Own resources of the European Union: Reforming the EU's financing system

09-11-2018

The EU budget is financed by the system of own resources and cannot run a deficit. The current system provides sufficient revenue to cover EU expenditure, but has often been criticised as opaque and unfair. The European Parliament, which has little say in the design of the system, has long pushed for its reform, with a view to shifting the focus of budgetary negotiations from geographically pre-allocated expenditure to the policies with the highest European added value. The European Commission is proposing to modify the financing of the EU budget as of 2021, when the next multiannual financial framework should start. Proposed changes include: the simplification of existing own resources; the introduction of three new own resources linked to EU policies on climate, environment and the single market; the reduction of the share of revenue provided by the GNI-based resource, which is perceived as national contributions; the abolition of the UK rebate (following that country’s withdrawal from the EU); and the phasing-out of corrections currently granted to other five Member States. A special legislative procedure applies to the principal decision, requiring unanimity in the Council. This is considered a major obstacle to reform of the system, which has remained substantially unchanged for 30 years. First edition. The 'EU Legislation in Progress' briefings are updated at key stages throughout the legislative procedure.

The EU budget is financed by the system of own resources and cannot run a deficit. The current system provides sufficient revenue to cover EU expenditure, but has often been criticised as opaque and unfair. The European Parliament, which has little say in the design of the system, has long pushed for its reform, with a view to shifting the focus of budgetary negotiations from geographically pre-allocated expenditure to the policies with the highest European added value. The European Commission is proposing to modify the financing of the EU budget as of 2021, when the next multiannual financial framework should start. Proposed changes include: the simplification of existing own resources; the introduction of three new own resources linked to EU policies on climate, environment and the single market; the reduction of the share of revenue provided by the GNI-based resource, which is perceived as national contributions; the abolition of the UK rebate (following that country’s withdrawal from the EU); and the phasing-out of corrections currently granted to other five Member States. A special legislative procedure applies to the principal decision, requiring unanimity in the Council. This is considered a major obstacle to reform of the system, which has remained substantially unchanged for 30 years. First edition. The 'EU Legislation in Progress' briefings are updated at key stages throughout the legislative procedure.