Multiannual Framework Negotiations and the Eurozone Crisis: One Step Far Away to a Reform

The relative size of the EU budget is fixed and there has not been any long term support to significantly increase it above 1% of the  EU’s GNI. Both the European Commission and the European Parliament point to the urgent need to increase the size of the EU budget but some member states want to see a decline in this ratio. The Eurozone debt crisis could – and should - be used as an opportunity to improve the stabilization capacity of the EU budget according to fiscal federalism theory recommendations, moving the EU closer towards the last stage of the integration process, i.e. a political union. While it appears that we know what needs to be done, we also seem to know that there is no way to achieve that. To achieve this goal will be a major challenge for the EU and its member states in the near future. We argue that the current crisis opened an opportunity window that needs to be fully utilised. In the proposed paper, we will provide an economic analysis of the scenarios with respect to the most recent regional and global economic and financial developments. We will also look at the bargaining skills and positions of the EU’s institutions (Parliament, Commission, Presidency) and member states, both members and non-members of the Eurozone and the negotiations strategies of member states, and how their ‘political power’ can be utilized in securing favourable negotiations outcomes in the context of the new budgetary framework negotiations.

JEL: E42, E62, F33,

Keywords: EU budget, fiscal federalism, EU negotiations, eurozone crisis