Digital development, common defence and security, research and innovation, youth training, support to small and medium-sized enterprises, environmental protection, response to migration are among the priorities recently set out by the European Commission with guidelines for the future Multiannual Financial Framework (MFF), namely, the preliminary EU budget outlines for the period 2020-2027. Improving revenue and expenditure of Community budget, taking into account current and future challenges for the 27 Member Countries are the focus of future programming. As compared to the current MFF (2014-2020, 950 billion euro earmarked for a seven-year period), the first post-Brexit Financial program will have to take into account EU membership of Balkan Countries and consider new adhesions probably after 2025. Hence the debate on the MFF in Brussels and Strasbourg is in full swing. Detailed proposals and figures are expected to be released by the Commission the coming May.
What is the Multiannual Financial Framework? “The MFF sets the limits for the annual general budgets of the European Union” according to the definition of the EU Council of Ministers. Divided into commitment and payment appropriations, “it determines how much in total and how much for different areas of activity the EU could use each year when it enters into legally binding obligations over a period” of seven years. The MFF is defined by EU budgetary authorities, Council and Parliament, on a proposal by the Commission. The purpose of the MFF is “to translate political priorities into figures” for a multiannual budget cycle; “to make the adoption of the annual EU budget easier”; “ensure budgetary discipline for the EU”; “add predictability to EU finances”, bearing in mind that Union budget revenue depends for the most part on payments by Member States on the basis of the dimensions and wealth of each Country.
The role of the Commission. The EU Executive led by Jean-Claude Juncker “presented various options – and their financial consequences – for a new and modern, long-term EU budget that delivers efficiently on its priorities after 2020.” The Commission’s position is clear: “When discussing about the level of ambition of EU action in areas like protecting the EU’s external borders, supporting a true European Defence Union, boosting Europe’s digital transformation or making the EU’s cohesion and agricultural policies more efficient, it is important for the Leaders to ascertain what their choices would mean concretely in terms of funding at EU level.” Quantifying the financial impact of various possible policy choices is the criteria followed by the Commissioners’ College due to submit a MFF proposal next month, which, as for the past, will amount to approximately 1% of Europe’s GDP. It will then be the turn of the European Parliament, and the task of Member Countries in particular, to establish political ambition levels: States are still waiting for EU response to various questions (along with considerable funding, especially Countries with recent EU accession), entrusting to the EU increasing responsibilities while refraining to concretize a more consistent common budget to address hanging problems. The EU Parliament debated the issue on March 14 with a decision to increase resources thereby extending the budget from 1 to 1.3% of EU GDP.
Investments, cuts. In the past weeks German Budget Commissioner Günther H. Oettinger illustrated the new areas deserving investments and those that will need to be downsized, given that over 90% of the EU budget depends on contributions from Member States. Hence the priority areas include security, research, migration, while budget spending for the EU Pillar of Social Rights launched in November is bound to be low, also in the light of yet insufficient EU competences in this sector. The Commission points out that without the UK the budget will have less resources (estimated at 10 to 12 billion Euros each year) “that should thus be better invested.” According to the indicative financial framework, border control will not be subjected to cuts (25-30 billion over seven years); there will be new funding for defence (10 billion in research and industrial development in this sector); twofold increase of appropriations for Erasmus (from € 14 billion to € 30 billion). The Commission insists on doubling funding for research funding. Pre-accession funds are envisaged for candidate countries in the Balkan region. The highest cuts involve regional and cohesion policies, along with the agricultural sector, which to date is the recipient of almost 40% of common resources.
Hanging issues and “conditionality”. Jean-Claude Juncker said: “Budgets are not bookkeeping exercises – they are about priorities and ambition. They translate our future into figures. So let’s first discuss about the Europe we want. Then, Member States must back their ambition up with the money to match.”. The MFF is reconfirmed as the financial framework shaping annual EU budget programming until 2027, encompassing EU investments and expenditure. Hanging issues include the so-called “own resources”, namely the new sources of revenue of EU budget. Moreover, the Commission proposes options for EU budget modernization and sets out possibilities for strengthening the link – often referred to as ” conditionality” – between EU funding and the respect for the EU’s fundamental values.
Timing is of the essence. Oettinger stressed another issue. In fact, in his opinion political agreement on the MFF but be reached in the short term. “We must not repeat – he remarked – the unfortunate experience of 2013 when the current EU budget was agreed with considerable delay. If such a delay were to happen again, more than 100,000 EU-funded projects – in key areas like business support, energy efficiency, health care, education and social inclusion – would not be able to start on time, and hundreds of thousands of young people would not be able to benefit from an Erasmus+ exchange in 2021″. Moreover, partners and beneficiaries of EU funding – – from students and researchers to infrastructure, health care or energy projects, as well as national and regional authorities … – deserve and need legal and financial certainty.