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What do a
small bakery in the Charlottenburg district of Berlin and
teachers of linguistics at Slovenia's Jozef Stefan Institute,
research engineers at Krakow University of Technology and
Lisbon’s Oriente railway station have in common? All have
received funding from the European Union’s budget. By far the
largest share of the EU’s annual budget is spent for the
benefit of people and communities across Europe. The EU budget
helps to pay, for example, for clean air and water, safer food
and cancer research. |
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The biggest slice of the budget goes to management of
natural resources, particularly the EU’s farming and rural
heritage. Of the total budget of €121.2bn in 2006, €42.9bn is
earmarked for agriculture, including secure supplies of safe
food, modernisation of production and higher quality. A
further €11.8bn is for rural development, €1bn for fisheries,
€0.3bn for health and consumer protection in areas such as
animal welfare and plant health, and €0.2bn for protection of
the environment. Agriculture as a proportion of the budget
(35%) is now only half what it was 40 years ago as a result of
agricultural reforms and an expansion of the EU’s
responsibilities.
Funding to make the EU more cohesive, by closing gaps in
levels of economic, environmental and social development, is
the second largest budget item, taking more than 30% of the
budget, i.e. €39.8bn in 2006. Some of the money goes on large
infrastructure projects, such as roads, bridges, motorways,
airports and improvements in electronic communications.
However, many other types of project qualify for assistance,
from small businesses to decaying city centres, from wind
farms to schemes to help the disabled be an integral part of
the community, from waste water treatment plant upgrades to
meet EU norms to vocational training schemes. |
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The remaining EU money is spread across a wide range of
policies, of which those which underpin the EU’s role as a
global partner in trade and aid take the largest share. The EU
funds economic, environmental and social development in many
countries around the world, but it pays particular attention
to the needs of its immediate European and Mediterranean
neighbours, including candidate countries for EU membership,
and to the countries of Africa, the Caribbean and the Pacific
(ACP) linked to the EU by the Cotonou Agreement on trade,
technical assistance and financial aid. Member states provide
additional money specifically for the ACP countries, which is
paid separately into the European Development Fund (EDF). The
ACP countries will receive €3.5 billion in total in 2006 from
the EU budget and the EDF. In addition, some €500 million is
spent every year on humanitarian aid around the world. This
includes emergency assistance to relieve famine or provide
help after earthquakes. |
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Growth, jobs and competitiveness are priorities for the EU.
Consequently, spending on research and innovation are major
budget items. More than €4 billion has been set aside for
research and innovation in 2006. The money helps promote
integrated pan-European research projects which pool the
efforts of scientists working in different EU countries in
areas such as consumer safety, the environment, energy,
transport and public health. A further €3 billion is being
spent in 2006 on education and training, information society,
energy and transport projects.
The EU budget also pays for educational programmes, such as
Erasmus, which helps students and teachers learn and gain
experience in other EU countries, Leonardo da Vinci, which
promotes cross-border vocational training, and for programmes
to preserve the EU’s cultural and linguistic diversity.
Citizenship, freedom, security and justice are a vital
complement to the single market and freedom of movement for EU
citizens. Funding is allocated each year to creating an area
of freedom and justice. This ensures that internal EU borders
are not a barrier to citizens pursuing claims in the civil
courts of other member states and improves cooperation between
criminal justice systems and the police, thus making it easier
to deal with terrorism, cross-border crime or criminals
exploiting freedom of movement by fleeing across EU borders. |
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Only a small share of the budget is used to pay the
administrative costs of running the EU. Including the cost of
running all the institutions (which include the European
Commission, the European Parliament and the Council of
Ministers) and translators and interpreters to deal with the
EU’s 20 languages, this comes to well under 6% of total
expenditure and around €0.70 per person per day.
Where does the budget money come from? It is a mix of the
EU’s “own resources” and a direct contribution by member
states. “Own resources” are revenues from levies on
agricultural imports, customs duties on other imports and a
slice of value-added tax income. They account for one quarter
of the budget.
These are all forms of tax which cannot be said to belong to a
particular member state. For example, goods on which customs
duty is paid in Valletta may — thanks to the EU’s single
market — actually be destined for an importer in Brno. The
member state collecting the money acts only as a service
provider for a common EU policy (and gets to keep a share of
the money as payment for acting as the collection agent).
The fourth resource was introduced in 1988 to deal with two
simultaneous developments: an expansion in the
responsibilities of the EU and a reduction in revenues from
duties and levies as the result of freer international trade.
Member states contribute a percentage of gross national
income. As this is a measure of national wealth, the formula
ensures that each country contributes according to its means.
The money is then spent where it is needed most. |
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To allow the EU to plan its spending strategically, a
Financial Perspective is established periodically. Under the
Financial Perspective for 2007-2013, the EU will have €826 4
billion available over the seven-year period, the equivalent
of 1.045% annually of the EU’s gross national income at 2004
prices. |
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