1. What is the EU Budgets role for the EU internal market? Jorge Nunez Ferrer Conference Europe in the Global Economy

2. Stated objectives of EU for internal market Sustainable growth Cohesion Justice and home affairs A lot can be achieved by policy coherence at EU and national level EU budget only a complement – NOT A CORRECTOR of inefficiencies or artificially generated market failures

3. The present budget Mainly a tool for reaching political objectives of integration How? By compensating losers of integration, real and imaginary - mainly –CAP: cohesion between social groups –Cohesion policy: between territories Measures designed with a mixture of theory and political correctness

4. Situation now Resource limitations and change in challenges require: –coherence –effectiveness in achieving economic as well as social objectives. Growth and redistribution policies need to be focused on facts rather than issues like net balance considerations Search for actual European Value Added

5. SUSTAINABLE GROWTH Budget can only be catalyser of resources There is a role in TENs and R&D R&D role of EU possible, but present direction is a concern Regulatory environment is suboptimal for PRIVATE R&D, public R&D in EU not particularly weak It needs more funds concentrating more for example on R&D infrastructures Use ERC or similar – do not bureaucratise research selection! Do not go for slogans: Applied research good, basic research also essential

6. EU role for climate change goals important Environment and energy efficiency cannot be a residual of CAP and cohesion funds Needs earmarking to reach needed financial goals Long term research post 2030 need public intervention, private sector cannot work on long term results and high risk financial returns

7. Cohesion policy based on flawed, partly interpreted theories of regional convergence Eligibility based on GDP per capita also very distortive Value added of intervention: –For regions lacking basic infrastructures, human capital and services: –WHERE LOCAL RESOURCES NOT SUFFICIENT! There are clear diminishing returns for infrastructure Role of funds: –setting enabling environment, growth is more strategy and national rules rather than funds –Target bottlenecks and real market failures –Important reforms needed, specially ESF implementation Cohesion

8. CAP Very important reform needed. There is an EU role: Food safety, environment But funds and goals very inefficiently linked, there is no space for waste in the EU budget Rural development funds has too many national pet projects incorporated and is too sectoral

9. Justice and Home Affairs Coherence and pooling of resources would generate potentially large economies of scale. Safety important for internal market Coherent rules important

10. To conclude EU budget is there to complement coherent and efficient policies at national level to generate higher benefits at EU level It should not be an instrument to correct national inefficient policies There are enough needs and funds are correctly limited