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Ursula von der Leyen has suggested making access to EU subsidies conditional on national economic reforms as a potential way to improve the bloc’s sluggish competitiveness against global rivals.
The European Commission president, who is campaigning for a second five-year term, told the Financial Times she “sees the advantages” in imposing conditions on hundreds of billions worth of cohesion funds and the bloc’s generous Common Agricultural Policy.
The potential change would be a dramatic shift in how the EU doles out its two biggest funding streams, and could ultimately free up space for additional spending on defence and industrial growth amid Russia’s war in Ukraine and a ramping up of subsidies in China and the US.
A successful precedent, von der Leyen said, was the bloc’s NextGenerationEU programme — an €800bn joint borrowing scheme aimed at jump-starting national economies following the Covid-19 pandemic — to which national governments have access only if they carry out economic reforms.
Having a “combination of reform and investment . . . led to growth”, she said. “And you see it now in the successful, economic development that you have in Italy, Greece and Portugal.”
“So we should learn lessons,” she said. “I’m open to that discussion because I see that the impact of our investment has been strong.”
The proposal comes as EU member states — whom von der Leyen needs support from to win a second mandate after European parliament elections next month — begin to make demands of the next budget, which will run from 2028-2034.
Curbs on spending and more economic conditionality are frequent demands from affluent countries including her native Germany, as well as the Netherlands and Nordic nations.
The centre-right European People’s party (EPP) for which von der Leyen is the lead candidate in the upcoming elections, is also in favour of an EU budget that is “boosting competitiveness”.
The EPP is forecast to win the most seats in the June 6-9 election, allowing it to nominate von der Leyen as its choice for commission president. She needs to be backed by EU leaders, and then win a majority of the new parliament to be confirmed.
France is the largest gross beneficiary of the CAP, which subsidises farmers and is worth a total of €386.6bn over seven years. French President Emmanuel Macron, who put forward von der Leyen’s name the first time, has yet to back her for a second term. His government has struggled to get spending under control and his economic reforms have been met by fierce domestic backlash.
Cohesion policy, worth a total of €392bn in the current budget, is aimed at closing the gap between the EU’s poorer regions and the more developed ones. Poland is the largest gross beneficiary.
Member states have demanded that the next EU budget includes more money for defence and security, to invest in new technologies and support European industry, calls that look set to see it grow in size.
Von der Leyen said that she was “open” to raising new joint debt to fill funding gaps, an idea backed by Macron and others, but that it was a “pure sovereign decision” of the member states.
“If we have a very clear analysis about what are the [spending] priorities and which of the priorities we want to find is on a European level . . . I’m open for that, but the preconditions have to be done first,” she said. “There is no carte blanche.”
Von der Leyen said that she would use the experience of her current five year mandate to improve and simplify how the EU budget is spent.
“We have overlapping programmes, partially, and redundancies, and . . . we see that sometimes the budget is too slow.
“If you have more clarity, more simplicity . . . you will have more speed and thus more impact,” she added. “In very simple terms, the euro that is spent today has much more impact than the same euro that is spent in three years because we are so slow in all our processes.”
Economic choices for Europe: The Financial Times and Bruegel think-tank hosts a debate on Tuesday among the top candidates in the European parliament elections. Watch here.
