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A two-tier federal budget for the European Union

Andrew Duff , Luis Garicano

Date: 27/02/2024
The European Union is taking on new tasks. But unless legal and political constraints on its budget are lifted, the EU will be left with inadequate financial resources.

In this Discussion Paper, the authors propose a radical restructuring of the EU budget after 2027 into a two-tier structure: a federal tier funded by true own resources to pay for European public goods, managed by an EU Treasury in the Commission, and a confederal tier financed by national contributions for domestic policies supported by the EU but implemented nationally.

Inescapable events in the opening decades of the 21st Century oblige the EU to assume more tasks, taking over where Europe’s nation-states fail. The financial crash, the COVID-19 pandemic, climate change, the return of war to Europe, immigration pressures, and the unreliability of the transatlantic partnership all contribute to this trend. Therefore, the need for a more discernible and centralised government at the level of the Union has never been more evident.

Read the full paper here.
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