Shaping the future of the European Union: a discussion on public goods

Summary

Marco Buti opened the discussion by presenting his latest research on European Public Goods (EPGs), which refer to programmes implemented at the European level with a cross-national scope and a shared interest. In the context of a central fiscal capacity, EPGs are viewed as a more politically feasible alternative compared to other options as they have an allocation-based nature that would avoid concerns over moral hazard and juste retour.

Furthermore, EPGs would play a crucial role in addressing impending economic challenges such as stagflation, financial fragmentation, the twin transition and the need to maintain competitiveness within the Single Market.

“It is sometimes the case that with vertical coordination, even a relatively small top-up at the European level could actually optimize the impact of what is done at the national level collectively” 

_{Marco Buti}

During her contribution, Małgorzata Kałużyńska emphasised that the current Multiannual Financial Framework (MFF) has already taken steps towards providing for EPGs as the current Commission has been installed with the clear goal of promoting the green and digital transition.

However, these new budgetary tools need to be assessed based on their effectiveness in order to implement evidence-based policy making. Kałużyńska also addressed the issue of subsidiarity and whether stronger centralization of public goods would undermine national competences.

In his address, Jean Pisani-Ferry concurred with the shift towards EPGs in the discourse on the central fiscal capacity, but also expressed concern about the current level of funding dedicated to the programmes. While there has been an improvement from the previous MFF, it is estimated that the amount allocated to EPGs in the EU budget accounts for only 1/64 of Member States' national expenditures, excluding social transfers. Clearly, this is an insufficient level of funding.

Pisani-Ferry highlighted several obstacles in moving towards a higher provision of EPGs. First, member states hold fundamentally different views on substance due to entrenched preferences at the national level. Second, despite the allocation-based nature of EPGs, the distributional aspect must also be considered. Finally, and perhaps most crucially, the financing of EPGs remains an open question, and the definition of own resources must be clarified.

Notes by Giulia Gotti.