Von der Leyen presents new budgets: greater centralization and a fivefold increase in defense spending
The European Commission proposes cutting CAP funding and creating new taxes.
BrusselsThe clamor of the regions and the peasantry seems which has not arrived in BrusselsDespite protests and pressure from administrations such as the Catalan government and farmers across the European Union, Ursula von der Leyen's administration has presented new EU budgets that increase fivefold the amount allocated to the massive rearmament and reduce investment in the primary sector. Furthermore, they give greater power in the distribution of European funds to the capitals of the member states, to the detriment of the regions.
Von der Leyen intends to bring together several plans, including Cohesion and the Common Agricultural Policy (CAP), into a single fund. These two packages alone account for just under half of the total EU budget: around €865 billion out of a total of €2 trillion. Furthermore, they will include items for immigration and border management. At the time, these plans were separate, and the regions, especially those for Cohesion, could mainly benefit directly.
Brussels, however, now intends for regional administrations to access them through national plans; that is, Catalonia would become more dependent on how the Spanish government distributes them. This situation is exactly what fourteen member states and up to 149 European regions, including Catalonia, wanted to avoid in a protest they made in the weeks before von der Leyen presented the EU budget, known as the Multiannual Financial Framework.
The centralization of funds will allow Brussels to more closely control how EU money is spent, and the configuration and disbursement would be similar to how the state plans for pandemic recovery, the Next Generation, work. This will allow it to impose more conditions on governments in exchange for providing them with European funding and, therefore, have even greater influence on their policies. Furthermore, EU sources also point out that the centralization of funds aims to simplify and accelerate the delivery of European funding and reduce bureaucracy, as Brussels claims member states are requesting.
As for EU funds allocated to farmers (the CAP), which historically have been among the most significant, they have suffered a 20% cut, dropping from €378 billion to a minimum of €300 billion. This reduction contrasts, for example, with the increase in defense spending announced by Von der Leyen at a press conference. "It will be five times what we have now," said the President of the European Commission. Thus, in the next financial year, the security, defense, and space portfolio will have a budget of €131 billion.
Negotiations begin
Von der Leyen's proposal marks the official starting signal for negotiations on the next European budget, which will come into effect from 2028 to 2034. Thus, until the budget is implemented, intense discussions are expected between the various actors involved, especially between the member states and the European Commission.
In reality, however, the back-and-forth over EU budgets between member states and attempts to influence Brussels have been going on for some time. And, as always, the different visions of countries regarding economic policies have once again become evident. On the one hand, governments such as those of France, Spain, and Italy are pressuring Von der Leyen to increase the EU budget. Spain even asked Brussels to double it.
On the other hand, member states advocating economic austerity, such as Germany and the Netherlands, are completely opposed to increasing their contributions to the EU budget. Thus, Von der Leyen has finally proposed that the next EU accounts should represent 1.26% of Gross National Income (the measure of the income of a country's businesses and citizens), while the current rate is 1.13%. In any case, this percentage is still around 0.9 percentage points less than what the Spanish government is requesting.
Von der Leyen wants to please all Member States without forcing them to increase their contributions to the EU and, at the same time, pad the EU budget through new taxes. On the one hand, she wants to create an annual tax on companies valued at more than €100 million, which she hopes to raise €6.8 billion; and, on the other, she will increase taxes on tobacco through the minimum rate that Member States must apply, which she estimates will bring in another €11.2 billion.