Brexit will be a major factor influencing the negotiations on the new Multi-annual Financial Framework (MFF), which will set the rules for the EU budget in the next couple of years starting in 2021.

On the path towards the UK’s upcoming in-out referendum, the UK faces three dilemmas: first, they seek shallower integration at a time when their peers want to deepen it; second, the antagonism to deepening may obstruct what is considered to be necessary changes for the EU and the Eurozone to function effectively; and third, the UK’s demands may spur similar initiatives from other member states who are discontent with aspects of their membership. The author of this European Policy Analysis warns that too far-reaching demands may cause other members to conclude they are better off without the UK.

The debate on reform of the EU budget has hitherto primarily centred on how EU money should be spent. But a true reform calls for serious handling of the financing of the budget as well, argues the author of this new analysis.

In October 2010 the European Commission finally released the communication on the 2008/9 review of the EU budget. Professor Iain Begg concludes in his analysis that even though the political obstacles to EU budget reform are formidable, there should be plenty to debate in months to come, for example which expenditures to cut; what to do with the CAP; and a number of aspects related to Cohesion policy.

The intention of the ongoing review of the EU budget is to create a budget that is better adapted at facing future challenges. At the same time it raises fundamental questions about what the EU is and should do.

SIEPS’ annual conference 2007 was held on the theme The Purse of the European Union: Setting Priorities for the Future. The conference was arranged in the light of the EU budget review process that was launched in September 2007 and which is expected to be concluded in 2008-2009.