The EU's budget is the cause of many of the bitterest arguments in the European Union. Budget negotiations have become increasingly fraught over the last years. In December 2005, EU member-states finally agreed, after much wrangling, on a new budget for the period from 2007 to 2013. However, the compromise came at a high political price. The new budget has little relevance to the EU's priorities, such as research and development, innovation, fighting against crime and terrorism or a stronger role for the EU in the world. The final deal also limits the growth of the budget, despite the EU's latest enlargement to ten new countries.

The review of the EU budget in 2008 will be crucial to the Union's ability to meet its ambitions. The CER has been actively contributing to this debate, and will further explore possibilities to reform the Union's budget in depth.

Europe's Common Agricultural Policy (CAP) no longer suits consumers or small farmers, it damages the environment and it hurts the world's poorer economies. Despite substantial past reforms, the EU still needs to change its farm policy, if it wants to meet the challenge of enlargement and the liberalisation of world trade. As the battle over the CAP turns into a proxy for a deeper debate about the future of Europe and the budget it needs, pressures will continue to grow. Can the EU keep a system of fixed prices and play an active role in the WTO and in the economic development of poor countries? Can it meet economic challenges of globalization without overhauling its budget? Should it not put more emphasis on environmental protection and rural development?

EU development aid policy: The European Union with its member-states is the biggest aid donor in the world. It financed more than half of the global aid to developing countries in 2004, spending $42 billion or three times as much as the US figures in terms of GDP. However, the EU's influence is still limited compared to, for instance, that of the World Bank or IMF. The EU and its member-states need to better co-ordinate, take advantage of their diversity, build up a European system that combines community and national efforts. How can the EU and its member-states better co-ordinate? Should the Commission play more of a centralising role or should the co-ordination take place on the ground? How can the EU make its aid more efficient?