On Wednesday 14 September, the European Commission proposed a fairly ambitious mid-term revision of the multi-annual financial framework (MFF) of the EU for 2014-2020, which is likely to upset several capitals, as it brings in the possibility of spending more by increasing budgetary flexibility.
The MEPs, on the other hand, will be getting a very nice early Christmas present, as the Commission is proposing to create a new European Union crisis reserve, to be paid for out of unused credits.
€6.3 billion more to face challenges, but leaving ceilings untouched. The extra funding proposed up to 2020 will stand at €6.3 billion, to meet the challenges of investment and migration. The money will be divided up as follows: 1) €2.4 billion to kickstart growth and employment thanks to increased funding for the European Fund for Strategic Investments (EFSI) (see other article), the youth employment initiative, the Horizon 2020 programme (research and innovation), the EU programme for the competitiveness of companies and SMEs (COSME), the Erasmus programme and the Connecting Europe Facility (CEF). This money includes €50 million for WiFi4EU, an initiative aiming to help local communities in Europe to offer Wi-Fi access free of charge to all citizens, with a total envelope of €120 million; 2) €2.5 billion to fund needs in the fields of migration, security and control of the external borders (creation of the European bodyguard and coastguard agency and the EU agency for asylum, reform of the common European Dublin asylum regime); 3) €1.4 billion for the European Fund for Sustainable Development (see other article), which will finance investments outside the EU and call upon private partners to help tackle the underlying causes of migration, whilst helping to achieve other development objectives.
Taking account of the extra funding earmarked in the draft 2017 budget (€1.8 billion) and the technical adjustment of the envelopes under cohesion, which will channel extra money into these priorities (€4.6 billion), the mid-term review will include extra funding of nearly €13 billion. The member states will not have to pay anything on top of their existing commitments under the MFF 2014-2020. The funding will be taken from some of the budgetary reserves, such as the unallocated margins and the special instruments.
A more flexible budget with a new EU crisis reserve. The Commission is also proposing to improve the capacity of the EU budget to react quickly and appropriately to unforeseen events, by: - setting in place a new EU Crisis Reserve, to focus on priority expenditure, to be paid for out of unused credit; - doubling the envelope of the flexibility instrument (which rises to €1 billion) and of the emergency aid reserve (to €0.5 billion); - the creation of the first ever 'flexibility reserve' allowing financing outside the EU through a reserve of up to 10% of the annual commitment appropriations; - the possibility of trust funds to carry out emergency actions or specific actions within the EU (currently, these are only authorised for actions outside the EU). By increasing the thresholds of the flexibility instrument and of the emergency aid and creating a new flexibility reserve, the Commission has increased its options to spend more via the European budget.
In his speech on the state of the Union in 2016, President of the Commission Jean-Claude Juncker said that "our European budget is living proof of financial solidarity". Kristalina Georgieva, Vice-President of the Commission with responsibility for the Budget, said that it made her proud that the EU budget had succeeded in honouring the political priorities. "This review is the start, and not the end, of a movement aiming to focus efforts even more on the results, so that every euro of the EU budget is spent as effectively as possible".
Streamlining the budgetary rules. The Commission is also proposing to simplify the financial rules on granting EU funds to member states and other beneficiaries. This step will aim to achieve the following: - easier access to EU funding. For instance, researchers or students will no longer need to spend time on filling in forms for their travel expenses and will instead be able to dedicate more time to research; - in order to facilitate cooperation, the EU will be able to rely on already existing audits and controls by other donors, like the UN. This will save NGOs receiving money from multiple donors a lot of paperwork, allowing them to spend more time in the field; - citizens' involvement will be encouraged. For example, citizens will be able to have a say on whether the money for their village should be spent on a new square or a playground; - the financial rulebook will be easier to read and 25% shorter than at present.
In detail, the Commission has adopted the following texts and legislative acts: - 'mid-term review/revision of the multi-annual financial framework 2014-2020' communication; - proposed regulation modifying Regulation 1311/2013 laying down the MFF 2014-2020; - proposed modification to the inter-institutional agreement of 2 December 2013 on budgetary discipline, budgetary cooperation and good financial management; - proposed decision modifying decision 2015/435 on the mobilisation of the contingency margin; - proposed regulation on the financial rules applicable to the general budget of the EU.
Legislative proposals presented must now be approved by the European Parliament and the Council. The Commission hopes to be able to reach an agreement on most of the package by the end of 2016.
The mid-term review, which was part of the political agreement on the MFF 2014-2020, is provided for by Article 2 of Regulation 1311/2013 of the Council (the MFF Regulation). The current MFF was adopted in 2013 against the backdrop of the economic crisis and its repercussions on public finances. For the first time in EU history, this seven-year budget was lower than the previous budgetary framework, which is why this MFF has had to be made more flexible in order to respond to new challenges, particularly managing the influx of migrants and refugees. (Original version in French by Lionel Changeur)