The Administration of EU Fiscal Resources

EU budgetary law has changed significantly in the last twenty-five years, with a gradual strengthening of the European Commission spending powers. This tendency became more tangible with the expansion of the Multiannual Financial Framework (MFF) 2021-2027 capacity throughout the pandemic. Even in its aftermath, the new fiscal rules (contained in Regulation (EU) 2024/1263) contain provisions that have the potential to change the balance in the multilevel management of public expenditure. The administration of European fiscal resources occurs in light of the predetermination of the policy areas in which Member States shall invest and adopt reforms, with the same logic of the headings of the MFF. Therefore, the Commission’s assessments of the compliance of domestic investments with the indicated policy areas seem to be depoliticized, and for this reason, one could speak of “budgetary administration”.

In this regard, one could say that the European budget has a “two-dimensional nature”: on the one hand, the Union level, linked to the direct, shared and indirect management of EU resources; on the other hand, the domestic expenses forecasted in national budgets – from now on also known as national medium-term fiscal-structural plans. The latter acquire “European” relevance under two aspects: firstly, because of the necessity to contain public debt, which is considered in a unitary manner unlike European expenditure, and still reflects the division of competences between the Union and the Member States; and secondly, because of the use of domestic resources for the pursuit of common objectives, additional to those that the Member States already periodically contribute for the “own resources”.

The Multiannual Financial Framework, strengthened by the Recovery and Resilience Fund, is therefore at the heart of a new system of governance for the European economy. In this new system, a common thread can be identified in the rules that have renewed the European Semester, as well as in the European centralization trends of public spending management.

In relation to the domestic dimension of the EU budget, the introduction of seemingly restrictive rules for the spending sovereignty of the Member States could represent a European constitutional problem, as the broad scope of these provisions might deserve to be included in the Treaties, rather than through the adoption of secondary law instruments. This raises the question of the potential normalisation of spending conditionality within the EU legal framework, as is also evident in several policy areas, such as green transition and migration management. In other words, under the request to contain domestic public debt on acceptable expenditure paths, the Union will ask Member States to invest additional national resources for the development of predetermined policy areas.

If these new constraints applied to domestic expenditure could possibly be framed as a species of the Structural Funds’ conditionalities, they should follow precise administrative procedural rules, such as the case of Regulation (EU) 2020/2092. Nonetheless, unlike the rule of law conditionality mechanism protecting the EU budget, which not only describes the administrative procedures for assessing potential breaches of the EU values set in Article 2 TEU but also the related sanctions for the violation, the new fiscal rules - focused on national budgets - do not mention the evaluation procedure that should bind the Commission in its assessment on national investments and domestic reforms in predetermined policy areas. The lack of clear procedural rules can lead to uncertain legal protection mechanisms against the Commission’s evaluations of national budget plans, which would be characterized by unlimited discretion. Numerous issues might arise in this respect, such as who has the right to contest acts that contain the Commission's evaluations, or which is the natural judge before whom they can be challenged – the negative outcome of which could also manifest in a mere informal communication addressed to the Member States.

Taking into consideration these issues raised by the intertwining of the European economic governance tools recently adopted by the European institutions, this seminar will debate the following questions:

-   Spending Conditionality as a New Governance Model: In the post-pandemic season, how has the EU legal framework changed in respect of spending conditionality, and does it have an “administrative nature”?

-   New Constraints in Governance through Funding: Does it become more complex for Member States to access Structural Funds, because of the condition which requires the national fiscal plans comply with the policy areas set out in the Regulation (EU) 2024/1263?

-   Alternative Criteria for the Restructuring of the European Budget: How will the competitiveness criterion, as the core of a new season of reforms of EU legal framework as suggested in the 2024 Draghi’s Report, influence the structure of EU budget in the upcoming MFF?

-   Towards a top-down model of European integration: Has the reformed expenditure management reduced the spending capacity of the Member States in such a way as to conceal a different model of European integration?

This event is co-organized with MCEL