EU budget ‘should be cut by half’; LFMI study is presented in Brussels by New Direction

Brussels, 7 February 2013 – The budget of the European Union could function at half of the proposed cost to EU taxpayers while boosting economic growth, according to a new report, 50:50 for 2020,– published in Brussels today. The report written by Lithuanian Free Market Institute senior expert Kaetana Leontjeva and presented by New Direction – The Foundation for European Reform.

As European leaders gather in Brussels for a second attempt at agreeing the block’s budget for the next seven years, the report’s author, Lithuanian economist Kaetana Leontjeva, says the EU’s proposal – that include €1.025tn of spending and retaining harmful tariffs and subsidy programmes such as the Common Agricultural and Fisheries policies – had failed to respond adequately to the economic crisis.

The report, published by the New Direction think tank proposes a radical alternative budget cutting overall costs by 52%. According to the report the EU should be funded by a simplified revenue stream based on member states’ economic output, while shifting the focus of spending to trans-European infrastructure and energy networks.

Tom Miers, Director of New Direction, said: “Europe’s leaders are once again wrangling over the EU’s inflated budget. What they really need is to think big – or rather small – and work out what the EU budget is really for. A lot of the money is spent on vested interests and actually harms the EU and its citizens. This study brings some clear thinking on where the budget works, where it doesn’t, and how we could save a lot of money.”

The study’s recommendations include:

•             Scrapping duties on trade

•             Abandoning proposals for new EU taxes

•             Abolishing the Common Agricultural and Fisheries policies

•             Reforming competitiveness and cohesion budgets

•             Cutting salaries and perks of EU bureaucrats.

50:50 for 2020: How the European Union’s budget could be cut by half

In Brief

The €130bn+ European Union budget is contested fiercely by member states and various interest groups. But much needed radical thinking by the European Commission has not been forthcoming. This paper examines the theory behind current and proposed revenue raising and expenditure and proposes an alternative budget based on sound economic principles at half the cost to EU tax

For the full study go to:

New Direction – The Foundation for European Reform is a free market, euro-realist think-tank established in Brussels in 2010 to add innovative ideas and encourage reform efforts in Europe. Together with a strong network of partner think tanks around Europe, New Direction produces original and relevant research papers focusing on the most pressing issues in the area of economic growth, competition, financial regulation, energy security, taxation, agricultural policy, bureaucracy and EU institutional affairs.