This policy brief has reviewed how the EU budget has evolved over the decades, with a specific focus on the novelties of the 2021-2027 MFF and NextGenerationEU, and how it has been increasingly aligned to the Union’s priorities. But it has also showed how the EU budget has generally evolved in an incremental way. For the EU budget to have an increasing macroeconomic relevance and ambition, an appropriate size and composition will have to be ensured. Such reassurance will have to be backed up by an ambitious EU budget financing (revenue) system. Size, composition and financing have until now evolved at different speeds and at a different incremental pace, mainly because of the unanimity needed in the Council to adopt the MFF Regulation and the Own Resources Decision, the latter requiring even national ratification. This shows why the EU budget has undergone an evolution, and not a revolution.
Many questions remain open concerning the role of the EU budget in the future and the issues that will need to be addressed. In no particular order, these include:
First, can the EU budget respond to future challenges and needs within the existing legal and institutional framework, or may legal changes be necessary?
Second, how can the revenue side of the EU budget be reinforced with new own resources, reducing the reliance on national contributions? Which new own resources, in light of EU policies and competences, and the Union’s political priorities?
Third, can some of the off-budget tools, institutions and instruments created over the years – for example the European Stability Mechanism and the European Peace Facility – be integrated in the EU budget in the future? How can the EU budget become more durably flexible to respond to specific needs while at the same time having a more coherent overall framework for the EU financial architecture?
Fourth, how can it be ensured that the EU budget respects the do-no-significant harm principle for all expenditures and maximises the EU added value? This issue involves assessing existing programmes (e.g. the common agricultural policy) and delivery methods (including the novel delivery method of the Recovery and Resilience Facility) to identify where EU funding can maximise its impact and added value.
Fifth, how could the funding strategy for NextGenerationEU, over its whole lifetime, make a strong contribution to the Capital Markets Union and the international role of the euro, and which conditions would need to be fulfilled to achieve this?
Sixth, is it possible to envision a bigger and more agile EU budget to increase its economic and social impact and its stabilisation role when faced with a shock?
Maximising the socio-economic impact of the EU budget is crucial to ensure its relevance. This implies having an EU budget that is up to the task of addressing modern challenges like the green and digital transition and economic inequalities, and able to contribute to macroeconomic stability.
Seventh, what role can the EU budget play in an incentive-based, modernised EU economic governance? Which aspects of ‘NextGenerationEU’ should be retained in the future? This issue has become especially relevant as the RRF has paved the way for a role for the EU budget in EU economic governance and policy coordination and in fostering the adoption of growth-enhancing structural reforms.
These are some of the most pressing questions that, along with others, remain open for future work and will have to be answered not only in relation to how the EU budget evolves, but also in relation to how the EU itself evolves.
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