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The EU’s Multiannual Financial Framework and some implications for CESEE countries

Bruegel scholars Zsolt Darvas and Guntram Wolff contributed to the September 2018 edition of the OeNB's Focus on European Economic Integration.

By: and Date: September 12, 2018 Topic: Macroeconomic policy

This article was also published in the September 2018 edition of the OeNB’s Focus on European Economic Integration.

The European Union’s budget – which is fundamentally different from the budgets of federal countries and amounts to only about 1% of the EU’s gross national income – continues to be heavy on agricultural and cohesion spending. The literature shows that the EU’s common agricultural policy (accounting for 38% of EU spending from the current budget) provides good income support, especially for richer farmers, but is less effective for greening and biodiversity and is unevenly distributed. The EU’s cohesion policy (accounting for 34% of current EU spending) contributes to convergence, but it is unclear how strong and long-lasting the effects are. Spending on new priorities such as border control could require additional funds of at least EUR 100 billion in the 2021–2027 period, but there will be a EUR 94 billion Brexit related hole in the EU budget for 2021–2027 if the EU loses the United Kingdom’s share of contributions and the EU’s work program as a share of gross national income remains unchanged.

The European Commission’s May 2, 2018, proposal for the 2021–2027 budget makes several welcome steps in reforming the EU budget, e.g. by reorganizing spending commitments toward priorities which have gained more importance recently, while reducing the share of spending on agriculture and cohesion policies. But many details remain quite fuzzy and need to be spelled out further before a critical appraisal can be made. Moreover, the new draft budget for agriculture foresees larger cuts for rural development support – important for environment and biodiversity goals – than for direct subsidies to farmers. Also, we would argue that the European Commission needs to make a significantly stronger attempt at measuring the actual “European value added” of the various proposed initiatives. Therefore, while we regard the European Commission’s proposal a good basis for subsequent negotiations, we propose a number of significant changes.

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Opinion

European governance

Can the EU fiscal rules jump on the green bandwagon?

By and large, setting a new green golden rule would be a useful addition to the existing EU fiscal framework.

By: Guntram B. Wolff Topic: European governance, Green economy, Macroeconomic policy Date: October 22, 2021
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The inconsistency in global strategic relations

All of this talk on strategic retrenchment and autonomy is the language of escalation, not of appeasement and collaboration.

By: Maria Demertzis Topic: European governance, Global economy and trade Date: October 13, 2021
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Pandemic prevention: avoiding another cycle of ‘panic and neglect’

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How can the European Union increase green public investment while consolidating budget deficits?

By: The Sound of Economics Topic: European governance, Macroeconomic policy Date: September 29, 2021
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For remote work to work, new ground rules are needed

The pandemic has shown workers and employers that another way to work is possible. The European Union should develop a framework to facilitate hybrid work.

By: Mario Mariniello Topic: Inclusive growth Date: September 23, 2021
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Unboxing the State of the Union 2021

In this Sound of Economics Live episode, Bruegel experts look at the State of the Union address delivered by Ursula von der Leyen, President of the European Commission.

By: The Sound of Economics Topic: Macroeconomic policy Date: September 15, 2021
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Past Event

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The Sound of Economics Live: Unboxing the State of the Union 2021

In this Sound of Economics Live episode, we look at the State of the Union address delivered by Ursula von der Leyen, President of the European Commission.

Speakers: Grégory Claeys, Maria Demertzis, Alicia García-Herrero and Giuseppe Porcaro Topic: Macroeconomic policy Location: Bruegel, Rue de la Charité 33, 1210 Brussels Date: September 15, 2021
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European governance

EU-India trade relations: assessment and perspectives

In-depth analysis prepared for the European Parliament's Committee on International Trade (INTA).

By: Suman Bery, Sonali Chowdhry, Alicia García-Herrero and Niclas Poitiers Topic: European governance, Global economy and trade Date: September 10, 2021
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Policy Contribution

European governance

A green fiscal pact: climate investment in times of budget consolidation

Increasing green public investment while consolidating deficits will be a central challenge of this decade. A green fiscal pact would address this tension, but difficult trade-offs remain.

By: Zsolt Darvas and Guntram B. Wolff Topic: European governance, Macroeconomic policy Date: September 9, 2021
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EU climate plan should involve taxing pollution, not borders

Climate change and taxes may be some of the only true certainties in life. To protect ourselves better, we should make careful choices on how they interact.

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Conference on the Future of Europe: envisioning EU citizens engagement

Bruegel Annual Meetings, Day 3 - Panellists will discuss different options and what they may entail while revisiting the debates on the future of Europe at national and EU-level that have been conducted thus far.

Speakers: Caroline de Gruyter, Kalypso Nicolaïdis, Niclas Poitiers and György Szapáry Topic: European governance, Macroeconomic policy Location: Palais des Academies, Rue Ducale 1 Date: September 3, 2021
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