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Building a Euro-area Budget Inside the EU Budget: Squaring the Circle?

As part of a volume on the Multiannual Financial Framework, the EUI recently published a chapter by Grégory Claeys on the creation of a euro area budget within the EU's budget.

By: Date: December 1, 2020 Topic: European Macroeconomics & Governance

This chapter was originally published on CADMUS for the European University Institute

This chapter, part of an edited volume on the EU Multiannual Financial Framework 2021-2027, is the outcome a conference held in mid-October 2019 on initiative by the Robert Schuman Centre for Advanced Studies at the European University Institute of Florence.

Abstract

This paper explores how a budget for the euro area might be established within the European Union budget as part of the 2021-2027 Multiannual Financial Framework. The author first discusses what budgetary tool the euro area needs and what essential characteristics it should have. They then compare these with the characteristics of the ‘Budgetary Instrument for Competitiveness and Convergence’ agreed upon by the Eurogroup in 2019. They conclude that in its current form this new instrument, which has been labelled a ‘mini revolution’, will most probably be inadequate to deal with the most important challenges facing the euro area.

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Past Event

Past Event

European banks: under global competitive pressure?

Bruegel Annual Meetings, Day 2 - European banks have lost stature and remain generally low-profitability, low-valuation in comparison to their global peers. Is that a problem? If so, what can EU policymakers do to address it?

Speakers: José Antonio Álvarez Álvarez, Mairead McGuinness and Nicolas Véron Topic: European Macroeconomics & Governance, Finance & Financial Regulation Location: Palais des Academies, Rue Ducale 1 Date: September 2, 2021
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Blog Post

Private equity and Europe’s re-capitalisation challenge

Companies are struggling in the coronavirus crisis but solvency support provided by the European Union looks likely to be modest. This will make private equity more important in the recovery, and could create a springboard for longer-term reform to boost private equity.

By: Alexander Lehmann Topic: Finance & Financial Regulation Date: September 17, 2020
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Past Event

Bruegel Annual Meetings 2020 - Day 3

Third day of Bruegel Annual Meetings.

Topic: Energy & Climate, European Macroeconomics & Governance, Finance & Financial Regulation, Global Economics & Governance, Innovation & Competition Policy Location: Bruegel, Rue de la Charité 33, 1210 Brussels Date: September 3, 2020
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Past Event

An EU budget for Europe's future with Johannes Hahn

How do we make the EU fit for future?

Speakers: Zsolt Darvas, Johannes Hahn and Mehreen Khan Topic: European Macroeconomics & Governance Location: Bruegel, Rue de la Charité 33, 1210 Brussels Date: July 7, 2020
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The need for market-based finance after COVID-19

How do COVID-19-caused financial dislocations inform policy responses?

Speakers: Maria Demertzis, Gabriel Makhlouf and Guntram B. Wolff Topic: Finance & Financial Regulation Location: Bruegel, Rue de la Charité 33, 1210 Brussels Date: June 29, 2020
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Blog Post

An uncompromising budget

Apart from decisive European Central Bank measures, the EU-wide response to the COVID crisis had been rather weak until the Commission put on the table a drastically new proposal: the creation of a new recovery facility, ‘Next Generation EU’, that would borrow money in the name of the EU to finance EU-wide expenditures. The changes to the proposed standard seven-year budget that primarily focuses on long-term structural issues are however generally small, and funding reductions are compensated by new funds from the recovery instrument, suggesting that an opportunity is missed to reform the EU budget.

By: Zsolt Darvas Topic: European Macroeconomics & Governance Date: May 29, 2020
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Past Event

The new EU budget: from COVID-19 remedies to green goals

Can we rescue the economy after COVID-19 and reach the environmental goals?

Speakers: Zsolt Darvas, Maria Demertzis, Karolina Ekholm and Miguel Otero-Iglesias Topic: European Macroeconomics & Governance Location: Bruegel, Rue de la Charité 33, 1210 Brussels Date: May 29, 2020
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External Publication

European Parliament

A Just Transition Fund – How the EU budget can help with the transition

On 14 January 2020, the European Commission published its proposal for a Just Transition Mechanism, intended to provide support to territories facing serious socioeconomic challenges related to the transition towards climate neutrality. This report provides a comprehensive analysis of how the EU can best ensure a ‘just transition’ in all its territories and for all its citizens with the tools at its disposal. It provides an overview and a critical assessment of the Commission's proposal, and suggests possible amendments based on best practices from other just-transition initiatives.

By: Aliénor Cameron, Grégory Claeys, Catarina Midões and Simone Tagliapietra Topic: Energy & Climate, European Macroeconomics & Governance, European Parliament Date: May 26, 2020
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Blog Post

The European Union’s SURE plan to safeguard employment: a small step forward

The new EU instrument to mitigate unemployment risks during an emergency (SURE) is too modest to have a significant impact the COVID-19 crisis beyond being a first step in the overall recovery plan.

By: Grégory Claeys Topic: European Macroeconomics & Governance Date: May 20, 2020
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Blog Post

How much will the UK contribute to the next seven-year EU budget?

This post estimates the United Kingdom’s net contribution to the 2021-2027 EU multiannual budget at close to €20 billion, taking into account the most significant items of the financial settlement according to the October 2019 EU27-UK draft withdrawal agreement.

By: Zsolt Darvas and Bruegel Topic: European Macroeconomics & Governance Date: December 16, 2019
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Working Paper

A new look at net balances in the European Union's next multiannual budget

Whenever the European Union’s budget is discussed, much of the political focus is on net balances – whether countries pay in more than they receive – rather than on the broader overall positive effects of EU spending. The largest net contributor countries have sought to limit their contributions, leading to the build-up of an ad-hoc, complex, opaque and regressive system of revenue corrections.

By: Zsolt Darvas Topic: European Macroeconomics & Governance Date: December 12, 2019
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Blog Post

Who pays for the EU budget rebates and why?

A complex system of EU budget revenue corrections has been developed since the mid-1980s. I quantify their impacts: which countries pay and benefit from it and by how much and highlight several anomalies. The best solution would be to reform EU budget spending to provide only European public goods and eliminate all rebates. But if that’s not possible, then at least the rationale for the rebates should be spelt out clearly, and a transparent system built on clear principles should replace the current ad hoc, complicated, non-transparent and regressive system.

By: Zsolt Darvas and Bruegel Topic: European Macroeconomics & Governance Date: December 4, 2019
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