Financing of the European Union Budget

This study is concerned with the future financing of the EU budget, including possible budgetary correction mechanisms, and is intended to feed into the budget review. The revenue side of the EU budget comprises several elements, all of which need to be assessed in appraising the functioning of the current system and whether it should be reformed. They include the revenue instruments used - the ‘own resources’ (OR) - and how they are set, the means by which net contributions deemed to be excessive are adjusted, and how to ensure that the EU’s revenue balances its expenditure as required by Art. 268 TEC. Such balanced budget rules are often applied to control the expenditure of sub-national governments in multi-level fiscal systems Work done in the course of this study has included an extensive literature survey and examination of relevant previous work, empirical research and policy analysis. The empirical work comprised a mix of qualitative and quantitative analysis, extensive dialogue with practitioners, and a survey directed to officials (mainly, but by no means exclusively, in finance ministries) in Member States. This research has been used to investigate both how well the current system is working and to try to provide a systematic basis for analysing options for reform.