The question “how to spend it?” is ever more relevant with a debate starting over the European Union’s next multiannual financial framework. But whereas the Financial Times devotes a glossy supplement to advising its readers “how to spend it” in meaningful and pleasant ways, the process of putting together the EU budget is a little different. The goal of the budget negotiations is to figure out how best to spend common EU funds at a time of significant pressure on public finances throughout the European Union.
Tempting though it might be at a time of fiscal austerity, approaching the next multiannual financial framework from the point of view of a balance-sheet or with the aim of juste retour would in my view be foolish. We should not limit from the outset the ambition of future EU budgets without any substantial discussion on their content. As both the European Council and the European Commission have stressed, spending at the European level should provide added value. Indeed, we need to figure out how and where to spend EU money so that we get the best bang for our buck or – to be exact – an earnest effect for every euro.
I believe that in order to achieve the best value for money on the spending side, we need to re-think the concept of member states’ so-called ‘national envelopes’ and introduce more ‘European’ or ‘macro-regional’ envelopes. The bottlenecks that have kept us from creating a smart, sustainable and inclusive economy in Europe are mostly cross-border in their character. That means that they simply cannot be properly addressed by a budget that divides spending mainly into national blocks.
It is my conviction therefore that in order to maximise the competitiveness of the EU, the greatest value that we can add is to overcome the cross-border impediments to growth and the proper functioning of the internal market, including those linked to infrastructure (such as energy, transport, telecommunication, innovation). For greater competitiveness, we also need to make sure that infrastructure investments are accompanied by investments in human capital and innovation. Indeed, meeting the EU 2020 target of spending 3% of gross domestic product on research and development and innovation is crucial.
I believe that earmarking specific amounts in the EU budget’s so-called ‘national envelopes’ for use in cross-border projects would help induce some of these changes. These ring-fenced funds should include EU infrastructure and convergence funds (again covering also ‘national envelopes’).
I also believe that instead of capping the funds that are available nationally, under-utilised funds should be invested in cross-border projects and should act as seed capital for launching priority projects. The experience from the European Economic Recovery Plan has been overwhelmingly positive. In the Baltic Sea region, we used under-utilised funds to build strategically important energy links, such as Estlink-2. At the same time, we also took steps nationally to liberalise our markets further.
EU macro-regional strategies and policy initiatives, such as the Baltic Sea Strategy and the Baltic Energy Market Interconnection Plan (BEMIP), are excellent tools, which can be used as a basis for collaborative partnerships and priority-setting with the aim of integrating the internal market and enhancing growth and jobs through concrete projects.
The European Union has all the institutional, regulative and financial means to create a smart, sustainable and inclusive economy. Old and new EU policies outlined in the Treaty of Lisbon obviously need to be prioritised, suitably equipped and adequately financed. But better use must also be made of the EU budget. Indeed, in the impending discussions on the EU budget, the link between spending at the macro-regional and European level should be strengthened, so that every euro spent has a greater impact.
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