Milieu prepared the study supporting the European Parliament paper on EU added Value of “An EU mechanism on democracy, the rule of law and fundamental rights” (DRF), which accompanies a legislative-initiative report. Combining extensive desk research and original economic analysis and modelling, the Milieu study investigates the relationship between selected aspects of DRF violations and their impacts on individuals (e.g. income, access to education, health) and macroeconomic performance (i.e. Gross Domestic Product (GDP)-type indicators). It then identifies and models the gaps and barriers at EU level in monitoring and enforcing EU values, notably in the DRF area, and develops scenarios representing possible enhanced EU action in the area of DRF monitoring and enforcement across the EU. Finally, it calculates the potential costs and benefits of enhanced EU actions in order to assess the EU added value of the EU Pact on Democracy, the Rule of Law and Fundamental Rights, as proposed by the European Parliament.