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Who gave and who took: the real numbers of EU funds

The result should not be surprising: in financial relations with the EU we have lost out overall. I don't see how the opposite can be argued, not only and not so much because the numbers say so (I'll provide you with the data sources and a summary immediately afterwards), but because logic dictates that it should be so. In the European project, Italy, especially after the "enlargements", found itself in conditions of relative pre-eminence, with a per capita income relatively higher than that of many other member states. The principle of cohesion which the European budget is inspired by (and of which you have a detailed account here ) therefore means that Italians pay for those who have less than them.

The fact that in our financial relations with the EU the result is overall at a loss would therefore also be commendable, as it responds to a solidarity principle which one could abstractly adhere to, also considering that in other eras (i.e. the era of the European Community) , Italy had benefited from this same principle.

However, in my opinion, the fact is made indigestible by three circumstances:

1) information operators deny this fact in an almost systematic way, instead telling us about an EU that is generous towards us (where generosity, as Romina Raponi explained to us, consists exclusively in telling us what we should do with our money);

2) the beneficiaries in some notable cases (Poland, Czech Republic, Hungary…) are not subject to the same constraints as us because they are equipped with that fundamental economic policy instrument which is currency policy (i.e. they have their own currency and they maneuver it to absorb macroeconomic shocks), which makes our help quite superfluous and their competition quite unfair (below you see how the real exchange rates of Hungary, Poland and Italy reacted to the 2008 crisis: Hungary and Poland were able to devalue immediately, and this undoubtedly helped them):

3) the funds that are returned to us are used by the EU to advertise itself with a flood of plaques, symbols, stamps and sealing wax (just think of the school where you take your children: the plaques at the entrance will convey to you and to your children the idea that without the generous support of the EU that school would never have been built! Too bad that generous support consists of your money…)

In the end, circumstance 3, which for me is the most annoying (if you want to get propaganda, do it with your own money, damn!) is ultimately the most natural: everyone knows that the customer pays for advertising!

But let's get to the numbers and their sources.

In Italy, financial relations with the EU are monitored by the IGRUE ( General Inspectorate for Financial Relations with the European Union ), a "region" of that "State within a State" which is the RGS (General Accounting Office of the State). The meticulous annual reports of the IGRUE are one of the main sources used by the Court of Auditors to draw up its annual report (which you can find here ).

All very nice, but since we are Europeans (not pro-Europeans) the sources that interest us are the European ones (don't blame the national institutions: it's not distrust!).

We have already dealt with the topic here , but in the meantime four years have passed and it may be useful to consult the updated data found on the EU spending and revenue 2021-2027 page in an Excel sheet entitled EU spending and revenue – Data 2000-2022 ( for previous dates the reference remains the EU Budget Financial Report of 2008).

The numbers that interest us are essentially two:

the total expenditure (of the EU to the benefit of Italy) and the total of own resources (of the EU budget paid by Italy). Here you see these numbers for the year 2000, which, as you can check, coincide (and it could not be otherwise) with those reported in the EU Budget Financial Report of 2008:

For your convenience I report these numbers in a table for each year from 2000 to 2022, using for simplicity as column headers: Received, Data and Balance (so Received is the total expenditure (of the EU for the Member State), Data is the total own resources (EU received by the Member State), and the balance is the difference between Received and Given):

Summary: starting from 2000 (but if we started earlier it would change little, and for the worse) we have systematically given more than we have taken, and the cumulative difference amounts to 97 billion.

At this point, however, the more astute among you might ask yourself: what about the pereperepere (for PNNR friends)?


We must also consider the cash effects connected to the PNRR, which are reported, starting from 2021, in this Excel "sheet":

Be careful though! The figures must be verified and understood, and the first thing to understand is that the entire NGEU is financed with borrowed money, which must then be repaid, so, as in any loan, a positive cash effect today (a collection) will correspond a negative cash effect tomorrow (an outlay, i.e. a refund). The thing that probably not everyone has understood is that this concerns not only what in the context of "recovery" are defined as loans , but also what are defined as non-repayable contributions or grants.

We will also repay the lost fund.

But where is it written, and what is the difference between loans and non-repayable funds?

But it is simply written in the information for investors , that is, for those who have lent, are lending and will lend money to the EU within the framework of NGEU.

The difference between loans and "repayable funds" is this:

the loans will be repaid directly by the Member States, while the "repayable fund" will be repaid by the EU budget.

And you will say: therefore we don't have to reimburse it! And no, it doesn't work that way. It works like this:

It works that to repay the so-called "repayable fund" via the EU budget, member states will have to think about other "own resources", that is, ultimately, about other taxes for citizens. There are " Next Generation own resources ": ever heard of the carbon market? The Emission Trading System and the Carbon Border Adjustment Mechanism will be used to reimburse the non-repayable fund.

And how will this miracle happen, how will we get from carbon to reimbursement?

Simple: through your pockets.

Everything you buy will cost a little more (either because it is produced in Europe by companies that will have paid a little more for CO2 emission permits, or because it is produced abroad and therefore subjected to the "ecological" duty of the CBAM) , and part of the difference will be used to repay a loan on the use of which you have not been able to fully express yourself. But obviously this will not be enough, and therefore the contribution from other own resources will also be increased for the occasion. And where is it written?

But it is specified in COUNCIL DECISION (EU, Euratom) 2020/2053 of 14 December 2020 on the system of own resources of the European Union and repealing Decision 2014/335/EU, EuratomCouncil Decision (EU, Euratom) 2020/ 2053 , the so-called own resources decisions , where it is clearly written that:

that is, as an exception to the principle according to which the "own resources" (the money given by the Member State to the EU budget) cannot exceed 1.4% of the GNI (gross national income) of the Member State, to repay the "repayable fund" of NGEU this threshold can be raised by 0.6, therefore reaching 2%, until full reimbursement, and in any case no later than 2058.

Clear, right?

The benefit of NGEU, of recovery, of pereperepere, in short, call it what you sometimes call it, is therefore not to get a gift! The benefit exists and consists in the fact of being able to anticipate certain expenses (which is the reason why loans are normally taken out), but this benefit, in addition to being minimal, in the opinion of the writer (and not only) is more than compensated by three serious critical issues:

1) with that money we cannot do what we want, but what those who lend it to us want (do you remember going to the bank to ask for a mortgage and the bank granting it to you but if you choose which house you buy? No, obviously, because in the normal world it doesn't work like that. In the EU it works like that);

2) that money is almost impossible to spend because EU intermediation adds a level of bureaucratic complication that not so much the Italians as the very efficient Northern Europeans are unable to manage :

3) the hypothetical benefit deriving from the fact that in the case of the grants the EU would have paid the interest is also canceled out by the fact that since the financial planning of NGEU was handled by two Nordic jurists who were differently equipped in terms of financial skills, the interest burden that the EU has to repay on grants is already well out of the question , as you know (those who follow Goofynomics have known this since April 2023 ):

which will require a review of the MFF ( Multilateral Financial Framework , the EU budget), and guess what? Yes, you guessed it: an additional load of "own resources" (i.e. your money).

Here is a good article , dating back to May 2023, I had the honor of telling you that there would be problems in financing it in July 2020:

and that there would be many new taxes from the beginning, and ex multis here:

After having clarified this aspect (i.e. that the "non-repayable fund" is also a loan, and therefore as such it would not go into the income statement), I also provide you with the table including the non-repayable fund:

We are still in credit, overall, even if the total imbalance drops to 64 billion, but after a short period in which we will apparently be net beneficiaries as in 2021 and 2022, from 2027 the annual balance will return negative, and heavily! (due to NGEU's own resources, the increase in the ceiling, and the additional own resources required by the unexpected interest burden: all expenses relating to the reimbursement of the "subsidies").

Please note: it is true that the loans   they do not go into the income statement, since in the Excel sheet what you find are only the non-repayable contributions (which however are not such, but are loans for the reasons that I have written and documented). In fact, you can find the total money collected in the NGEU tracker :

and the 10198 that you see for 2021 in the previous mirror correspond to the 8954 of the Recovery and Resilience Facility reported by the NGEU tracker plus the sums coming from the other "minor" NGEU instruments (essentially, additional financing from the usual European funds):

The so-called "subsidies" (the non-repayable fund) however are just under 70 billion :

of which thirty have already been collected (but not yet returned). This means that if in the next three years there were no disbursements from us, but only those receipts, our budget with the EU would remain in the red. But there will be disbursements, and they will be increased for the three reasons I have documented for you.

Here you are. Today in the Commission I highlighted (and colleagues nodded) that in our country too many confuse the contributory calculation method with the funded management system. This misunderstanding is objectively a problem, but the qui pro quo is excusable because the matter is technical and the terms are complex. In the case we are dealing with today, however, the misunderstanding is not excusable: it is not necessary to have a master's degree in finance, not even the one taken at Oscar's university, to understand that if you have to return them they are not a gift!

I owed you so much.

This is a machine translation of a post (in Italian) written by Alberto Bagnai and published on Goofynomics at the URL https://goofynomics.blogspot.com/2024/01/chi-ha-dato-e-chi-ha-avuto-i-numeri.html on Wed, 24 Jan 2024 13:42:00 +0000. Some rights reserved under CC BY-NC-ND 3.0 license.