Brussels, 27/06/2013 (Agence Europe) - Broad agreement was reached on Thursday 27 June on the European Union's multiannual financial framework (MFF) for 2014-2020.
The European Parliament (EP) is planning to approve the MFF deal in a vote in Strasbourg on Wednesday, but the legally binding vote will not take place until September. The European Summit on 27 and 28 June is expected to indicate in a paragraph of the conclusions document that it approves of the deal (unanimous voting is required among the EU27 ministers).
In order to get the EP to agree, concessions were offered by the ministers in terms of budget flexibility (including cash to tackle youth unemployment, research, Erasmus and small businesses), allowing €3.6 billion of the €6 billion earmarked for youth unemployment to be used in 2014 and 2015. In addition, there is the option of reducing the multiannual financial framework to five (rather than seven) years after 2020. The ministers have pledged to solve the problem (at the Ecofin Council on 9 July) of the budget shortfall brought forward from the 2012 to the 2013 budget. A billion more euro have been agreed for helping the most vulnerable.
“I am delighted to announce that today we have a political agreement on the European Union's future budget. This was possible because all sides have gone the extra mile”, said the president of the European Commission, José Manuel Barroso, after a meeting on Thursday morning with the president of the European Parliament, Martin Schulz, and the Irish prime minister, Enda Kenny.
Barroso explained: “This is a good deal for Europe, this is a good deal for European citizens, this is a good deal for the European economy. The deal includes more flexibility on both payments and commitments. The deal includes frontloading of expenditure on critical issues like youth employment, research, youth, namely Erasmus, and also SMEs. The deal includes also the possibility for the countries that so wish to increase the aid for most deprived people. The deal also confirms the agreement reached for this year's amending budget. This is extremely important namely for those regions and those citizens in Europe that badly need this investment”. The amending budget Barroso is referring to is the question of the €11.2 billion extra needed in 2013 to cover the budget shortfall in 2012.
The president of the EP said it hadn't been an easy agreement and he would have to fight at the EP to win majority backing. The EP was very disappointed with the outcome of the European Summit in February, he said. The EP wants to ensure that the €908 billion in payment appropriations for the upcoming MFF are genuinely available to pay invoices, added Schulz, noting that the agreed instruments should make this possible. He added that, in the current MFF (for 2007-2013), some €45 billion has not been spent and will be returned to the member states or used to cover other expenditure. The new regulation states that the next Commission and EP will review the MFF, said Schulz, noting that the MFF starting in 2021 should be for five years, not seven. He welcomed the improvements in the use of unspent amounts in the budget (improvements on the European Summit's view from February) and urged the Conference of Presidents of the European Parliament's political groups to put the MFF on the agenda of the plenary sitting next week so it can be put to the vote. Schulz said the deal was not the best one, but was the best that it had been possible to negotiate, and 1% of something is better than 100% of nothing.
Kenny said it was an important day for Europe and the European Parliament had been respected (vis-à-vis the extra funding to cover the 2012 shortfall). Kenny said it was a great day for young people, the unemployed, research and people who receive food aid.
Alain Lamassoure (EPP, France), chair of the EP's budgets committee, said that the EP had got most of what it had called for in a resolution voted through on 13 March 2013, namely 1) a mid-term review clause on spending and income in which the Commission will publish proposals so that the review can be made in 2017. On Thursday, the EP managed to ensure that the Commission will publish practical ways of aligning the duration of future MFF's with the EP and Commission's terms of office; 2) political agreement to undertake a reform of resources that feed into the EU budget (which will come into force in 2021) by finding new own resources and disconnecting national budgets from the EU budget; 3) budget unity (if any new budget instruments are created); 4) flexibility - in terms of payments, the EP has not achieved total flexibility, he said, but all the same, something close to it (the option of postponing unpaid amounts to the following year). In terms of commitment appropriations, the EP has been granted flexibility throughout the period (front-loading) to focus on priory policies like youth employment. Moreover, after 2015, the financing of the Youth Initiative can be guaranteed until the end of the MFF period by using any unused commitment appropriations left over at the end of each year.
The EP has been granted that commitment appropriations can be concentrated on the first two years of the MFF (2014 and 2015) in areas other than help for young people, such as €200 million for R&D, €150 million more for Erasmus (the draft budget for 2014 provided for a 10% cut in funding) and €50 million for small business competitiveness (the COSME programme).
The EP has won additional finance of a billion euro for help for the most disadvantaged (which will now be financed by the European Social Fund), making €3.5 billion in total.
Lamassoure hoped that it would be possible next week to make the legally binding vote on €7.3 billion of the spending shortfall to be covered in 2013 (the budgets committee will vote on Monday). The political commitment required by the EP on the remaining shortfall was reiterated in a statement by the Irish Presidency. Since the final vote at the EP cannot take place until September or October, the EP will make sure that the payment shortfall is rectified before it makes the final vote, explained Lamassoure.
The final tweakings that enabled agreement to be reached are as follows:
The EP won last-minute concessions on the overall margin for payments. Lamassoure explained that the option has been granted of carrying forward all payment margins from one year to the next for four of the seven MFF years, the amount that can be carried forward being capped for the last three years. The cap is relatively generous: “The annual adjustments shall not exceed the following maximum amounts (in 2011 prices) for the years 2018-2020 as compared to the original payment ceiling of the relevant years: 2018: €7 billion 2019: €9 billion 2020: €10 billion.”
Special flexibility for tacking youth unemployment and research. Up to €2.543 billion at 2011 prices can be frontloaded to 2014 and 2015: “Specific flexibility to tackle youth unemployment and strengthen research. Up to €2,543 million (in 2011 prices) may be frontloaded in 2014 and 2015, as part of the annual budgetary procedure, for specified policy objectives relating to youth employment, research, ERASMUS in particular for apprenticeships, and SMEs. These amounts shall be fully offset against appropriations within and/or between headings in order to leave unchanged the total annual ceilings for the period 2014-2020 and the total allocation per heading or sub-heading over the period. The Institutions agree to use this amount as follows: €2143 million for Youth Employment, €200 million for Horizon 2020, €150 million for Erasmus and €50 million for COSME.”
Margin for commitment appropriations for growth and jobs, particularly jobs for young people. The agreement states: “Global margin for growth and employment, in particular youth employment. Margins left available below the MFF ceilings for commitment appropriations for the years 2014-2017 shall constitute a Global MFF margin for commitments, to be made available over and above the ceilings established in the Annex for the years 2016 to 2020 for policy objectives related to growth and employment, in particular youth employment. Each year, as part of the technical adjustment provided for in Article 4, the Commission shall calculate the amount available. The Global margin or part thereof may be mobilised by the budgetary authority in the framework of the budgetary procedure pursuant to Article 314 TFEU”.
Aid for the most deprived. “In order to maintain the current level of funding for this programme, in addition to the €2.5 billion already agreed, member states may decide to increase their allocations by up to €1 billion on a voluntary basis.”
Budget review. There have not been any changes to the review clause, which states that, by the end of 2016, the European Commission will unveil a review of the functioning of the multiannual financial framework for 2014-2020, taking full account of the economic situation at that time. If necessary, the review will be accompanied by draft legislation to revise the MFF. The statement on the duration of the MFF has been added to the regulation proper, giving it greater political importance. Before the Commission unveils its proposals, the question of the length of the MFF needs to be examined. A new sentence has been added about making MFFs last five years rather than seven: “The Commission will also examine aligning its proposals for the next MFF with the political cycles of the Institutions”.
Amending Budget No. 2/2013. “The Council commits to take a formal decision on the first tranche of DAB 2 no later than Ecofin Council on 9 July 2013. The Council commits to take all necessary additional steps to ensure that the Union's obligations for 2013 are fully honoured. On the basis of a proposal to be made by the Commission in early autumn on the basis of the latest updated estimates regarding payment appropriations, the Council commits to decide, without delay, on a further draft amending budget to avoid any shortfall in justified payment appropriations”. (LC/transl.fl)