The EU Budget Dispute – A Blessing in Disguise?

Abstract

This paper analyses the current budget of the European Union and the relative position of the new member states. The author argues that the EU budget should be reconsidered, as the union has expanded to 27 member states and has become more heterogeneous. The budget priorities should be re-oriented toward growth enhancing spending programs. A simple economic growth model illustrates that the EU budget is, at best, neutral with respect to EU-wide long-term growth potential, and may actually hamper growth in the majority of member states if the distortionary nature of taxation is taken into account.budget, European Union, growth