The lines along which the European budget is stitched

The budget of the European Union (EU) is the result of long and painstaking negotiations between the community institutions – the European Parliament and the Council – based on a proposal from the Commission. The budget is financed from so-called “own resources” (revenues) based on: national contributions from 27 countries (based on a percentage of gross national income); customs duties on imports from third countries; the percentage of VAT collected by each country; and, from 2021, a contribution based on the amount of non-recyclable plastic packaging waste in each Member State.

European rules state that the budget must be balanced. The maximum limits on the revenue the EU can collect from its 27 member states are set by law, and expenditure must equal revenue.

The annual Community budget is a deviation from the long-term budget (multi-annual financial framework), which sets budgetary guidelines for a period of 7 years. According to the European Commission, for the current period, 2021-2027, the budget is around 160/180 billion euros per year (around 1.2 billion in total).

Portugal is one of the net beneficiaries of the general budget. A purely accounting of the transfers paid and received in 2023 allows us to understand that Portugal received from the public pie about 4518 million euros, having invested 2366 million euros.

European Budget Rates

The EU budget aims to improve the lives of almost half a million European citizens. It has goals as diverse as creating jobs, producing high-quality food, promoting innovation, science and education, strengthening energy networks, securing external borders or combating climate change.

There are countless concrete examples of the impact of local budgets on the daily lives of citizens. During the pandemic, it has made it possible to purchase 4.2 billion doses of the Covid vaccine. The EU budget supports more than 5 million farmers through direct payments for food production, and contributes to the existence of such iconic European projects as the Erasmus university programme, Galileo (the European GPS) or the EU Civil Protection Mechanism, which helps combat forest fires and other natural disasters.

European “bazooka”

To restart member states’ economies after the pandemic, the EU in 2027 approved an unprecedented NextGenerationEU recovery plan (the “European bazooka”) worth €806 billion in grants and loans.

The plan is based on loans taken by the Commission on the capital markets. To reimburse them, Brussels has proposed a new generation of own resources: revenues from the gas emissions trading scheme, resources generated by the EU’s carbon cap adjustment mechanism, and a temporary statistical own resource based on corporate profits.

With its recovery plan and long-term budget ($1.2 billion), the EU has a “firepower” of around €2 billion (at current prices) to invest in a “greener” and more sustainable economy between 2021 and 2027.