does the EU budget do in times of crisis?

The EU budget is always there to respond to emergencies both inside and outside the EU. Beyond the coronavirus pandemic, other emergencies include:

  • In 2022, in the aftermath of Russia’s military invasion of Ukraine, the EU budget was mobilised to provide emergency assistance and support, at the border and in EU countries, and to alleviate the humanitarian consequences of the war. In addition, emergency assistance was offered to Ukraine directly by all EU countries, plus Norway and Turkey, via the EU Civil Protection Mechanism (this was the largest ever response in the history of the Mechanism).
  • In 2021, in response to forest fires raging across the Mediterranean and the Western Balkans, the EU deployed a fleet of 16 planes and 4 helicopters, over 290 vehicles, and more than 1,300 first responders to Cyprus, Greece, Italy, Albania, Algeria, North Macedonia and Turkey – all through the EU Civil Protection Mechanism.
  • Emergency operations were bolstered from space by the EU’s Copernicus Emergency Management Service, which produced more than 580 maps around the world in 2021 alone.
  • Since its establishment in 2002, the European Union Solidarity Fund – funded by the EU budget – has provided €7 billion to help 24 EU countries respond to major natural disasters. A further €0.5 billion was offered to 20 countries to tackle the COVID-19 health emergency.
  • Throughout 2021, the EU budget funded lifesaving support to those affected by disasters across the globe, including to people in Haiti after the earthquake, in Guinea following the outbreak of Ebola and in the Democratic Republic of Congo after a volcano erupted.

The largest budgetary response to a crisis, however, is NextGenerationEU: it directly tackles Europe’s recovery from COVID-19, with the capacity to mobilise up to €800 billion in current prices to help EU countries build a greener, more digital and more resilient Europe.

How has the EU budget helped address the EU response to the COVID-19 pandemic?
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source: European Commission

The EU budget has supported the EU response to the pandemic since day 1. Already in the spring of 2020, the Commission mobilised every cent from the EU budget to ensure a robust response to the pandemic. In practical terms, this meant:

  • Thanks the Coronavirus Response Investment Initiative, Member States got extra money to fight the crisis via extra liquidity, plus full flexibility to use their 2020 cohesion funds for this purpose.
  • The Emergency Support Instrument helped finance the EU vaccine strategy, including contracts with pharmaceutical companies for the EU-wide procurement of vaccines. Among many measures, the funding also helped increase testing capacities across the EU and set up the Digital COVID certificates.
  • The funds for the EU’s rescEU instrument made it possible to repatriate EU nationals stranded abroad and to create the first pan-European reserve of medical equipment. As a result, thousands of people could get back home and be with their families, and many more could receive healthcare when they needed it the most.

The EU budget also helped activate the up to €100 billion SURE instrument, which funded short-term employment schemes across the EU at the peak of the pandemic. In 2020 alone, the instrument supported 31 million people, helped around 2.5 million firms affected by the pandemic and helped EU countries save some €8.2 billion in interest payments.

Most importantly, the EU budget is supporting Europe’s economic recovery through the €2.0 trillion package consisting of the long-term budget for 2021-27 and the NextGenerationEU recovery instrument. It is already working to rebuild our economies and societies following the pandemic and its consequences.

How did the EU budget finance the purchase of coronavirus vaccines?

Thanks to EU budget funding, the European Commission – acting on a mandate from all EU countries – negotiated contracts with 8 major pharmaceutical companies. The first contracts were signed back in 2020, when the first vaccines were still in a development phase.

On the basis of these contracts – formally referred to as advance purchase agreements – EU countries were able to order and purchase vaccines for their citizens once vaccines were approved and authorised.

The EU budget enabled the EU to secure a portfolio of up to 4.2 billion doses of COVID-19 vaccines. On this basis, 81% of the adult population in Europe had been fully vaccinated, with many having received boosters. Most recent figures can be found here.

In addition, the Commission and EU countries have pledged over €3 billion to COVAX, and are supporting vaccination campaigns in partner countries.

How did the EU budget enable the EU response to the war in Ukraine?
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source: European Commission

The EU budget has underpinned the EU response to the Russian military invasion since day 1. Thanks to the mobilisation of existing flexibilities within the budget, the EU has been able to support Ukraine as well as EU and neighbouring countries (such as Moldova) affected by the war.

To date, the EU has mobilised for Ukraine billions in economic, financial, humanitarian and emergency support, as well as military assistance.

Together with its international partners, the EU is working on a reconstruction platform, at the heart of a reconstruction process to be fully owned by Ukraine. It should foresee investments and reforms to help Ukraine emerge stronger and more resilient from the devastation.

As the situation is still unfolding, the most up-to-date information can be found at EU assistance to Ukraine.

Who spends the EU budget – the Commission, EU countries, third parties?

All of the above. The EU’s long-term budget is spent through almost 50 programmes, in 3 main ways, also known as implementation modes:

  • Direct management: EU funding is managed directly by the European Commission (around 20% of the budget)
  • Shared management: the European Commission and national authorities jointly manage the funding (around 70%)
  • Indirect management: funding is managed by partner organisations or other authorities inside or outside the EU (around 10%)

 

Making sure the budget is spent in line with the rules and goes to where the the needs are therefore depends on all partners involved. The Commission works hand in hand with all of them to make sure every euro goes to where the needs are and funds the public good in the EU.

In addition to the funds spent under the long-term budget, the extraordinary recovery instrument NextGenerationEU finances the Recovery and Resilience facility, which is directly managed by the Commission.

How much is spent on administration?

Only a tiny percentage of the EU budget is spent on buildings, salaries, pensions, and other running costs of all the EU institutions, agencies and bodies.

In relative terms, the EU’s administrative staff is small: we employ about 60,000 officials – comparable to the administration of a large European city – to cater for the needs of the 450 million EU citizens.

How can one receive EU funding?

A wide range of beneficiaries can apply for EU funding. The EU has several different funding programmes that you may be able to apply for, depending on the nature of your project.

To qualify for EU funding, you need to follow certain rules and procedures. This is inevitable – we need to make sure that every euro is spent in a transparent and correct way, for the benefit of EU citizens. At the same time, the EU is also constantly working to simplify and modernise its budget rules and make sure people can access EU funding to finance their ideas as easily as possible.

Do you want to start a business or help you children’s school become more energy efficient? Check our website to find out your options. To be considered, your application needs to be complete, concise, and submitted on time through the correct electronic submission system.