This article discusses the concept of European public goods (EPGs) and the argument for their financing through the European Union (EU) budget. These goods, such as cross-border infrastructure, external border protection, defense, and pandemic prevention, benefit large parts or the entire EU, providing greater economies of scale and cross-border spillovers compared to national-level provision. The EU budget, which has remained relatively small at about 1% of GDP since the 1980s, has been primarily used for the Common Agricultural Policy and cohesion funds, but there is an opportunity to redirect more resources to the provision of EPGs.
EPGs are defined as policies or initiatives whose value to citizens is higher when carried out at the EU level. Examples include the interconnection of energy grids, pandemic response, and the procurement of vaccines. The article argues that financing these goods at the EU level would create efficiency gains, reduce costs, and enhance public good provision across the union. With the EU facing new priorities, such as security and the green transition, investing in European public goods is seen as a way to address these challenges while benefiting all member states.
The article also touches on the political and economic hurdles that have hindered EU-level financing of these goods. Concerns about fairness, contribution disparities, and fears of increased tax burdens have slowed the shift toward EU-level provision. However, it highlights that such investments could stimulate demand, foster innovation, and generate broader macroeconomic benefits, benefiting businesses and citizens alike.
In terms of financing, the article suggests leveraging existing EU mechanisms, such as the European Stability Mechanism (ESM) and the European Investment Bank (EIB), to fund these initiatives. Additionally, the report discusses potential reforms to improve the financing structure and enable more effective provision of European public goods, such as defense spending and energy infrastructure.
By financing public goods that have cross-border effects, the EU can create more efficient and effective solutions, driving long-term economic growth and fostering a more competitive and secure Europe.
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