Home Finance The EU Budget: How Brussels' Coffers Are Refilled And How They Finance Member States – Forbes

The EU Budget: How Brussels' Coffers Are Refilled And How They Finance Member States – Forbes

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European elections are only weeks away. While citizens of the European Union (EU) prepare for polling day, a huge part of the population does not clearly know the basic principles according to how the Union works. A lot of the uncertainty involves money, how much every member state pays to the coffers in Brussels and how much economic support do they receive.

European Commissioner for Economic and Financial Affairs Pierre Moscovici presents the Autumn 2018 economic forecast at EU headquarters in Brussels, Thursday, Nov. 8, 2018. (AP Photo/Olivier Matthys)ASSOCIATED PRESS

The EU was founded over values of solidarity, unity and teamwork, which is exactly why wealthier member states bring more to the budget of the Union. The strongest economies help the ones dealing with more difficulties, to ensure stability and harmony within member states. The net contributors, Germany, France, The United Kingdom and Italy, are those countries which always give more than what they receive. These four together make up 61.57% of the whole budget. On the other hand, those states which are struggling, or which economy never was of a big size, are mainly beneficiary of the EU’s funds.

In 2016 the biggest share of total contributions to the Union’s budget came from Germany, with a share of 19%. Following, France, the UK and Italy all reached contribution shares higher than 10%. At the bottom of the rank, Malta share of contribution was at 0.07%. The budget is planned on a term of seven years, during which funds get allocated in different fields. Brussels invests in projects of social cohesion, research and development, agriculture, infrastructure, migration, environmental policies, labor programs that ensure occupation, strategies that keep the markets competitive and common economic growth and wealth.

Member states have access to the funds both by national and regional application. Also smaller entities, like municipalities or schools, could demand to receive these EU’s assets if they present a related project. However, if the money received does not get spent by the end of the second year since it was supplied, it returns to Brussels. When populist anti-European rhetoric takes over, supporting the Union’s budget while allowing European institutions to take back the finances received, can become tricky for a state. This is exactly what happened in Italy, where the coalition government that came into power last June fueled the idea that being part of the EU only comes with costs and no benefits.

In 2017, Italy has been giving to Brussels €198 ($224) per capita, while receiving funds for around €162 ($183). The result is a deficit of €36 ($41) per head. This data has been recurring in the anti-European talks typical of populist movements, which are now gaining ground all over the continent. However, in the Italian case, what gets frequently forgotten is that Rome is not paying more than other member states, giving the principle that each one contributes according to the size of its economy. Moreover, a lot of the funds that the Mediterranean country receives from the EU does not get spent and end up being retracted.

An investigation led by an Italian journalist, Milena Gabanelli, stated that in the 2014-2010 financial plan Italy was the country, after Poland, which received the biggest assets. However, it was ranked sixth from last for expenses. The inquiry also found out that by the end of last October, Italy used up around 3% of the available capital, against a European average of 13%. The European Court of Auditors stated that during the seven years between 2007 and 2013, Italy accumulated €950 million ($1074m) of unspent funds and suspended projects, only second to Romania for unused assets.

According to data presented by the Commission, the 89% of the projects submitted by Italy within 2007 and 2013 did not show an adequate cost-benefit analysis, the 68% displayed evaluation mistakes regarding the planning phase or the market related and the 51% did not sufficiently evaluate the environmental impact or the financial coverage. Moreover, Italian MPs are most of the time simply absent when it comes to apply for EU’s funding and reach agreements over the projects to subsidize. Italy is often missing at the negotiating table, and the fact that its representatives hardly speak any English or French does not help when it is present.

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