EU and the economy

Photographer: Tomas Roslin / Gorilla.

The economies of the EU countries have become closely integrated, and the countries in the euro area in particular have common interests. For this reason, the economic policy of the member states is coordinated by the Economic and Financial Affairs Council (Ecofin).

Attention is paid in particular to those policy areas with effects that may extend across national borders. The countries in the euro area have a common monetary policy, for which the European Central Bank is responsible. The common monetary policy is one reason that the EU has legally binding rules concerning the public finances of the member states and their financial policy. The rules are collected in a Stability and Growth Pact.

The coordination also covers other areas of policy, such as structural and employment policy, but the procedures in relation to this are not binding to the same extent.
Actions that the member states cannot finance themselves or that can be financed together more efficiently are financed via the EU budget. The budget is prepared by the European Commission. It is decided jointly by the Council of the European Union and the European Parliament.

The Ministry of Finance participates in the preparation of the budget primarily in the Budget Committee of the Council. Either the EU member states and the Commission together or the Commission alone are responsible for the management of the budget. Most of the budget is managed by national or regional authorities. Among other things, the EU budget provides subsidies for Finnish agriculture, supports rural development and provides special aid to the sparsely populated northern and eastern areas.

The funds for the EU budget come mainly from the member states, which pay a percentage of their gross national product (GNP). Other income in the budget comes from customs duties on products arriving from outside the EU, and a share of the harmonised value added taxes levied by the EU member states.

EU affairs and the Finnish government