A common budget that makes common sense

Europe faces a growing list of challenges, from soaring energy costs to competition in artificial intelligence. The continent needs €1.2 trillion annually to stay competitive, but this amount may be too low. Strengthening integration, solidarity, and welfare cannot be sacrificed on the altar of these investments. As Europe unifies its capital markets and mobilizes household savings, it should adopt a forward-looking financial framework rather than revert to reactive measures.

However, there is a push to cut the EU's financial plan for 2028-2034, which could hinder Europe's ability to act independently. The European Commission's original proposal of nearly €2 trillion is similar to the current spending plan, accounting for around 1.15% of the EU's gross national income. Spain has suggested freeing up to €11 billion annually, which could help retire debt by 2058 without increasing repayments.

This would release nearly €70 billion, equivalent to one-fifth of a proposed fund for strategic sectors and roughly one-third of the aid sent to Ukraine since 2022. Spreading the debt repayment could also reduce investors' demand for euro-denominated assets. Additionally, Spain proposes allowing the Commission to issue debt on behalf of member countries, potentially saving €25 billion in annual interest.

Spain, set to become a net contributor to the next budget, is willing to contribute fairly to make the EU a global leader. The budget should be capped at 2% of EU GDP, providing economic and societal support. While this is less than the investment gap identified, it addresses investor and citizen concerns. Europe's next budget should signal to voters the need for economic security and reassurance amidst rising energy costs and declining factory operations.

Facing the most challenging decade since the Cold War, Europe must not shrink but rather build on progress to avoid the hands of populist parties seeking to dismantle the project. Initiatives like NextGenerationEU proved Europe's ability to provide economic security during crises; now, it's time to continue this momentum.