Opening remarks by Commissioner Hahn at the Annual EU Budget Conference 2024

Annual EU Budget Conference 2024

Dear Colleagues,

Ladies and Gentlemen,

Dear fellow budget fans,

Europe's future starts now: In less than 1000 hours almost 360 million Europeans are called to vote on their future by electing the European Parliament, followed by a new College which will present a new budget architecture leading into the next decade. The months to come are all about shaping our future.

In this sense, welcome to the conference. The next hours are well invested: reflecting on a future budget matching our ambition for a stronger, more competitive, and secure Europe. Therefore, we invited the brightest speakers and panelists who are dealing with the budget – now and in the future. Unfortunately, we will be missing Prime Minister Tusk who is sick and whom we wish a speedy recovery.

Our discussions will feed into preparing the next multiannual financial framework. I am therefore delighted that we are organising this conference together with the Belgian Presidency.

While political discussions are too often caught up in day-to-day issues, today we have the luxury of thinking beyond election day, limitations, and negotiation boxes.

Let's be bold and innovate!

Let us think about how we can best bundle our European power and let us envision our future together – cast in budgetary figures!

Why do we need to make our budget futureproof

“A good decision is based on knowledge, and not numbers”, and Plato's wisdom is still relevant today – especially when it comes to budget negotiations. We should always keep the bigger picture in mind: “Budget follows future priorities” is the equivalent of the golden management rule “Structure follows strategy” – and this should define our starting point: What do we need to tackle on a European level?

Facing two wars in our neighbourhood, migration pressures and an increasing confrontation between democracies and autocracies, our long-term budget needs to adapt to a new reality. If we want to remain a global player, we need to rise to the geopolitical and geoeconomic challenges:

We must leave our comfort zone as we can no longer leave European security largely in the hands of the US. European security is our common responsibility because it is inseparable. This also means: We need to underpin our soft power with hard power, including investments in our common defence capabilities.

Our geopolitical engagement is also called for in our immediate neighborhood: Ukraine, Moldova, and the Western Balkan are part of the European family. Their integration is deepening our collective security, democracy, and prosperity. As a former Commissioner for neighbourhood and enlargement, I am convinced that enlargement will be manageable from a budget point of view. Other obstacles might require more political will.

Business as usual is no longer an option – especially not in the geoeconomic context we are living in. Therefore, we need to strengthen our competitiveness – the fundament of European prosperity. I am proud that we created the Strategic Technologies for Europe Platform STEP, the first step in directing EU investment in critical projects in biotech, deep, digital and clean tech – by better using synergies.

STEP is a testing ground for the direction of the European budget. We will assess what works for our industries and adapt.

Budgeting is also learning.

I am convinced: We can achieve more with the same amount of money if we bundle our strength and lower national egos, for example: joint procurement of military equipment.

What lessons can we draw from the current MFF?

“Tomorrow was created yesterday” – John Le Carré said, which is also True for the budget. As an author of espionage novels, he would have turned our “budgetary yesterday” into a page-turning thriller. Looking back at this mandate, I can only state: This must have been the most exciting but also challenging time ever for a budget commissioner. I am proud of all we have achieved together, in particular our support for Ukraine.

Let me highlight three key dimensions: spending, revenue and impact – drawing lessons for the future for a more resilient, agile and performant budget:

1. What do we want to spend money on, and how?

Futureproofing of expenditure is key: Our climate and digital ambitions should run like a red thread in every programme, because our European budget works as seed financing – triggering European added value, for example, by supporting cross-border or cross-regional projects.

We also need a more agile budget. Our current long-term budget proves this very well: Multiple unforeseeable challenges – such as Russia's attack against Ukraine, followed by the energy crisis and inflation – had stretched all flexibilities. The current budget structure – with all its pre-allocations and only little flexibility – makes it difficult to react to a changing reality.

We had to be very creative to come up with answers of historical significance – to stand on the side of the Ukrainian people and all Europeans, who also felt the shockwave of the war. RePowerEU to tackle the energy crisis is one of the many good examples of cooperation between the European and the national level.

As a budget Commissioner, my responsibility is to ensure our Union's capability to act. Therefore, I proposed a targeted but crucial mid-term revision. This was more than just a “top-up” – it shows that Member States' share a common understanding that we must tackle certain challenges better together, such as supporting Ukraine, reacting to migration and external challenges – and strengthening our Union's competitiveness.

Lesson learned: in the next MFF, we need to ensure the necessary flexibility and the appropriate speed to match new challenges – because there will be foreseeably the unforeseen. At the same time the new long-term financial framework will also provide the opportunity to question whether we finance the right priorities with the right tools: We can for example ask ourselves whether we really need the multitude of programmes or whether a different, more streamlined, approach would have more value-added?

1. How can we strengthen the revenue side?

First of all, we should avoid getting stuck in the obsession that the budget cannot exceed 1 % of EU GNI. Once we are clear and agree on our common priorities, we need to have sufficient funds to cater for common needs. Here, it is worth looking at the revenue side:

Today, our budget is pre-dominantly financed by national contributions based on the economic weight of a country, the GNI contribution. Why don't we explore different sources of revenue, such as new own resources? The Commission has already put concrete proposals on the table, and it would be in the interest of all European to proceed swiftly.

We have already proven that the impossible is possible if we use our power of unity: Our current European long-term budget was conceived when the Covid pandemic caused the biggest challenge of our generation. And we matched this challenge with the biggest stimulus package in our Union's history – combining the Multiannual Financial Framework (MFF) with NextGenerationEU. This demonstrates: Once there was a joint political will, even the previously unthinkable – common borrowing on a larger scale– became possible.

Today, EU bonds play a crucial role not only in financing the recovery but also in supporting Ukraine. Thanks to our unified funding approach, the EU has been able to transform its market presence: Today we have become a leader in the green bond market, we strengthened Europe's role in financial markets and the international role of the Euro. That means: NGEU is a one-off; but has created many long-term advantages to be used.

Lesson learned: We need to think beyond GNI contributions and to explore all options of innovative financing – using our Union's joint weight.

1. How to maximise impact?

Looking at the current budget, we can also draw lessons to maximise impact: On the one hand, we could explore all options to increase investments – triggered through financial instruments – and assess whether we can increase our impact with existing funds.

On the other hand, we can use the transformative power of the budget, to which the Recovery and Resilience Facility contributed a lot with its performance-based approach. Implementing the RRF reforms has led to tangible results in the labour market and social protection, justice systems, the digitalisation of public administrations and so on. For example: Italy cleared the reform backlog in the judiciary system, which had hampered business investments. In Spain, the RRF gave the final extra incentive to finalise the long-planned labour market reform. And the Hungarian Plan includes measures to reinforce judicial independence.

Lesson learned: Following the example of the RRF, the impact of the EU budget could also be increased through a broader link between EU spending and reforms and investments.

Personally, I am convinced that less is more: Programmes and rules could be simplified and rationalised – to facilitate beneficiaries and reduce the administrative burden for everyone. But let me be clear – simplification does not mean less effective control of EU funds but more efficient use of control instruments.

I am curious to hear your ideas. We will need to be innovative to make our next long-term budget fit for the future. With potentially more challenges, this will not be easy. But I am convinced this is worth every effort, because – if I may recall John Le Carré: “Tomorrow was created yesterday”. That means: Only if we make the right budget choices today, we will have good policy choices tomorrow.

Therefore, let us seize this conference as an opportunity to imagine a budget matching our ambition: to enlarge our union while also enlarging our economic and political scope.

Let us be bold when we discuss the five key questions of the coming hours and years:

1. What do we need?
2. What do we want?
3. What does it cost?
4. What do we want to afford?
5. And how can we finance it?

I look forward to your creative budgetary ideas and wish you an inspiring budget talk.