Moving beyond the “juste retour” to give Europe the means to match its ambitions

Download the Point of vue by Clément Beaune, High Commissioner for Strategy and Planning and Mattéo Torres, advisor of the HCSP

Public debate tends to focus above all on the balance between what goes out and what comes back into the French account. How the budget is funded generally attracts less attention, even though it determines what the Union’s funding priorities are and who will finance them.

Today, the European budget is financed essentially by the Member States. Two-thirds are calculated on the base of gross national income (GNI) by country. The equation is simple: the richer a country, the bigger its’ contribution. In 2027, France’s contribution is estimated at nearly €31 billion. France remains the second-largest net contributor, behind Germany.

This method of financing has two major flaws, which reinforce each other. The first is the risk of failing to cover Europe’s major needs for the coming period. The second runs deeper. Because each Member State contributes to the EU budget from its own national budget, it tends to assess the European budget primarily in terms of what it gets back relative to what it pays in: the so-called “juste retour” logic. Countries are thus more willing to defend the funds that are reinvested for their farmers or their regions, rather than spending benefits that are shared by all EU countries, such as research or defence. These shared priorities may deliver essential common benefits, but this does not fit into the “juste retour” equation. The two flaws feed on each other: the more needs grow, the more closely each State monitors what it gets back, and the less willing it is to fund European commons. To break this flawed cycle, we need to redefine how we finance the European Union.