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Johan Van Overtveldt: “The EU’s money is at risk of running out”
The MEP and chairman of the European Budget Committee is sending a serious warning to the European Commission. If nothing fundamental changes soon, the EU risks having insufficient funds to pay the interest charges on its loans. “I have been warning about this for a year, but I am not getting any clear information from the Commission. This could well end with higher taxes, which I absolutely oppose.”
Following the coronavirus crisis, the European Commission launched the NextGenEU plan, the coronavirus recovery fund that provides EUR 330 billion to support the Member States. That money must be borrowed. The interest charges of that huge budget amount to EUR 8-9 billion per year. “The EU’s total annual budget is about EUR 170-180 billion. In other words, there is insufficient money to bear those interest charges,” Johan Overtveldt calculates.
“I already warned last year that interest rates might rise and that it would therefore be advantageous to borrow a larger amount sooner. A difference of 0.1% interest on an amount of EUR 330 billion is EUR 330 million. It thus has huge consequences. They have waited too long, and there is no clear explanation why they have waited,” says Johan.
“The average citizen will not notice any of this at the moment, but if additional money is needed in the future, it can only come from two sources: new taxes or new savings. I don’t think Flemish citizens will accept even more taxes when they are already struggling to keep their heads above water. Nevertheless, a majority in the European Parliament is in favour of it.”
More efficient spending
According to Johan, the main focus must be on expenditure. “A third of the European budget goes to the economic development of the Member States, while another third goes to agricultural subsidies. In terms of efficiency, I think it would be appropriate to look at this in order to free up more financial space. I am not alone in saying that; the European Court of Auditors is also concerned about the way in which that money is being used.”
At their wit’s end
“We can quite rightly be concerned. Not only the EU itself, but also all Member States. We have exhausted ourselves in all kinds of initiatives in recent years, which leaves little scope for policy matters. If something else happens to us, such as a pandemic, a lot of people will be at their wit’s end.”