The Budgetary Procedure in the European Union and the Implications of the Treaty of Lisbon

Abstract

The Treaty of Lisbon reformed the budgetary procedure of the European Union (EU). This paper describes the key changes and presents a game-theoretical analysis of the annual budgetary procedure. Our focus is on the implications of these changes for the budgetary powers of the European Parliament (EP). Against the common belief that the budgetary powers of the EP were strengthened as a result of the Lisbon Treaty, our analysis paints a somewhat more sober assessment of its budgetary empowerment as a result of the reform. We find that the budgetary procedure operates much like the codecision procedure does in the legislative process. Compared to the budgetary procedure used prior to the Lisbon Treaty, it has become more difficult for the Parliament to pass amendments, if it wants to affect what used to be referred to as non-compulsory spending or decrease compulsory spending. The EP’s ability to pass amendments that increase compulsory spending is mostly unaffected. The configuration of preferences and bargaining powers in the Conciliation Committee determine whether on balance the EP is better off under the new procedure.