A Union without money is a powerless Union

Money is the sinews of war, as the saying goes, and rightly so. Indeed, the budget that the EU has (or does not have) at its disposal determines its ability to implement the many public policies that we so badly need on a continental scale. But for the moment, this budget remains meagre, and there is no indication that it will increase significantly in the coming years.

The EU budget is set for several years, and negotiations will begin on the budget cycle covering the period after 2028, which will continue until 2027. The European Commission is due to present an initial proposal in July.

Everyone agrees: it is essential to reduce the inequalities between Europeans that fuel social dumping and Euroscepticism; it is urgent to boost innovation and finally reduce our excessive dependence on both China and the United States; we must accelerate the energy transition and ecological change to address a worsening environmental crisis; and finally, we must strengthen our defence without delay to resist the threat posed by the alliance between Donald Trump and Vladimir Putin.

But for the moment, Europe has virtually no money to implement these policies. Almost 70 years after the Treaty of Rome, we have agreed to pool only 1% of the wealth we produce each year. That is forty times less than in each of our Member States and more than twenty times less than the federal budget in the United States. And every time this budget is discussed, the only question that matters is how to reduce it.

Furthermore, unlike the Member States, the EU is not allowed to borrow money. An exception was made in 2020 when €750 billion was borrowed jointly to deal with the COVID-19 pandemic and its consequences. But since then, it has been impossible to repeat this exercise, even in the face of Russia’s war of aggression and the threat it poses to the whole of Europe.

With the recently launched SAFE programme, the Union has certainly taken on new debt of €150 billion. However, unlike Next Generation EU, this money will only be used to grant loans to Member States that request them. In other words, it will not really be additional money injected into European defence by the Union.
An additional handicap is that the European Union currently has virtually no sources of funding over which it can decide to act on its own. Its resources come mainly from transfers from Member States and must therefore be negotiated with them.

In order to repay the €750 billion loan, it was decided in 2020 to provide the EU with new own resources, and the Commission made proposals to this effect.

However, these proposals have not yet been adopted. If they are not adopted by 2028, the EU budget will have to be cut by some €20 billion per year, or 10%, in order to repay Next Generation EU. This would be disastrous.

But for the time being, in a deteriorating economic context where the far right is setting the tone everywhere, there is no indication that the European budget can be significantly increased, that the Union can be endowed with own resources corresponding to its needs, or that it can take on new joint debt at significant levels.
If this prediction proves accurate, we should not be surprised if our technological backwardness continues to worsen, if Europe continues to be ectoplasmic on the global geopolitical stage, and if Vladimir Putin ultimately succeeds in dividing and subjugating us…