The European Added Value of EU Spending
1. edition 2013 (PDF)
Free of charge
Critical public debt levels have forced EU member states to pursue fiscal consolidation. Yet, there is a flip side to the austerity policies being administered to overcome the sovereign debt crisis. Cut backs in social transfers and public service delivery erode the social welfare architecture of the European economic model. Growing social insecurity, in turn, challenges European integration. Ever declining popular approval rates for the EU speak for themselves. In addition, the scaling back of public investments seems not to be an option either. This only further strangles what is left as potential for growth. Given that ever less money is available, increasing the efficiency of public spending – one would think – becomes the order of the day. One possibility to achieve such efficiency gains is the appropriate allocation of spending across all levels of government. In the EU context, this would mean determining what governance level in the EU – Brussels or the member states – could do what best, and thus be in charge also in fiscal terms. The assumption is that in certain areas where, for example, economies of scale come into play a “euro spent at the EU level brings more benefits than if spent at the national or regional level,” as the European Commission puts it. It was the Commission that featured the concept of the European added value when it released its EU budget proposal for 2014 to 2020. According to the EC, added value “is best defined as the value resulting from an EU intervention which is additional to the value that would have been otherwise created by member states alone”. The Commission’s argument for reform of the EU budget did not fell on fertile soil with member states. During the budget negotiations, the question of European added value played at best a tangential role. Instead, old-fashioned juste retour thinking prevailed. The fight was, once again, over the size of the budget and the way in which appropriations are distributed. It was not about how the quality of the EU budget can be improved to the benefit of Europe’s citizens. It may not come as a surprise to hard-nosed political warhorses that even in times of fiscal crisis so little thought was given to a more rational assignment of fiscal activities between the EU and its member states. For them, politics based on empirical evidence is as such a contradictio in adiecto. Unfortunately, thus far political reality offers ample proof that political and economic logic simply do not pair – at least not in budget negotiations. Nevertheless, these realists fall short when it comes to answering how politicians can continue to evade these economic choices, especially at times when neither their nation state nor the EU can deliver the public goods needed to protect citizens in a globalised world.