Centre for European Policy Studies Place du Congrès 1, 1000 Brussels
13th Annual Intereconomics / CEPS Conference in Brussels (in-person event)
The European Union has weathered a number of turbulent storms in recent years from the COVID-19 pandemic to the ongoing war in Ukraine. These crises have highlighted the limitations of the EU budget and the need for the flexibility to adequately respond to challenges in real time. They have also raised questions about the legal feasibility of more common debt following a dramatic increase in common EU borrowing. What are the obstacles – and the opportunities – for the EU’s public finances in the face of the numerous crises of our time? Is it possible to balance predictability for long-term investments and flexibility to react to unexpected turns of events? Does the EU budget need restructuring – and if so, what would that look like? This conference will examine these and other pressing questions through thoughtful discussion and debate.
The EU budget’s first and primary purpose is to provide funds for medium- to long-term investments through multiannual programming. The planning approach ensures a high level of predictability but also allows for less flexibility. The recent EU-wide crises have highlighted this limitation. Only a relatively minor part of all EU budget resources has been reallocated for crisis response to COVID-19 and the war in Ukraine. As the debate on the future of cohesion policy gains momentum, many commentators stress the importance of rethinking the EU budget deeply to enhance its versatility for trouble-shooting and crisis management. Should the primary goal of the EU budget be amended? Can one find a balance between the predictability for long-term investments and the flexibility to respond effectively to crises? What would this mean for its design? What are the legal and economic constraints?
Session II: Can the EU be a Credible, Long-term Borrower?
The COVID-19 pandemic triggered a dramatic increase in common EU borrowing. The introduction of SURE (Support to mitigate Unemployment Risks in an Emergency) and NGEU (Next Generation EU) resulted in an increase in EU debt, raising from approximately €50 billion to over €300 billion by the end of 2022. An additional €120 billion are expected to be issued by the end of this year. This has been regarded as a remarkable political achievement for the EU. Nevertheless, as some policymakers and commentators advocate for more EU funds to address common EU challenges, issues related to the legal feasibility of more common debt and less favourable market conditions are sparking doubts. What does it take for the EU to become a credible, long-term borrower? Does it require a change in the structure of the EU budget? Is the current temporary and pre-defined borrowing capacity an intrinsic limitation?
