Tuesday, 13 November 2007

An EU budget for citizens

What if the budget of the European Union was made to serve the interest of the citizens? A radical change like that would require a major overhaul of both rules and practices.

According to Sebastian Dullien and Daniela Schwarzer the negotiations in the European Council leading up to the present long term budget (2007–2013) show that the present system has reached its end. The budget review clause for 2008-09 is an admission of this fact. The researchers summarise the situation:

”the EU budget is generally judged as being in a complete mismatch to the tasks the EU has assigned itself.”

When the citizens of the European Union are represented through their national governments, the results are not necessarily efficient, democratic or legitimate. The EU citizens cannot express their collective preferences and they cannot change the priorities through elections. The Council makes the crucial decisions (multiannual financial framework, revenue), so the authority of the European Parliament is restricted (although growing under the Lisbon Treaty concerning annual expenditure).

In the future the European Union needs a politically accountable executive, which is at liberty to propose a budget. The European Parliament, free to decide on income (taxes) and expenditure, would be the main budget authority, more important than the Council.

Instead of agricultural policy and regional policy, the resources of the European Union could be allocated to enhance sustainable growth. Hence, the Lisbon strategy for growth and jobs could be given new impetus, especially concerning great projects of common interest, for instance in research and development.

The EU budget could be given a new task: stabilization of the economy at the Union level.

Income and expenditure could be used to mitigate booms and busts.

In addition, at least the members of the Economic and Monetary Union (EMU) could introduce a new, stabilizing element. The new “stabilization pillar” proposed by the researchers could be a basic unemployment insurance at the European level, partly replacing the national schemes.


If the resources of the European Union are used for more beneficial purposes than today, the citizens reap the rewards through jobs that are maintained and created. The new system would fulfil the requirements of accountability and democratic legitimacy.

Ralf Grahn


Sebastian Dullien & Daniela Schwarzer: Integrating the macro-economic dimension into the EU budget: reasons, instruments and the question of democratic legitimacy; EU-Consent EU-Budget Working Paper No. 4; August 2007; http://www.eu-consent.net