Reforming the budget, Changing Europe Stefan Lehner Director, European Commission, DirectorateGenera

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 Reforming the budget, Changing Europe
 Stefan LehnerDirector, European Commission,
Directorate-General for Budget Office of the
Committee for European Integration Warsaw, 8
April 2008
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Commission undertakes a review of the EU budget

• In accordance with the conclusions of the
  European Council, the Commission has been invited
  to undertake a full, wide-ranging review covering
  all aspects of EU spending, including the Common
  Agricultural Policy, and of resources, including
  the United Kingdom rebate, and to report in
  2008/2009.
• (Inter-Institutional Agreement between the
  European Parliament, the Council and the
  Commission, 17.5.2006)

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Payments ceiling Own resources and EU Financial
framework (in of Gross national income (GNI)
till 2002 GDP)
Enlargement -gt EU15
Enlargement -gt EU25
Enlargement -gt EU27
Own resources ceiling
(Change from GDP to GNI)
Multiannual financial framework ceiling for
overall payments
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Structure of the EU financial framework 2007 -
2013
Total 975 billion (in current prices)
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EU Budget trends

• The profile of EU spending has changed
  considerably over 25 years. But has it changed
  enough?
• For example The Common Agricultural Policy
  absorbed 61 of the budget in 1988. By 2013, the
  share of CAP spending could almost halve (32),
  though CAP will stay a major part of EU spending.

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Key objectives of the reform

• Analyse longer-term challenges and issues facing
  the EU
• See how European budget can be shaped to serve
  EU policies better and to meet challenges of the
  decades ahead
• Seek a new consensus on EU spending priorities,
  how the budget is managed and how to fund it.
• The review will NOT make a proposal for the next
  financial framework

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Preparing for Tomorrows Challenges

• New policy challenges have emerged
• Globalisation Europe has to improve its capacity
  to adjust to structural change Scientific and
  technological progress, innovation and mobility
  are getting more important.
• Energy supply, protection of the environment und
  of the climate global demand for energy is
  growing, so is Europes import dependency. Europe
  is a leader in environmental protection, but the
  mitigation of climate change and of its
  consequences are main challenges in the future.
• Security and safety E.g. increased demographic
  and income disparities and the instability of
  neighbouring regions increase migratory
  pressures.
• Solidarity The pressure on the European way of
  life and its economic and social cohesion will
  increase.
• Globalisation has brought home the need for
  Europe to have an effective presence worldwide if
  it is to project its interests and values
  successfully.

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EU facing stiff competition
Asia leads the world in growth
Source International Monetary Fund, Finance and
Development, June 2006
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ChallengeBoosting knowledge and innovation
Gross domestic expenditure on RD 2001 - 2005
Lisbon-target
The EU is still far below the Lisbon target for
research expenditure.
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Challenge Facing the consequences of climate
change
Changes by the end of this century compared to
end of last century
Changes in crop yields
Changes in precipitation
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Challenges for rural and maritime areas
Climate changes Significant consequences for
rural and maritime areas
Source International conference  Climate
changes 
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ChallengeSecuring a sustainable energy supply
EU IMPORT DEPENDENCY ()
The EUs dependency on foreign energy is
increasing constantly
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ChallengeGuaranteeing security to EU citizens

• New security threats are more diverse, less
  visible and less predictable

Environmental disasters
Fighting crime
Food safety
Consumer protection
Disease prevention
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ChallengePromotingSolidarity Cohesion

• In 2004, the top regions (with 10 of the EU
  population) had a GDP per head that was almost 5
  times higher than that in the bottom regions
  (with 10 of the EU population).

4th Cohesion report, May 2007
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ChallengeEngaging an interdependent world

• In an interdependent world, an effective
  presence and strong efforts to provide support
  are a vital necessity.

Education
Access to water
Peace and Democracy
Poverty
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How to respond to the challenges Which role for
the EU budget ?
The reform of the EU budget expenditure will
emerge from a critical review of the new
challenges and the existing obligations, in the
light of the principles of European value added
and proportionality
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Significant shift in EU budget funding

• The EU budget is increasingly based on the GNI
  contribution, from 11 of the total in 1988 to
  74 in 2013.

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Financing EU policies - principles

• The current financing system has provided
  sufficient resources to finance the EU budget
• BUT
• Member States tend to judge policies primarily in
  terms of "national returns" and not so much in
  terms of the added value of policies for EU
  citizens.

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Debates on net contributions led to a rise in
budgetary corrections

• UK correction 66 of the difference between
  contributions and its receipts
• Lump sum payments to the Netherlands and Sweden
• Reduced VAT rates and reduced UK correction
  payments for the Netherlands, Sweden, Germany,
  Austria
• Retention of 25 of traditional own resources for
  all Member States collecting them

The financing of the EU budget has become
incomprehensible
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The challenge of reformingthe financing system

• A consensus on spending priorities could
  facilitate a reform of the EU own resources.
• Should alternative sources be envisaged taking in
  to account the national sovereignty on fiscal
  policy?
• Could a new system better contribute to and
  support related EU policies?
• Should corrections disappear or be generalized ?

The overall composition of the Union's own
resources system will be an important element in
the review
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The Timetable

• Consultation Paper setting out the challenges and
  issues at stake
• Launch of public consultation phase
• Deadline for submission of contributions
• Political Conference
• Commission presents the Review

• 12th September 2007
• 15th April 2008
• Autumn 2008
• 2008/2009

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Consequences of the Review of the Financial
Framework ?

• The European Council can take decisions on all
  the subjects covered by the Review, in full
  respect of the established rights of the European
  Parliament.
• The Review will also be taken into account in
  the preparatory work on the following Financial
  Framework (starting in 2014).

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The Commission consultation

• A Commission website presents the issues and
  collects contributions
• http//ec.europa.eu/budget/reform/index_en.htm
• Contributions can be sent until 15 April 2008 to
• budget-review_at_ec.europa.eu

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 Reforming the budget, Changing Europe
 Stefan LehnerDirector, European Commission,
Directorate-General for Budget Office of the
Committee for European Integration Warsaw, 8
April 2008