This thesis assesses the underlying political and financial reasons of the recent budgetary crisis of the European Union. It aims to discuss the possible reform alternatives for the European Union budget in order to improve it to better serve for the objectives of the enlarged Union and to enable the Member States to share the budget burden more fairly. To this purpose, the thesis first analyzes the budget of the European Union in terms of its aims, evolution and structure of revenue and expenditure items and than presents a general overview of the shortcomings of the present own resources system. In general, the thesis discusses possible reform areas, in which the reform process could take place. The thesis also shows how the Union overcame the policy challenges, and particularly the budgetary implications brought out with the inclusion of Central and Eastern European countries and how its financial perspectives covering the 2000-06 and 2007-2013 periods were finalized.