European Union Budget

Introduction

Article 311 of the Treaty provides for a European Union budget to finance the various activities which underpin its policies. These include agriculture (CAP), fisheries, structural & cohesion funding, research, education, infrastructure, competitiveness for SMEs, EU external actions, citizenship and security actions and a range of other activities. In addition, the EU budget covers the administration costs associated with running the EU institutions.

Budgetary Process

Under Art 312 of the Treaty, the Multi-annual Financial Framework (MFF) sets out annual maximum amounts (ceilings) for EU expenditure as a whole and for the main categories of expenditure (headings) for a period of at least five years.

The EU budget is then adopted on an annual basis within the overarching expenditure limits (ceilings) set out by the MFF. Under Article 314 of the Lisbon Treaty, the European Parliament and the Council comprise the Budgetary Authority, which has the power to amend and adopt the Union’s annual budget.

Budgetary Revenues

Under Art 311 of the Treaty, the EU’s expenditure is financed by own resources contributions from each member state. These comprise:-

  •    ‘traditional own resources’ – principally customs duties collected on behalf of the EU with 75 per cent of the amount collected paid over to the EU. The balance is retained by the member state to fund the costs of collection and administration;
  •    a VAT-related payment;
  •    a payment based on a percentage of each member state’s Gross National Income (GNI).

Management and Protection of EU Financial Interests

Article 325 of the EU treaties assigns responsibility for the combating of fraud affecting the financial interests of the European Union to both the Union and to member states. However, given that c. 80 per cent of EU expenditure is managed by member states and EU budget revenue is collected by them, the primary responsibility for combating fraud falls to the member states.

As an additional safeguard, the EU Commission has responsibility for monitoring the national administrative practices and procedures in place to fight fraud so as to ensure they are both effective and comply with EU rules.

Multiannual Financial Framework 2014 - 2020

The new 2014 – 2020 MFF was formally adopted in November 2013 and totals €960 billion (in 2011 prices). This represents a 3.5 per cent reduction from the preceding budgetary period, reflecting the current climate of public finance consolidation across member states. This budget is distributed across seven broad policy areas as set out in the table below.

Multiannual Financial Framework 2014 – 2020

 

1. Smart and Inclusive Growth                                                                       451

1a. Competitiveness for Growth and Jobs                                                  126

1b. Economic, social and territorial cohesion                                            325

2. Sustainable growth: Natural Resources                                                  373

of which: market related expenditure and direct payments                   278

3. Security and Citizenship                                                                            15.5

4. Global Europe                                                                                              59

5. Administration                                                                                             61.5

Total                                                                                                                                           €960 bn

Ireland and the EU Budget

Ireland has been a net beneficiary from the EU Budget since accession in 1973. Details of our public sector receipts and payment contributions are published annually in the Budget and Economic Statistics. However, these statistics do not include research receipts as these payments are made directly to the beneficiary. In 2013, research receipts amounted to c. €110m. In overall terms, Ireland remained a net recipient from the EU Budget in 2013 and received over €57 million more than was contributed.

The majority of Irish funding from the EU has come through the Common Agricultural Policy (CAP) and is spent on areas such as direct income and market support to the agricultural sector. Further monies are received for rural development programmes. In 2013 these areas accounted for c. 90 per cent of our total EU public sector receipts.

The next largest area is receipts under the structural and cohesion funds, invested mainly in human capital and physical infrastructure. These receipts have included considerable investment over the decades in our transportation, educational & water-related infrastructures and educational training and other supports used in up-skilling our workforce.

For the new 2014-2020 programme, the majority of Irish funding will continue to come through CAP. Ireland can also still expect to receive significant receipts under structural fund spending. Structural fund spending will, for the 2014 – 2020 programme, include a focus on areas such as research, technology and innovation supporting SMEs, ICT, energy efficiency and education, training and labour activation measures.

Additional funding opportunities will arise under the Horizon 2020, Erasmus, Connecting Europe and Cosme EU level programmes which cover research, education, infrastructure networks and SME competitiveness and a number of other smaller programmes.