The Budget of the European Union

4 / 2010
Herman Matthijs


This paper first provides a short history of the European budget, focusing on the development of the EU's “own resources”. It then elaborates on the fundamental changes to the financial system and the budgetary procedure that the Treaty of Lisbon introduced. It is posited that with the amendments the budgetary process has lost clarity. Whilst the multiannual framework may provide for long-term stability, it stands in contradiction to a central principle of parliamentary democracy: annual budgets. The EU's search for a fair and transparent budgetary system has not yet come to full fruition. Europe needs a fairer and more transparent system. Since the Luxembourg agreement of 1970, the Union has not done anything with the VAT as own resources. The VAT is related to the welfare standards and developments in the Member States. A fixed share of this indirect tax could form the base of a long term financing plan for the general EU budget.

About the author

Herman Matthijs is associated with the Vrije Universiteit Brussel (VUB). He holds a PhD in political sciences, and has published several articles and books concerning the budget of the European Union. At the political sciences department, he is responsible for courses on public administration, political structures of the USA and public budgets. He is also a member of the inter-federal Belgian institution High Council of Finances, which advices the Belgian governments on the public finances.