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// definition

Headroom

EU budget guarantee capacity

freshreviewed 0 days ago
Macro & central banks

Short definition

The difference between the annual EU own-resources ceiling for payments and the resources needed to finance the budget. It guarantees the Union’s financial obligations and contingent liabilities within the applicable legal limits. A guarantee call may require contributions from member states; headroom is not cash already available.

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Knowledge map

Intuition

A budget guarantee mobilises resources when a financial obligation falls due.

Formula

Headroom = own-resources ceiling for payments − own resources needed to finance the budget

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