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The Deadlock of the EU Budget: An Economic Analysis of Ways In and Ways Out

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  • Charles B. Blankart
  • Christian Kirchner

Abstract

Most of the EU budget is spent on redistribution. Large sums of money are transferred from the member state governments to Brussels and back to these governments. Some member states end up as net receivers and some as net payers. Most economists agree that the resources of the budget should be reallocated from redistribution towards the provision of more Union-wide public goods. While such appeals have been made for years, little change has been observed. We want to explain why. We propose to distinguish two periods. In the early years of the Community, some larger member states or coalitions of member states were able to credibly threaten to terminate membership if their claims on budgetary resources were not fulfilled. Their activity has created a redistributive status quo to which, in the second period, the budgetary rules of the Treaty were applied. It is shown that the combination of the Council’s qualified majority rule on the expenditure side and the unanimity rule on the revenue side and on the programs are largely responsible for creating a deadlock in the status quo with large redistribution and few Union-wide public goods. In order to break the deadlock, a complementary budget procedure is proposed on the basis of voting by veto.

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  • Charles B. Blankart & Christian Kirchner, 2003. "The Deadlock of the EU Budget: An Economic Analysis of Ways In and Ways Out," CESifo Working Paper Series 989, CESifo.
    • Handle: RePEc:ces:ceswps:_989
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    References listed on IDEAS

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    Cited by:

    1. Widgren, Mika & Kauppi, Heikki, 2008. "Do Benevolent Aspects Have Room in Explaining EU Budget Receipts?," CEPR Discussion Papers 6778, C.E.P.R. Discussion Papers.
    2. Tobias Hagen & Philipp Mohl, 2011. "Econometric Evaluation of EU Cohesion Policy: A Survey," Chapters, in: Miroslav N. Jovanović (ed.), International Handbook on the Economics of Integration, Volume III, chapter 16, Edward Elgar Publishing.
    3. Kellermann, Kersten & Schlag, Carsten-Henning, 2005. "Eignung der liechtensteinischen volkswirtschaftlichen Gesamtrechnung als Basis für Beitragszahlungen an internationale Organisationen: Gutachten im Auftrag der Regierung des Fürstentums Liechtenstein.," KOFL Studien, Konjunkturforschungsstelle Liechtenstein (KOFL), Vaduz, volume 1, number 1.
    4. Karen Pittel & Dirk T.G. Rübbelke, 2005. "Internationale Klimaschutzverhandlungen und sekundäre Nutzen der Klimapolitik," Perspektiven der Wirtschaftspolitik, Verein für Socialpolitik, vol. 6(3), pages 369-383, August.
    5. Pierre Salmon, 2003. "The assignment of powers in an open-ended European Union," Post-Print hal-00445601, HAL.
    6. Wohlgemuth Michael, 2008. "50 Jahre Europäische Ordnungspolitik: ordnungs- und konstitutionenökonomische Anmerkungen / 50 years of European „Ordnungspolitik”, remarks from a constitutional economics perspective," ORDO. Jahrbuch für die Ordnung von Wirtschaft und Gesellschaft, De Gruyter, vol. 59(1), pages 381-404, January.
    7. Kauppi, Heikki & Widgrén, Mika, 2008. "Do Benevolent Aspects Have Room Explaining EU Bydget Receipts?," Discussion Papers 1161, The Research Institute of the Finnish Economy.
    8. Lars Feld, 2005. "The European constitution project from the perspective of constitutional political economy," Public Choice, Springer, vol. 122(3), pages 417-448, March.
    9. Heikki Kauppi & Mika Widgrén, 2009. "The Excess Power Puzzle of the EU Budget," Discussion Papers 45, Aboa Centre for Economics.
    10. Iain Begg, 2007. "The 2008/2009 review of the EU budget: Real or cosmetic?," CESifo Forum, ifo Institute - Leibniz Institute for Economic Research at the University of Munich, vol. 8(1), pages 45-50, April.
    11. Loek Groot & Erik Zonneveld, 2013. "European Union Budget Contributions and Expenditures: A Lorenz Curve Approach," Journal of Common Market Studies, Wiley Blackwell, vol. 51(4), pages 649-666, July.
    12. Iain Begg, 2007. "The 2008/2009 review of the EU budget: Real or cosmetic?," CESifo Forum, ifo Institute - Leibniz Institute for Economic Research at the University of Munich, vol. 8(01), pages 45-50, April.
    13. Christian Kirchner, 2012. "The unanimity rule revisited: the case of revisions of hybrid constitutions," Public Choice, Springer, vol. 152(3), pages 445-449, September.
    14. Indhira Santos & Susanne Neheider, 2009. "Reframing the EU budget- decision-making process," Working Papers 306, Bruegel.

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