EU Budget, Financing and Financial Rules
What the exam tests
Budget questions test the annual and multiannual cycle, revenue and expenditure, and the financial rules that govern spending. Distinguish political decisions from audit and discharge. Annuality means appropriations are generally used in the year; carry-overs are exceptional and must be authorised. The budget authority is the European Parliament and the Council.
Core rules
- The Multiannual Financial Framework (MFF) sets annual ceilings by heading for several years; the annual budget must respect those ceilings. The EU budget must be balanced and may not borrow to cover deficits.
- Own resources include customs duties, a VAT-based resource, a GNI-based resource and, since 2021, a plastics-based contribution. The Own Resources Decision requires unanimity in Council and ratification by Member States.
- Budgetary principles include unity, annuality, equilibrium, unit of account, universality, specification, sound financial management and transparency.
- The Financial Regulation (EU, Euratom) 2018/1046 governs procurement, grants, commitments, payments and controls. Key actors include the authorising officer, accounting officer and internal auditor.
- The Court of Auditors audits legality and regularity and sound financial management; the European Parliament grants discharge.
Worked example
The Commission wants to award a grant to an NGO. It must first have a legal basis and a budget line, then make a budgetary commitment before a legal commitment. Payments follow evidence of eligible costs. If the NGO fails to declare a conflict of interest, the authorising officer may suspend payments and recover funds. The Court of Auditors may later report an irregularity, but only Parliament grants discharge.
Traps
Do not call the MFF the annual budget. Do not say the EU budget may run a deficit. Do not confuse discharge with audit. Do not assume the Commission alone decides own resources. Do not ignore that commitments and payments are separate stages.