15 July 2018

Social Europe: The New EU Budget Under The Constraints Of Brexit And The Debt Brake

At the same time, a reform is overdue: Many challenges require European solutions: climate change, shortage of resources, high unemployment in many parts of Europe, social and economic inequalities as well as digitization and global instability. Keeping the status quo intact would send a bad signal about the effectiveness of the political union. Within this context, Brexit has come like any other unexpected event at a bad time. [...]

The policy-making power of the EU depends on the readiness to boost its sovereignty and on its financial provisions. Now the UK is leaving this comes over more as a ‘spending watchdog’ than as a committed protagonist of a political union. But other member states might take over the UK role. The ‘frugal four’ – Austria, Sweden, Denmark and the Netherlands – reject any increase in their contributions.  [...]

Looking at challenges as set out above, the strengthening of the social dimension of Europe must take first place. The EU Budget must aim for the perceptible improvement of living and working conditions of European citizens and the fight against increasing economic and social inequalities as well as the unacceptably high youth unemployment rate of up to 50%.

The most important instruments of European convergence policy, European Regional Development Fund and Cohesion Fund, are set at €273bn, the European Social Fund+ at €101bn. According to the Commission, both should be more strictly connected to the European Semester. ESF+ should be increased. However, its share of structural funds still remains too low in order to combat unemployment and poverty in an efficient manner. A shift of the Budget from direct payments to rural development (EAFRD) is the order of the day to combat rural migration.

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