The European Commissioner for the Budget, Günther H. Oettinger, called for a slightly higher EU budget, at 1.1% of EU GNI (gross national income), in Brussels on Monday 8 January, at a conference on the multi-annual financial framework (MFF) post-2020, which shed early light on the principal budgetary challenges to come.
Germany considers that this level of ambition would equate to additional spending of around €10 billion; “it’s a lot”, but it is less than the target increase in defence spending set out in the framework of NATO, the German foreign affairs minister, Sigmar Gabriel, pointed out.
Broadly on the basis of the reflection document on the future of the EU budget presented by the Commission in June 2017 (see EUROPE 11818), Oettinger pointed out that the EU was having to deal with two financial gaps: - the first, of around €12 billion, due to the withdrawal of the United Kingdom from the EU; - the second as a result of political priorities such as migration, defence and security.
He believes that the former gap may be 50% plugged with savings and 50% fresh money, and the latter could be 80% filled by fresh money and 20% by re-shifting credits. In any event, the funds earmarked for youth and research must continue to be protected from any budget cuts, Oettinger said.
Echoing the President of the Commission, Jean-Claude Juncker, before him, the Commissioner stressed the importance of two policies - the common agriculture policy and the cohesion policy - which still account for three quarters of the European budget. The cohesion policy remains essential for countries such as Bulgaria, but cuts in the region of 5 to 10% could be considered, he added, although he is fully aware of the need to avoid further rifts within the EU between the beneficiary countries and the net contributors.
Acknowledging the need to support European territories directly suffering from the opening up of their borders to foreign competition, the French economist Jean Pisani-Ferry, a founder member of the Bruegel think tank, nonetheless said that the regional level was not necessarily the right one to intervene in socio-economic cohesion matters.
Taxing plastics production at European level?
The vast majority of those who took the floor stressed the importance of financially supporting actions at European level in areas in which Europe genuinely adds value. These actions, such as security and innovation expenditure, should be decided upon before final envelope, Juncker stressed.
How will the chosen political priorities be paid for? Oettinger said that in its proposals on the future MFF post-2020, scheduled to be published for May, the Commission would adopt several proposals for the reform of the ‘own resources’ strand of the EU budget set out in the 'Monti' report of January 2017 (see EUROPE 11701). In particular, he referred to taxing the production of plastics for environmental reasons, as the fight against climate change is a European competence.
The president-elect of the Eurogroup, Mário Centeno, referred to other areas, including VAT reform, the taxation of the digital sector, company profits and even financial transactions. The French European affairs minister, Nathalie Loiseau, said that another way of limiting budgetary haemorrhaging would be to put an end to all rebates. In light of Brexit, it would be a good thing if we never heard the words ‘I want my money back’ again, she said.
Conditional access to European funding
Neither Juncker nor Oettinger referred to the possibility of making access to European structural funds conditional on pursuing certain policies or respecting certain values.
Others did it for them. “It’s not a swear word. It is clear and in fact obvious that the cohesion funds should be conditional upon fiscal, social and even rule of law convergence rules”, Loiseau said.
The Minister delegate of the Bulgarian Presidency of the Council, Lilyana Pavlova, on the other hand, slammed the idea. She argued that creating this conditionality would jeopardise the prospect of long-term convergence. And why should such a rule apply only to the cohesion policy, she added.
Within the cohesion policy, the award of support is already conditional on member states’ compliance with the Stability Pact. However, the attempt to enforce these rules against Spain and Portugal in 2016 came up against stiff resistance, although the countries were ultimately put under pressure to take additional budgetary consolidation measures (see EUROPE 11605).
The Bulgarian Presidency will host a specific high-level conference in Sofia on 9 March and hopes that in June, the member states will adopt conclusions on the future of the CAP and the cohesion policy in light of the proposals on the post-2020 MFF to be presented by the Commission in May.
The final decisions will have to be made before the European elections, Juncker said. Oettinger considers that the European summit of Sibiu, to be held after Brexit but before the elections, is the appropriate time to do so. (Original version in French by Mathieu Bion)