Europe’s Dysfunctional Growth Compact
Although European governments have agreed to encourage the faster absorption of EU funds in crisis-stricken countries, they have refused to pay into the EU budget to enable the funds’ actual disbursement. Unless a mechanism is introduced that facilitates this process, EU funds cannot be used to stimulate growth in times of crisis.
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BRUSSELS – Recently, a €10 billion ($13 billion) shortfall in this year’s European Union budget came to light. As a result, the EU cannot reimburse member states for recent unexpected expenditures, including emergency outlays, such as aid to Italian earthquake victims, and spending aimed at boosting economic growth and employment, such as the accelerated absorption of unused Structural and Cohesion Funds. Member states have refused the European Commission’s request for extra contributions to cover the shortfall, causing talks over next year’s budget to collapse.