How is the European Union’s budget allocated?

The European Union, or the EU, now consists of 27 Member States following Brexit, the withdrawal of the United Kingdom from the Union. Its population is estimated at nearly 500 million in 2016. However, its budget remains low. In order to be aware of its weakness, it is lower than that of the Belgian State. This is because it cannot exceed a certain ceiling set at 1.23% of the wealth produced each year by all its Member States.

The European Union budget is set up jointly by the finance ministers of all Member States and also by MEPs.

budget 2015 eu

EU expenditure:

90% of the European Union’s expenditure is due to:

  • Competitiveness and cohesion: This expenditure makes it possible to increase productivity and thus growth in all Member States. They are used to finance and support research, education and infrastructure. Cohesion spending, on the other hand, helps disadvantaged, if not poor, regions of the European Union. Their weight has increased due to the accession of the Central and Eastern European Countries (CEECs).
  • Conservation and management of natural resources: Largely through the Common Agricultural Policy, which provides support to livestock farmers and farmers to help them in their activities. But also through rural development, the environment and fisheries.

The remaining 10% of the European Union’s expenditure is intended for:

  • Its action at the global level through its diplomatic activities and the subsidies it provides to developing countries, or countries that have suffered natural disasters.
  • Its administrative expenses: The remuneration of the staff of the European institutions.
  • The security of European citizens: This security refers to the fight against cross-border crime.

EU revenues

The European Union’s revenue must be equal to its expenditure. Indeed, it is prohibited to have a budget in deficit. Its recipes come from:

  • Its Member States: Mostly. Each member country pays a contribution calculated in proportion to its level of wealth but also a small part of its Value Added Tax (VAT).
  • Its customs duties: These revenues are generated thanks to imports of products from the rest of the world.
  • Miscellaneous sources: such as fines it imposes on companies that do not comply with competition rules.

This European Union budget is currently at the heart of the debates. Should it be left as it is? Lower it or raise it? In this way, the role of the European Union can be increased or decreased.