EU Institutions, Finance, and Economic Governance

Court of Justice of the European Union (CJEU)

Composition: One Judge per Member State (MS).

Core Functions of the CJEU

1. Ensure proper interpretation of treaties and resulting laws.
2. Resolve disputes (direct and indirect).
3. Ensure law is interpreted and applies equally across the EU.
4. Check the legality of actions taken by EU institutions.

Types of CJEU Proceedings

1. Preliminary Ruling: A Member State court asks the CJEU for interpretation in case of doubt. The resulting decision is binding preliminary law.
2. Infringement Procedure: Initiated when a Member State or the Commission believes an MS is failing to fulfill EU law.
3. Procedure for Annulment: Initiated when an MS, the Council, the European Parliament (EP), or the Commission believes an EU act is illegal, leading to its annulment.
4. Procedure for Failure to Act: Initiated when the EP, Council, or Commission fails to act as requested by the Treaties. MS, EU institutions, or individuals can complain to the CJEU.

Economic and Monetary Union (EMU)

The EMU represents a major step in EU integration. Its primary mission, laid down for the European Central Bank (ECB), is maintaining price stability for the Euro area (€).

Key Pillars of the EMU

• Coordination of economic and fiscal policies.
• Monetary policies for the Euro and price stability.
• Supervising and monitoring financial institutions.
• Ensuring the smooth operation of the Single Market.

Stability and Growth Pact (SGP)

The SGP enforces fiscal discipline within the EMU, requiring government deficit to be less than 3% of GDP and public debt less than 60% of GDP.

SGP Components

• Preventive Arm: Binds Member States to commitments and sets Medium-Term Objectives (MTO).
• Corrective Arm: Implements the Excessive Deficit Procedure (EDP).

Related Legislative Measures:

• 6-Pack: Comprehensive legislative package strengthening economic governance.
• 2-Pack: Ensures strong adherence to budgetary rules.
• Fiscal Compact (TSCG): Strengthens the MTO framework.

Broad Economic Policy Guidelines (BEPG)

Non-binding guidelines designed to promote macroeconomic stability across the EU.

Monetary Authorities

Eurosystem

The monetary authority of the Euro area, composed of the ECB and the National Central Banks (NCBs) of Member States that have adopted the Euro.

• Maintain price stability.
• Safeguard financial stability.
• Promote financial integration.

European System of Central Banks (ESCB)

The European System of Central Banks (ESCB) is composed of the Eurosystem (ECB + Euro Area Central Banks) plus the National Central Banks of Non-Euro area Member States.

The EU Budget

Main Expenditure Areas

• Smart and Inclusive Growth: Competition, employment, and growth; support for disadvantaged regions (European Regional Development Fund - ERDF).
• Sustainable Growth and Natural Resources: Common Agricultural Policy (CAP), Rural Development Policies, Environment, and Fishing.
• Global Action: Foreign policy, crisis response, and humanitarian aid (ECHO).
• Administration: Institutional operations and staff salaries.
• Security and Citizenship: Addressing cross-border criminality and ensuring citizen safety.

EU Budget Revenues

1. VAT-based Contribution: Approximately 16%.
2. Gross National Income (GNI) Contributions: Approximately 67% (proportional to Member State wealth).
3. Custom Duties: Approximately 16% (from the Common External Tariff).

Multiannual Financial Framework (MFF)

The MFF sets the EU's spending limits for a period of seven years. Member States contribute approximately 1% of the EU's GNI to this budget pot. Funds are allocated across six main policy headings:

1. Smart and Inclusive Growth: Competitiveness, jobs, and Regional Policy (helping less-developed regions catch up).
2. Sustainable Growth: Focusing on Natural Resources.
3. Security and Citizenship: Justice, home affairs, border protection, immigration, and health.
4. Global Europe: Foreign policy, humanitarian aid, and the European Development Fund.
5. Administration: Institutions, pensions, and European Schools.
6. Compensation: Temporary compensation measures for new members (e.g., Croatia).

EU Financial Framework Phases

Resource Ceiling

The maximum permissible income. Approved by the Council after consulting the European Parliament and National Parliaments.

Expenditure Ceiling

The maximum spending limit (set below the Resource Ceiling). Requires European Parliament consent and Council approval by unanimity.

Annual Budget

The real annual expenditure. Adopted via codecision by the European Parliament and the Council (using qualified majority voting).