“Investing where it matters: An EU Budget for Long-Term Growth”

 

A recently published report from the CEPS has identified the EU budget to play a key role in providing long-term growth and functioning of the internal market. Author Jorge Núñez Ferrer warns that obsession with net balances is bound to lead to bad decisions and exhorts Europe’s decision-makers to unleash the potential of the budget to make a significant contribution to long-term growth. To achieve this end, the report calls for enhanced investment in innovation, infrastructure that reinforces the single market and key European public goods, such as the management of environmental resources.

Therefore the budget is to be centered on areas that matter for economic growth while savings should be found in areas of low European added value. Expenditures are to be reduced in wealthier regions, when spending does not have a clear European dimension. To guarantee this, the Comission should be an effective strategic and monitoring body to control countries unable to use the EU budget correctly.

The recently discussed project bonds could play a major role in promoting the single market if they are used to assist pilot projects for new grid technologies. But to establish an effective use of the project funds for the EUs objectives, selection criteria should be based on strict economic criteria.

Besides, future growth in the EU will mainly depend on supporting research and innovation by further developping the Horizon 2020 and using the leverage effects of the EU-budget to promote growth-enhancing investment. Potential barriers that discourage private investment in innovation should be removed, while the installed Risk Sharing Financing Facility could play the role as a key instrument to foster sustainable growth relied on R&D.

In terms of cohesion policy, more weight should be put on ex-ante condititionality, monitoring and outputs and less on ex-post auditing. Currently, strategic planning and monitoring has been left to national and regional authorities which have been more interested in local preferences than in European objectives. Therefore, the Comission’s capacity to evaluate strategies and monitor performance needs to be reinforced. As a result, corrective influence of the budget to badly target expenditures and corrective influence on national strategies and fundings towards specific EU objectives.

Summa summarum: The future impact of the EU budget on long-term growth will depend on the quality of the fund strategies and their implementation.

 

Full paper at this link: “Jorge Núñez Ferrer: Investing where it matters: An EU Budget for Long-Term-Growth”

Thomas Adler

About Thomas Adler

Thomas Adler studied Philosophy & Economics and European History at the University of Bayreuth. He is interested in institutional economics, game theory, political philosophy and the history of economic thoughts.