Economics and Policies of an Enlarged Europe

Economics and Policies of an Enlarged Europe

Carlo Altomonte and Mario Nava

Carlo Altomonte and Mario Nava have written a very rigorous text in an accessible and jargon-free style, ensuring easy acquisition of invaluable insights into the European economic set-up and the possible evolution of EU policies, including an update on the reform of the Growth and Stability Pact and of the 2007–13 Financial Perspectives.

Chapter 6: The EU Budget

Carlo Altomonte and Mario Nava

Subjects: politics and public policy, european politics and policy


INTRODUCTION Chapters 1 to 5 of this book detailed how the different steps in the process of economic integration (Customs Union, Common Market, EMU) have contributed to the achievement of growth and stability, two of the three key goals in the EU model of economy and society. We have also clearly identified growth as the ‘missing’ element in the picture of the most recent years, and analysed some solutions to this problem (the Lisbon strategy). From this chapter onwards, we shall concentrate instead on how specific EU policies foster (or hinder) the achievement of the two previously discussed objectives, together with the attainment of the third, related, EU goal, cohesion. In this regard, it is quite obvious to point out that, without its own money, the EU would have a hard time conducting any such policies. In general, the financial flows to and from the EU and its member states, regions, private economic agents (citizens, firms, universities, local entities and so on) are varied and complex. Understanding their rationale (be it of an economic, social or political nature) and understanding the interinstitutional procedures through which these flows are authorised, is crucial to understanding any EU policy. The EU budget in particular is the tool with which money is collected and spent for EU policies. Overall the EU budget has a very modest dimension. The maximum ceiling for the financing of the EU budget, politically agreed among member states, is 1.27 per cent of the EU GNP (which...

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