The European Union- or EU- has 28 member countries, soon to be 27 once the United Kingdom drops
out.
These member countries contribute to a shared budget that is designed to help growth and
job creation, and to bridge economic gaps between the various EU countries.
Trying to get your head around a budget that is shared between 28 countries is not easy,
so today we aim to simplify things by shrinking the total budget down to an amount you could
carry in your wallet.
Welcome to this episode of The Infographics Show: What If The EU Budget Was Only $100
- How Would It spend it?
Before we break the budget down let’s first take a look at where the money comes from.
98% of the total budget comes from the EU’s own resources across the 28 countries, which
are: 1) Traditional resources - which are mainly made up of money that comes from customs
duties on imports from outside the EU and sugar levies. 2) Value added tax (VAT) - The
VAT levie is capped at 50% of gross national income for each country.
And 3) Gross National Income – a standard tax that is placed on each EU member country
which sees them contribute directly to the budget.
As we mentioned that makes up 98% of the budget- the other 2% comes from other sources that
include taxes on EU staff salaries, contributions from non-EU countries to certain programs,
and fines on companies for breaching competition laws.
So how much does this all add up to?
The budget for 2018 was approved by the European Parliament on 30 November 2017, and the amount
set at €160.1 billion in commitments.
This is an increase of 0.2% compared to the 2017 EU budget.
In US dollars that equates to 186 billion.
So if we scale that down to $100, it means that each dollar of our $100 is worth 1.86
billion.
Now we know how much the budget is and where it comes from, so let’s see how it’s allocated
across the European Union.
The EU has what’s called a Money Market Fund (MMF) structure that outlines how the
union intends to spend budgets between 2014 to 2020.
The categories of the MMF are as follows: There’s smart and inclusive growth, which
has two subcategories.
The first is competitiveness for growth and jobs, and it includes research and innovation;
education and training; trans-European networks in energy, transport and telecommunications;
social policy; and development of enterprises.
The second is economic, social and territorial cohesion and this covers policies that help
the lesser-developed EU countries to catch up with the remainder, so the region as a
whole is strengthened.
Next is sustainable growth, which governs natural resources through things such as agricultural
policy, fisheries policy, rural development and environmental measures.
There’s also security and citizenship, which includes justice and home affairs, border
protection, immigration and asylum policy, public health, consumer protection, culture,
youth, information and dialogue with citizens.
Next is Global Europe, which covers most of the external activities by the EU such as
development assistance or humanitarian aid.
And finally administration, which includes the administrative costs of all the European
institutions, pensions and European Schools.
So how is our $100 going to be spent in 2018?
Märt Kivine is the deputy finance minister of Estonia and chief Council negotiator for
the 2018 EU budget.
He was quoted as saying the following about the 2018 EU budget.
“The European Parliament and the Council share the same main priorities for the financial
year 2018 - to tackle migration and security, and to boost innovation, growth and employment
in Europe.
I am convinced that we have achieved a good and balanced result, allowing the Union to
act and to react to the various needs.”
Let’s see if Kivine’s comments ring true.
Based on the MMF categories that we just outlined the 2018 EU budget has the following commitments.
Smart and inclusive growth gets a total of $48, which is broken down as $13 for competitiveness
for growth and jobs and $35 for economic, social and territorial cohesion; Sustainable
growth with natural resources is allocated $37; Security and citizenship $2; Global Europe
$6; and administration also gets $6.
That totals $99 with the last $1 going towards special instruments which is an additional
category that allows the EU to mobilize the necessary funds to react to unforeseen events
such as crisis and emergency situations.
Let’s dive a little more deeply in to these numbers so we can get a better understanding
of the EU’s programs for 2018, and what they hope to achieve.
There have been reinforcements to several existing programs under the smart and inclusive
growth category.
The EU's research and innovation program known as Horizon 2020 is allocated $7.
And the Connecting Europe Facility, which was established to promote growth, jobs and
competitiveness through targeted infrastructure investment at the European level, receives
$1.70 to finance projects in the fields of transport, energy, and information and communication
technology.
The EU is also committed to supporting young people and allocations for the Erasmus+ program
which is an EU student program combining all the EU's current schemes for education, training,
youth and sport- this gets $1.40.
The Youth Employment Initiative gets 21 cents to help improve the possibilities for young
people of getting a job.
And to help tackle migration and the related security challenges, agencies in the field
of security and citizenship will receive 60 cents, which is an 8.9% increase on the 2017
budget.
The EU also aims to strengthen the strategic communication capacity of the European External
Action Service, by allocating 50 cents towards the fight against disinformation.
The EU has been in the mainstream media a lot in the last couple of years after the
UK voted to leave the union as part of the Brexit campaign.
This is set to take effect in March 2019, and it’s a decision that has resulted in
a 2.1 percent dip in the UK’s economic output according to a statement released by the Centre
for European Reform in March 2018.
How will Brexit affect the EU budget?
It’s not an easy assessment to make but the impact to the EU budget may be minimal
in the short term.
Business Insider reported in March 2018 that the UK government has agreed to pay $48.6
billion (£37.1) to the European Union as part of its departure.
However this sum will be paid off each year until 2064.
The UK will pay $21.5 billion (£16.4) worth of contributions into the EU budget between
the years of 2019 to 2020; $24 billion (£18.2) between 2021 and 2028, with the remaining
funds being paid at other times between 2019 and 2064.
Maybe not such a bad divorce settlement for the European Union, after all.
Hopefully breaking down the EU budget to $100 helped you to understand it more easily.
Are there other country budgets you’d like us to dissect in this way?
Let us know by commenting in the notes.
Also be sure to check out our other video, What If The US Budget Was Only $100 - How
Would It Spend It?
We hope you’ve enjoyed this episode of The Infographics Show!
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