Op-ed: EU budget needs reform to better respond to emerging crises

The Committee on Budgets must transform current thinking to ensure the budget's allocations, financing methods and funding sources address emerging challenges.
Flood on the Lippe, Dorsten, North Rhine-Westphalia, Germany

By Johan van Overtveldt

MEP Johan van Overtveldt (ECR, BE) is chair of the European Parliament’s Committee on Budgets?(BUDG).

12 Nov 2024

@jvanovertveldt

The role of the EU budget is changing, which means that the Committee on Budgets (BUDG) need to think about what form it should take in the future.  

My previous two stints as chair of this committee saw the European Union’s budget being used in novel ways to respond to crises: the 2020 decision to undertake large-scale joint borrowing through NextGenerationEU to finance the post-Covid recovery, and the decision earlier this year to provide financial support to Ukraine, amounting to €50b between 2024 and 2027.   

It is appropriate for the budget to be used in this way to respond to the unprecedented challenges of our time. However, it was designed to provide investment predictability over the medium term and is ill-equipped for this new purpose. Therefore, we need to discuss the future of our budget – considering what it finances, how it finances those initiatives, and how it is itself funded.  

First, the what. We need to take a careful look at what we are spending at the EU level and ensure that our budget effectively delivers results. This includes ongoing needs related to the green and digital transitions, migration and border control, continued support for Ukraine, the enlargement process, and global aid and development. We must also monitor EU investment policies to ensure they stimulate the necessary scale of investment and address areas where there is an obvious rationale for a European approach.

Our budget also requires far greater crisis response capacity. The recent floods in central and eastern Europe are a graphic illustration of the extreme weather events we now face due to climate change, while Covid-19 and the Russian invasion of Ukraine remind us that unforeseen events are both inevitable and unpredictable. People expect the EU to act in a crisis and we must ensure we are in a financial position to do so.  

Secondly, we need to discuss how the EU distributes its finances. European Commission President Ursula von der Leyen has set out her vision of a simpler, more focused and more responsive budget based on policies, rather than programmes. While we can all share that basic vision, the devil will be in the details. It cannot mean giving the Commission free rein or diminishing the European Parliament’s role as legislator, budgetary and discharge authority, and body responsible for holding the Commission to account.   

Thirdly, we must consider how we finance the budget. This exercise will be particularly challenging because, in addition to our investment needs and crisis response capacity, we will need to start paying off both the interest and the capital of NextGenerationEU borrowing from 2028 onwards.   

The next two-and-a-half years will be pivotal for the future of the EU budget and for the EU itself. The Committee on Budgets will push for ambitious reform anchored by democratic accountability and a budget that is fit for purpose in a changing world. 

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