01 Ago The European Right’s budget

Imagine any democratic country in the world where, after elections, the center-right and the far-right obtain 26.1 and 26.0 percent of the seats, respectively. Also bear in mind that, in that imaginary country, the far-right is not only more conservative than the center-right, but also advocates reducing—if not outright eliminating—any power of the national executive in order to “return it” to the regions that make up that jurisdiction. With these facts in mind, now try to outline a national budget proposal. Let me help. One would expect a reduced public budget, marked by cuts in social spending, a tax policy with little redistributive effect, and a concentration of expenditure on defense and borders. Furthermore, given the weight of this “ultra-regionalist” far-right, the role of the central government in the political management of the budget would also be diminished.

Well, bingo! That is precisely the proposal adopted last week by the European Commission for the new Multiannual Financial Framework and the Own Resources Decision for the 2028–34 period, the processing of which, by the way, has only just begun. Let’s look at the numbers.

First, the Commission presents an adjustment to the EU’s spending and investment capacity of nearly 40 percent. Let me explain. The current Multiannual Financial Framework, for 2021–27, was approved with total expenditure amounting to 1.13 percent of EU GDP. However, Next Generation EU added €750 billion, equivalent to an additional 0.8 percentage points of GDP. Thus, in the current 2021–27 period, the Union has had financing capacity of around 1.9 percent of GDP. In the new proposal for 2028–34, after what can now be seen as a long phase of overstatement—when the Commission itself insisted on the Union’s enormous financing needs—the EU executive is now requesting a budget of just 1.15 percent of GDP. Little more needs to be said.

Even leaving aside the fact that the Next Generation EU program is not being continued, the negative news piles up, even if one isolates from the quantitative analysis the extinction of the pandemic-era financing program.

Second, the Commission merges different social spending and territorial development programs into a new single chapter. This new super-program brings together, among others, the Cohesion Fund, the Just Transition Fund (won in the last term for Asturias), the Regional Development Fund, the European Social Fund, and the Maritime and Fisheries Policy Fund. Well, the Commission proposes cutting the regular resources of this new single chapter by 11 percent, within which is also included the bulk of Common Agricultural Policy spending, which is to be reduced by 20 percent. (Incidentally, those who railed against the CAP and against “Brussels” during the campaign for the Agricultural Council in Asturias in recent weeks should rethink their narrative.)

But beyond the budgetary cuts to this new super-program for social and territorial policy, the Commission also proposes a profound review of its governance. Whereas currently each program has its own common EU regulation and is managed in a decentralized way through the autonomous regions, the Commission now proposes giving all the power to the Member States, which would design national plans subject to soft common guidelines and under broad fiscal conditionality.

The President of the Committee of the Regions, Romanian Kata Tüttó, declared that these national plans, together with the Commission’s proposed cuts in social and territorial policy, constitute “a monstrous plan to swallow cohesion policy and break its backbone by nationalizing and centralizing it.” I can find no better words to describe this proposal. Perhaps just to recall that the far-right, euroskeptic bloc accounts for 26 percent of the Parliament. Less money for cohesion and more power centralized in national governments at the expense of “Brussels” and the regions.

At this point, one must ask which policies see their financing improved—because it cannot all be negative. In this regard, the Commission highlights the concentration of funds to foster European economic growth in a new Competitiveness Fund, whose resources increase by 167 percent. The Commission’s pitch is to improve the “efficiency” of cohesion funds in order to boost competitiveness.

However, within this new Competitiveness Fund, resources allocated to defense programs increase by 391 percent. Without doubt, Europe needs to strengthen its financing of common defense. Yet, the increase proposed by the Commission in the EU budget, combined with Member States’ commitments to boost defense spending, represents an investment volume that defies rationality, when Europe’s security problem is better addressed through greater cooperation. Moreover, civil programs aimed at improving mobility and the physical integration of national markets through infrastructure—programs which also see their funding increased—will now be geared toward “military mobility.”

Additionally, in another major chapter, the Commission also merges the management of the Union’s external aid, whose available resources are increased. Yet, a somewhat cynical reading of the published texts reveals that this increase is concentrated in spending lines designed to extend agreements with countries on the other side of the Mediterranean to externalize migration management. Frankly, it is difficult to continue writing about this proposal.

Finally, to finance all these spending programs, in addition to Member States’ contributions, the Commission proposes increasing Pigouvian taxes aimed at altering citizens’ behavior (taxes on tobacco, plastics, carbon, etc.) which, although necessary in many cases, are regressive elements in the revenue system and are not offset by progressive taxation.

In short, returning to the imaginary country with which I began this article—and acknowledging that my example does not capture the full institutional complexities of the Union—the political majorities, not only in Parliament but also in the Council and in the Commission, are what they are: more to the right and less pro-European than ever. If this is what a majority of Europeans want, so be it.

Thus, the Commission’s initial proposal includes cuts, adjustments to social policy, increased funding for defense and border control, and regressive taxes, along with a de-Europeanization of cohesion and agricultural policies.

That is the state of play, and that is how the budget battle begins.