David Cameron is proud of the EU budget cut that he helped broker in Brussels. But does this miss the point about the benefits that the budget, for all its imperfections, brings to EU member states?
If all government spending was subject to the same amount of scrutiny that the EU budget is then maybe the world (certainly the public finances) would be in a better state.
Watching EU member states labour over what accounts for a mere 1% of government spending makes one wonder. Some of the statesmen and stateswomen who point the finger at EU spending are the same people who have managed to amass massive debts and run up huge deficits at home. But they whip the EU budget (which has never over-spent or run a deficit) like a tired donkey under the Mediterranean sun, with a holier-than-thou attitude often dripping with hypocrisy.
The EU budget is not perfect; especially the way it is raised leaves a lot to be desired. But what gets missed in the current debate is the good that the EU budget does. 94% of that 1% of EU GDP is invested; the vast majorityof it straight back into member states, and the remainder towards development assistance in third countries.
The money goes towards supporting rural areas and helping the poorer regions around Europe. It creates jobs and growth, putting money into people’s pockets.
Estimates for 2009 are that the number employed was 5.6 million higher as a result of EU cohesion policy spending in 2000-2006. GDP in the EU-25 was 0.7% higher in 2009 due to EU cohesion policy investments during the same period. This is estimated to rise to 4% by 2020.
In Britain alone EU funding created 117.391 new jobs and supported 207.662 SMEs from 2000 to 2006.
The EU budget also supports Research and Development, with the UK being a major beneficiary. According to Research Councils UK ‘funding from the European budget for research and innovation is a valuable funding stream for UK research, with the UK receiving the second largest share of the funding after Germany (14.9% or nearly €4 billion in the period until June 2012)’.
The EU budget also helps protect wildlife in Britain, with 75% of the £450 million spent annually on Environmental Stewardship schemes in England coming directly from the EU’s Common Agricultural Policy.
Savings are of course always welcome and the EU civil service has been an easy target; it is often called ‘wasteful’, ‘expensive’, ‘over-bloated’. Such adjectives ignore the fact that only 6% of the EU budget goes on administration and it pays for 55,000 civil servants, who serve 500 million EU citizens.
It is also unfair and disingenuous to say that EU administration and those ‘evil’ eurocrats have been immune from cuts.
Administrative reform undertaken just 7 years ago has already saved EU taxpayers €3 billion, and it is expected to generate another €5 billion in savings by 2020. Salaries and pensions have been cut, retirement age has been raised, working hours have increased and all that with recruitment frozen while the EU went from 15 to 27 member states.
So the debate around the EU budget is disingenuous, light on facts, focused on the wrong thing and ultimately too much hassle for not that much money. It is of course a handy distraction from the real malaises member states suffer from and a good opportunity for grandstanding and EU-bashing.
What we should be really talking about is how the EU budget is raised. Today we have found ourselves in the perverse situation where about 85% of the budget comes from member states’ contributions (if one also takes the value added tax resource into account).
That was never the intention and the European Union Treaty actually states that ‘the EU budget shall be financed wholly from own resources’. Instead, the current system has created a complex web of political compromises between member states – made up of rebates, exceptions and correction mechanisms. These are based on the ‘fair return’ principle, which sets the so-called ‘net contributors ’ against the ‘net recipients’.
Everybody wants a piece of the EU budget and one way or the other everyone must get their fair share, often ignoring the common good.
It is imperative that we replace this opaque system with something that resembles what the treaty originally intended. Allowing the EU to raise its own resources would signal an end to the clientistic relationship between the Union and its member countries. It will free the EU to focus on things that can serve the collective interest of the Union, rather than the sum of the national interests of its member states.
It will allow it to invest even more in green technologies, research and development, telecommunications infrastructure, interconnection of energy grids (as well as financial assistance for poor regions and struggling farmers;) measures that increase competitiveness and intra-EU trade, and create more jobs and growth.
This is the conversation we should be having. But attacking those eurocrats is always more fun.
Petros Fassoulas is chairman of the European Movement. This post first appeared on the European Movement's website
