Bertelsmann Foundation and ZEW Publish New Study - EU Could Help Member States to Save Costs

The European Union could help its member states to save costs. Money could be saved by establishing common external representations of the EU or joint European armed forces. EU member states have been generating unnecessarily high costs by sticking to individual national structures. These are the key findings of a study carried out by ZEW in collaboration with the Bertelsmann Foundation. Today the study is presented to the public in Brussels.

In this study, the researchers focus on three policy areas: the Common Agricultural Policy (CAP), which has played a particularly important role in the EU budget for a long time, as well as External Representation and Defence, both of which are still a long way off. The key question addressing the three policy areas is whether Europe is able to create an "added value" and perform better than the individual member states have done so far. "Europe is not necessarily spending too little money - Europe is creating too little added value with its money", is how PD Dr. Friedrich Heinemann, head of the ZEW Research Department "Corporate Taxation and Public Finance", sums up the findings of the project.   

It may come as a surprise to even search for a "European added value" of the Common Agricultural Policy, which has repeatedly been labelled as a money pit by critics. However, the CAP could still make sense insofar as it helps to prevent expensive subsidy races between individual states. The model-based empirical analysis indeed shows that renationalising agricultural policy would in all likelihood not contribute toreducing overall costs. There is no evidence of a real added value, but there are, after all, no indications for unnecessarily high costs, either.

Evidence is strong, however, that an actual return can be achieved when it comes to common European embassies and consulates. Here, savings from 6 up to 19 per cent compared to current costs could be realised if the EU member states agree to establish "embassies with 28 flags". Annual expenditures could be reduced by up to 1.3 billion euros. The calculations for this area even take into account that shared embassies would still require specialised staff to maintain language services or to protect particular national interests.

In absolute numbers, steps towards a common European defence policy would be even more significant. The research team calculated the range of possible savings which could be achieved if the EU established common land forces. According to the study, between three and nine billion euros per year could be saved without reducing military capabilities.

The Bertelsmann/ZEW study also points to an intrinsic risk, however: the calculated savings can only be achieved if the EU’s assumption of new tasks will not be accompanied by an increase in remuneration, compared to the national level. If all members of European embassies and forces received EU salaries in the future, all chances to lower costs would inevitably be reduced to nothing.

For more information please contact

Florian Misch, PhD, Phone +49 621/1235-394, E-mail misch@zew.de

Marc-Daniel Moessinger, Phone +49 621/1235-161, E-mail moessinger@zew.de