The European Union will need to ask member states to make fresh contributions to the bloc’s budget to fund a growing list of priorities, including support for its industries and addressing fallout from the war in Ukraine, the EU executive arm’s top economy official said, Report informs via Bloomberg.
“We need in a sense to replenish the EU budget, because many of the reserves were used during the first years,” European Commission Vice President Valdis Dombrovskis said on January 18 during an event hosted by Bloomberg.
The bloc agreed on a seven-year, €1.8 trillion ($2 trillion) budget in 2020, including an unprecedented pandemic recovery fund financed through joint borrowing. But the war in Ukraine, the energy crisis and the need to support European companies to counter a $369 billion US climate law has put the EU budget under severe strain.
Member states would need to bolster the EU’s long-term budget for 2021 to 2027 via additional national contributions during its mid-term review, which is supposed to be concluded this summer, an EU official said.
As part of the review, Commission President Ursula von der Leyen has proposed a sovereignty fund to support companies in the development of cutting-edge technology on the continent, although it remains unclear how the new instrument would be financed.
In addition, the EU is expected to take a leading role in the reconstruction of war-torn Ukraine. The discussion about cooperation with other donors and ways to finance it is expected to pick up in the second half of this year, people familiar with the matter said. Given the magnitude of the funds involved, one option being considered is additional joint borrowing.