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.

This European Policy Analysis looks at the balance of powers between the European Parliament and the EU governments in the EU budget negotiations. The next long-term EU budget, covering the years 2014–2020, shows that its content is heavily constrained by how the decision process takes place.

Even though the Member States are ambitious in setting the agenda for the EU, they are less keen to provide the funding necessary to meet these ambitions. Indeed, if the EU seriously sought to attain all goals and ambitions of the Member States, it would easily swallow large parts if not all of the EU’s combined GNI.

The aim of reducing regional disparities in the European Union is enshrined in the EU Treaty. An important aspect that takes centre stage in discussions on the EU’s so-called cohesion policy is the ranking of the Union’s many regions in terms of their levels of prosperity.

The EU’s R&D policy has recently come under the spotlight. It is a central element both in the review of the EU budget and in the so called Europe 2020 strategy, where the goal of increasing the level of investment in R&D in the EU to three percent of GDP is emphasized.

The Commission’s Fifth Cohesion Report provides a wealth of new data on social, economic and territorial trends in Europe. This gives an excellent basis for discussing the future of cohesion policy, but the questions asked by the Commission in its consultation are too narrow.

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.

Despite ambitious targets for greenhouse gas emissions reductions, renewable energy use and energy efficiency, the EU was unable to play a central role in last year´s climate negotiations in Copenhagen. Lack of internal coordination was one reason, the EU budget not being adapted to the climate goals another.

The EU budget review will enter a new phase this autumn when the European Commission presents its long-awaited proposals for budget reform. At this seminar SIEPS will publish a new report, How to Reform the EU Budget? A Methodological Toolkit, in which EU spending is examined in detail.