Chapter 8 An Overview of EU policy-making


  • The EU is strongly involved in some issue areas but less or hardly involved in other areas.
  • EU policy-making focuses primarily on regulatory policies. (Re-)distributive policies are much less important than they are for member state governments.
  • The EU budget amounts to some 1% of European GDP.
  • The EU receives its revenues primarily from the member states. It does not levy its own taxes, and it is prohibited from running a budget deficit. However, the EU does borrow money for specific funds, most prominently the NextGenerationEU recovery fund. 
  • Around 70% of the EU budget is spent on two policy areas: agricultural policy and regional policy.
  • Some member states are net contributors to the EU budget while other member states are net recipients. The distribution of contributions and benefits between the member states has led to recurring budgetary battles that pit net contributors against net recipients and member states with large agricultural sectors against member states with small agricultural sectors.
  • Regulatory policies in the EU can be divided into three groups: regulation aimed at market regulation, regulation aimed at mitigating the negative impacts of economic activity, and regulation not (directly) related to economic activity.
  • Market integration occurs through a combination of ‘negative’ and ‘positive’ integration.
  • Over time, the EU has developed from an economic union to a political union.
  • In a quantitative sense, Regulations form the largest part of EU regulatory output. However, in a qualitative sense, Directives are often more important because they cover broader issues.
  • Economic and Monetary Union (EMU) and foreign policy are two areas of EU policy that have been subject to important developments over the past decades.
  • In EMU, monetary policies have been centralized at the EU level, while economic policies are primarily decided within the member states. Since the 2008 financial crisis, several measures have been adopted to strengthen the coordination of economic policies within the EU.
  • The development of EU foreign policy has been a slow and gradual process, because it goes to the core of member state sovereignty. Nevertheless, since the late 1990s several steps have been taken to strengthen foreign policy and military cooperation at the EU level. Despite these steps, the EU is still seen as an ‘economic power’ and a ‘soft power’, rather than a military power.

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