Webinar Series: EU Budget Talks

With Russia’s War against Ukraine entering its fourth year and geopolitical tensions reshaping global security more broadly, defence has firmly moved to the centre of the European Union’s Policy agenda. As the EU prepares its next Multiannual Financial Framework (MFF), fundamental economic and institutional questions remain: How should European defence spending be structured? What role should the EU budget play alongside national efforts? And where can European coordination plausibly create real added value?

In this first episode, we explore what we know about the economic effects of defence spending. Our discussion will examine the key EU-level defence instruments, assess how they compare to national initiatives, and analyse the potential benefits of greater coordination at the European level.

The webinar will conclude with concrete perspectives on how defence spending could shape the EU’s next long-term budget and what this means for Europe’s economic and strategic future. 

Panel:

• Paolo Surico: Professor of Economics at London Business School and Research Fellow at the Centre for Economic and Policy Research (CEPR)
• Krastio Preslavsky: Acting Head of Unit „Defence Industrial Programming Coordination" at the European Commission’s Directorate-General for Defence Industry and Space (DG DEFIS)
• Zareh Asatryan: Professor of Economics, ZEW and University of Münster

As the debate on the next Multiannual Financial Framework (MFF) intensifies, the question of how to finance EU-wide priorities has become increasingly urgent. With NextGenerationEU and its main spending instrument, the Recovery and Resilience Facility (RRF), the EU has for the first time issued large volumes of common debt.

Recent initiatives such as the Ukraine Facility, as well as discussions on a possible Green Deal or a European sovereignty fund, build on similar financing logics and reflect a growing role for EU-level borrowing.

This raises fundamental economic and institutional questions: Are Eurobonds and other joint borrowing instruments a temporary response to crisis or a building block of a more permanent fiscal capacity at the European level? How should such instruments be designed to balance macroeconomic stabilisation, market credibility and fiscal responsibility? And what are the implications for the EU’s system of own resources, national budgets and the governance of the MFF?

In this second episode, we will discuss the economic rationale as well as the benefits and risks of Eurobonds and common EU debt. We will analyse how new financing instruments interact with the MFF and the EU’s traditional own resources, and we will explore options for repayment, refinancing and the long-term integration of EU debt into the European fiscal framework.

The webinar will conclude with perspectives on how Eurobonds and EU-level debt could shape the next MFF and what this implies for the future of European fiscal integration and financial markets.

Panel:

• Lourdes Acedo Montoya: Directorate-General for Budget (DG BUDG), EU Commission
• Friedrich Heinemann: ZEW and University of Heidelberg
• Zsolt Darvas: Bruegel and Corvinus University of Budapest
• Lars Feld: Walter-Eucken Institute and University of Freiburg

As the EU advances its climate agenda and prepares the next MFF, the Carbon Border Adjustment Mechanism (CBAM) is emerging not only as a central climate policy instrument but also as a potential new source of EU revenue. Introduced to address carbon leakage and ensure a level playing field for European industry, CBAM could become an increasingly important component of the EU’s system of own resources.  

However, the mechanism raises several economic, fiscal and geopolitical questions: How significant could CBAM revenues become for financing the EU budget? How should climate-related revenues be integrated into the broader architecture of the EU’s own resources? What are the implications for industrial competitiveness, international trade relations and the political acceptance of EU-level taxation? And can climate policy instruments simultaneously serve environmental and fiscal objectives without creating conflicting incentives?  

In this episode of our EU Budget Talks, we will discuss the economic rationale behind CBAM and analyse its potential role in the future financing of the EU budget. The webinar will explore the interaction between climate policy and fiscal integration, assess distributional and sectoral implications and examine the broader international dimension of carbon border measures.  

We will conclude with perspectives on how CBAM and related climate revenues could shape the next MFF and what this implies for the future of EU fiscal capacity and European climate governance. shape the next MFF and what this implies for the future of EU fiscal capacity and European climate governance.

Panel:

• Philipp Dörrenberg: Professor of Taxation at the University of Mannheim
• Sebastian Rausch: Head of ZEW Research Unit “Environmental and Climate Economics”
• Jonas Teusch: European Commission, Economic Analysis and Taxation of Exempted Sectors (DG TAXUD, Unit C.5)
• Anne van Ysendyck: Vice President and Head of Government Affairs and Environment at ArcelorMittal Europe