The EU Budgetary Procedure in the Constitutional Debate

Despite widespread calls for reforms of the EU budgetary procedure, the European Convention and, even more importantly, the Intergovernmental Conference seem to have generated only minor institutional adjustments. This paper aims to explore the lack of institutional change in the budgetary field. On the basis of a thorough analysis of the current budgetary procedure and a detailed assessment of the various reform proposals, the paper contends that an important reason for keeping the institutional status quo has been the lack of a suitable alternative. While this result is line with the existing institutional choice literature, the paper develops the theoretical argument further. It reveals that the current design of the EU budgetary procedure corresponds by-and-large to an equilibrium between all actors involved, given the present state of political integration in the European Union. Altering that equilibrium would require a significant shift in integration. The “embeddedness” of the budgetary field in the overall state of European integration thus constrains the scope of reform significantly. Given that neither the European Convention nor IGC have dwelled on questions related to the general state of political integration, it is not surprising that the calls for far-reaching reforms of the EU budgetary procedure did not amount to the desired institutional change. 1 The opinions expressed in this paper are those of the authors and do not necessarily reflect those of the European Central Bank. This paper is part of a larger research project on the reform of the EU budgetary procedure that we are currently conducting together with Oscar Calvo-Gonzalez and Raymond Ritter. We thank Theodor Martens, Demosthenes Ioannou, Helge Berger, Alfredo De Feo, and the participants of a CESifo Conference in Munich for helpful comments.