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Spending Priorities in the EU Budget 2007–2013: The Perspective of Fiscal Federalism


  • Hans Pitlik



The new financial framework of the EU for the years from 2007 to 2013 provides for total liabilities amounting to € 864 billion. The budget thereby just slightly exceeds 1 percent of aggregate national income of the 27 member states. However, the composition of expenditure corresponds only to some extent to concepts developed by the theory of fiscal federalism for an optimal allocation of economic responsibilities between the Union and its member states. Almost one-half of EU budgetary expenditure is devoted to items for which an EU responsibility is difficult to establish from the point of view of fiscal federalism. From a normative perspective, a readjustment of funds would be desirable in favour of policy areas for which a genuine European responsibility can indeed be justified (e.g., basic research).

Suggested Citation

  • Hans Pitlik, 2007. "Spending Priorities in the EU Budget 2007–2013: The Perspective of Fiscal Federalism," Austrian Economic Quarterly, WIFO, vol. 12(1), pages 11-24, March.
  • Handle: RePEc:wfo:wquart:y:2007:i:1:p:11-24

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    References listed on IDEAS

    1. Guido Tabellini, 2003. "Principles of Policymaking in the European Union: An Economic Perspective," CESifo Economic Studies, CESifo, vol. 49(1), pages 75-102.
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    3. Brennan,Geoffrey & Buchanan,James M., 2006. "The Power to Tax," Cambridge Books, Cambridge University Press, number 9780521027922, March.
    4. Krugman, Paul, 1991. "Increasing Returns and Economic Geography," Journal of Political Economy, University of Chicago Press, vol. 99(3), pages 483-499, June.
    5. James R. Hines, 2006. "Will Social Welfare Expenditures Survive Tax Competition?," Oxford Review of Economic Policy, Oxford University Press, vol. 22(3), pages 330-348, Autumn.
    6. Michele Boldrin & Fabio Canova, 2001. "Inequality and convergence in Europe's regions: reconsidering European regional policies," Economic Policy, CEPR;CES;MSH, vol. 16(32), pages 205-253, April.
    7. Fritz Breuss & Markus Eller, 2004. "The Optimal Decentralisation of Government Activity: Normative Recommendations for the European Constitution," Constitutional Political Economy, Springer, vol. 15(1), pages 27-76, March.
    8. Schweickert, Rainer, 2005. "Vor der nächsten Erweiterung - Herausforderungen und Reformbedarf der EU," Open Access Publications from Kiel Institute for the World Economy 3667, Kiel Institute for the World Economy (IfW).
    9. Wallace E. Oates, 1999. "An Essay on Fiscal Federalism," Journal of Economic Literature, American Economic Association, vol. 37(3), pages 1120-1149, September.
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