Community budget: from the Leyen proposes EU budget of two trillion euros

EU Commission President Ursula von der Leyen clearly wants to increase the long-term community budget of the European Union in order to enable additional investments in safety and defense. As she announced in Brussels, the budget for the years 2028 to 2034 is said to include around 2 trillion euros – that is around 700 billion euros more than is currently estimated for the current seven -year budget period.

According to the Commission, almost half of the budget should flow into the member states and go to agriculture and the structural-weakest regions, according to the EU Commission President Ursula von der Leyen. “Agriculture and cohesion are still the focus of our household.”

More than 400 billion euros are intended for a fund to increase competitiveness. 131 billion euros alone are to flow into defense and space travel. “This is five times what we have today,” said von der Leyen.

In addition, funds are planned for the EU research promotion program Horizon and the ERASMUS+ educational program. The authority wants to provide 100 billion euros for the support of Ukraine – in addition to ongoing aid programs.

As a member state, Germany generally contributes almost a quarter of the funds. However, the proposed increase in budget could at least partially be financed through new sources of income.

In order to reduce pressure on national households, the EU Commission also wants to finance the proposed increase in budgets through new sources of income: so-called new own funds are to bring in 58.5 billion euros annually. Specifically, the EU Commission proposes, among other things, a tax for large companies with annual sales of more than 100 million euros and a tax on electronic waste not collected for recycling. It is also intended that some of the income from tobacco taxes should flow from the capitals to Brussels.

The budget roughly determines what the EU wants to spend money on – and how much. The Commission, led by the Germans of the Leyen, tries to reconcile different interests and factors with its proposal. Because while more money is to be spent on security and defense, farmers have to run storm against possible cuts and have to be repaid loans from the Corona construction fund, the health insurers of the member countries are empty. And financially strong EU countries such as Germany or the Netherlands do not want to dig deeper into their pockets.

Less money should be permanently planned

In addition to additional money for the upgrade against Russia, the Commission also wants to plan fewer funds – in order to be able to react quickly and effectively to new developments, as it is said. There should also be fewer specific expenditure programs overall. While so far there are about separate pots for EU agricultural policy and structural funding for regions, these posts are to be financed from just one large fund in the future. EU institutions such as the Border Protection Agency Frontex and the European Police Agency should also get money here.

According to the will of the Commission, each EU state should create a so-called national reform and investment plan (NRP) for money from the fund. In it, the country would show which reforms and investments it implement from 2028 to 2034 and what it would like to use EU money for. Regional authorities should also participate in the creation of the plan.

For the repayment of the Corona construction fund, the Commission provides for 24 billion euros annually at current prices – which means total costs of 168 billion euros, she said. The pot was created in 2021 to cope with the economic damage caused by Corona pandemic and at the same time modernize the economy. For the first time, debts were accepted in the EU in a large scale. The repayment begins in 2028 and is expected to continue until 2058.

Long and complicated negotiations expected

The proposal must now be advised by the EU countries and the European Parliament. Then the EU Parliament has to agree with a majority decision, the EU countries have to accept the budget unanimously. Long and complicated negotiations are expected. The EU heads of state and government in 2020 discussed the current financial framework for four days and nights at a summit.

Most of the long-term EU budget is made from contributions from the member states-each EU state pays a certain percentage of its gross national income (BNE). So -called own resources have so far been flowing to Brussels in particular and the yields of a plastic tax.

There was no reaction from the Federal Government to the Commission’s proposal. So far, however, Germany had never questioned that it has to make the highest national contributions. In Berlin it is pointed out that the Federal Republic as a large export country benefits the most from the common internal market.

The EU Parliament has already criticized the proposal- especially of the planned national reform and investment plans, according to which the member states are to be decided on the use of funds. In a common paper from the parliamentary group leader of the Middle Rights Alliance, the Social Democratic S&D, the Liberal Renew and the Greens it says that Parliament will not accept any restriction of its duty of supervision and democratic control over EU expenditure-“or, even worse, a renationalization of central EU policies”.