The high cost of shrinking the European Union budget

European Parliament co-rapporteurs Siegfried Mureşan and Carla Tavares argue that austerity measures directed at the EU budget are counterproductive. While national budgets can reach 50 percent of GNI, the EU operates on just one percent, a figure that has seen its purchasing power eroded by 10 percent due to inflation since 2020. Shrinking this capacity risks undermining competitiveness, agricultural stability, and regional cohesion across the 27 member states.

To bridge funding gaps without placing additional burdens on national treasuries, the Parliament advocates for revenue reform. Proposed measures include a digital service levy on major platforms generating €25.2bn annually, alongside levies on online gambling and crypto-assets. These mechanisms aim to ensure that global entities profiting from the single market contribute their fair share. By shifting the conversation from simple cuts to strategic financing, the EU seeks to maintain the economies of scale that underpin its collective security and growth.