EU spending is a significant instrument for achieving policy objectives. Every year we audit the revenue and expenditure of the EU budget and provide our opinion on the extent to which the annual accounts are reliable, and income and spending transactions comply with the applicable rules and regulations.
Spending totalled €142.5 billion in 2014, or around €285 for every citizen. It represented nearly 2 % of total general government spending of EU Member States.
The EU budget is agreed annually — within the context of 7-year financial frameworks — by the European Parliament and the Council. Ensuring that the budget is properly spent is primarily the responsibility of the Commission. Some 76 % of the budget is spent under what is known as ‘shared management’ , with individual Member States distributing funds and managing expenditure in accordance with EU law (for example, in the case of expenditure in the area of economic, social and territorial cohesion and spending on natural resources).
Where does the money come from?
The EU budget is financed by various means. The largest proportion is paid by Member States based on their gross national income (€94.9 billion). Other sources include payments by Member States based on the value added tax they collect (€17.7 billion), as well as customs and agricultural duties (€16.4 billion).
What is the money spent on?
The annual EU budget is spent on a wide range of areas (see below Diagram 1). Payments are made to support activities as varied as farming and the development of rural and urban areas, transport infrastructure projects, research, training for jobless people, support to countries wishing to join the EU, or aid to neighbouring and developing countries.
Total EU expenditure 2014 (€ 142.5 billion)
- Natural resources
- Economic, social and territorial cohesion
- Competitiveness for growth and jobs
- Global Europe
- Security and citizenship
- Other (compensation and other special instruments)
- 92% 56.6
- 86% 54.4
- 20% 13.3
- 13% 8.8
- 11% 7.2
- 4% 1.7
- 2% 0.5
EU spending can be characterised by two types of expenditure programmes involving distinct patterns of risk:
- Entitlement programmes, with payment based on meeting certain conditions, for example student and research fellowships (under competitiveness spending), direct aid for farmers (under natural resources), direct budget support (under Global Europe), or salaries and pensions (under administration).
- Cost reimbursement schemes, where the EU reimburses eligible costs for eligible activities. Such schemes include, for example, research projects (under competitiveness spending), investment schemes in regional and rural development (covered by expenditure under cohesion and natural resources), training schemes (under cohesion) and development projects (under Global Europe).