The budgetary procedure in the European Union and the implications of the Treaty of Lisbon

Abstract:

The Treaty of Lisbon reformed the budgetary process in the European Union. We present a game-theoretical analysis and an empirical evaluation of the new annual budgetary procedure. We find that the procedure operates much like the ordinary legislative procedure, and puts the European Parliament on an equal footing with the Council. Given the prevailing preference configuration, our empirical analysis shows that the European Parliament does not derive power from its veto right. Any voting coalition that commands a qualified majority in the Council includes a majority of the Members of the European Parliament. However, the European Parliament does derive power from its amendment and proposal rights. Furthermore, we conclude that the procedure is poorly designed and can lead to the breakdown of negotiations.