The Sound of Economics What should Europe pay for
Oct 1, 2025
Zsolt Darvas, a Senior Fellow at Bruegel specializing in EU budget reform, and Jacob Funk Kirkegaard, an expert on European public goods and defense spending, delve into the complexities of the European Commission's budget plan. They discuss the implications of shifting funds towards defense and research while questioning the effectiveness of current agricultural subsidies. The conversation explores how Europe can collectively address pressing issues like support for Ukraine and the challenges of financing public goods, emphasizing the importance of national contributions and the concept of 'own resources.'
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Big Number, Small Real Increase
- The Commission's €1.8 trillion proposal looks large but rises only modestly as a share of GNI to 1.26% from ~1.1% previously.
- Much of the increase mainly covers repayment and interest on Next Generation EU borrowing, leaving little for new spending.
Refocus EU Spending On True Public Goods
- Bruegel argues EU spending should focus on areas where pooling at EU level adds clear value like public goods.
- Jolt recommends shifting farmer subsidies to national budgets to free about one-third of the EU budget for common priorities.
Budget Shift Toward Competitiveness And Defence
- The Commission shrinks agriculture and cohesion share and boosts competitiveness, defence and research.
- Merging and reorienting funds signals a structural shift toward cross-border public goods.