Abstract
This paper analyses the current budget of the European Union and the relative position of the new member states. I argue that the EU budget should be reconsidered, as the union has expanded to 27 member states and has become more heterogeneous.
The budget priorities should be re-oriented toward growth enhancing spending programs. A simple economic growth model illustrates that the EU budget is, at best, neutral with respect to EU-wide long-term growth potential, and may actually hamper growth in the majority of member states if the distortionary nature of taxation is taken into account.