VDL’s ‘voodoo maths’
European Commission president von der Leyen yesterday made a pitch for a €2tn budget — a 64 per cent increase compared with the current purse. She swears EU countries won’t have to pay more for it, writes Paola Tamma.
Context: The EU budget is mostly financed by national contributions, with richer countries paying more into it, and other revenue streams such as taxes directly raised by Brussels.
The commission proposal includes a raft of new levies or “own resources” that would collectively raise around €58bn per year, or just over €400bn for the whole 2028-2034 period.
These include a tax on companies with €100mn in annual turnover, another on e-waste, a fee on flown-in packages, and hikes in tobacco tax.
But that leaves a roughly €400bn hole compared with the current budget appropriations of €1.2tn.
“It’s an interesting way to think about it and it doesn’t add up,” said one official in a European finance ministry.
That’s easily explained, commission officials say: countries will be asked to contribute what they will pay at the end of the current budget cycle, which is higher than what they agreed at the start, partly in thanks to carry-overs from previous years.
EU countries in 2027 will collectively pay in €186.2bn to the budget, according to the commission’s latest forecast. Seven times that — roughly €1.3tn — is the amount of money the commission expects them to cough up for the next budget, enabling von der Leyen to claim that “member states contributions will remain constant as we propose a step change in the new own resources”.
But still, it doesn’t quite add up.
“It will make sense if you believe that money will fall from the sky. But these new own resources will never happen,” the finance ministry official added.
As the commission shared its budget plans with EU countries yesterday evening, one EU ambassador told the commission the near-doubling of the budget was “highly problematic and unjustified,” according to people briefed on the discussions.
A second EU ambassador added: “We have a competitiveness problem in Europe and a debt problem, and this proposal is making both worse,” adding it’s “voodoo maths”.
Bottom line: the proposal is likely to be ripped to pieces as net EU contributors — the likes of Germany, Austria, Sweden, the Netherlands and Finland — refuse to pay the commission’s bill.