On Wednesday 2 May, the European Commission adopted its proposals for the multiannual financial framework (MFF) of the EU, providing for a total of €1.135 trillion in commitments (at 2018 prices) for the period between 2021 and 2027. This figure corresponds to 1.114% of the gross national income (GNI) of the EU of 27, compared to a level of 1.03% of GNI at the moment.
“This is a good increase”, said the Commissioner for the Budget, Günther Oettinger, who presented the Commission’s proposal, firstly to the European Parliament (see other article) and then to the press.
This level of commitments represents €1.105 trillion (or 1.08% of GNI) and payments (at 2018 prices). The European Commission is bringing the European Development Fund (EDF) within the EU budget.
Taking inflation into account, the level of the next MFF is comparable in size to the current budget for the period 2014-2020 (including the EDF). Expressed in current prices (and taking inflation into account), the total budget stands at €1.279 trillion in commitments and €1.246 trillion in payments.
The President of the Commission, Jean-Claude Juncker, considers that the EU budget proposed for 2021-2027 was “higher than the previous one”, whilst taking account of the prospect of Brexit. “Enormous challenges await us in a world in which things change at dizzying speeds”, he told the MEPs, defending a budget in which every single euro must add more value than purely national expenditure.
Commissioner Oettinger said that creating new resources (+ €22 billion) would help to plug 50% of the ‘gap’ brought about by Brexit (see other article).
The new priorities call for new investments. For this reason, the Commission is proposing to pay for them out of a combination of fresh money (around 80% of the budget) and redeployments and savings (around 20%).
Gradual shift to the new political priorities. To pay for new and urgent priorities, the current levels of funding should be increased.
The Commission proposes to:
- double the budget earmarked for Erasmus + (€30 billion) and the European Solidarity Corps (€1.3 billion);
- increase nearly nine-fold the budget for the digital transition (to €12 billion, not including the investments of the InvestEU fund);
- practically triple spending on the management of the external borders, migration and asylum (a total of €33 billion, compared to €13 billion at the moment), to give the European border guard and coast guard corps 10,000 operational agents by 2027;
- increase investments in research/innovation by 50% (to €100 billion for the future FP9 programme, which will take over from Horizon 2020);
- increase investments in the field of security by 40% (total €4.8 billion) and create a defence fund of €13 billion (see article). €6.5 billion for the investments required to facilitate military mobility throughout the EU will come from the Connecting Europe Facility;
- increasing the funding for external actions by 26% (to €120 billion), with emphasis on the European neighbourhood and maintaining a specific reserve to face the new challenges (stability, migration).
To top up the programmes paid for out of the EU budget in the field of defence, the High Representative has proposed to create a facility to support peace for €10.5 billion, which will be outside the EU budget.
Reductions of 5% and 7% for the CAP and cohesion.
The Commission proposes what it considers to be a “moderate” reduction in the financing of the common agriculture policy (CAP) and the cohesion policy: a 5% cut for the CAP (see EUROPE 12009) and 7% for cohesion (see other article).
Juncker considers that these cuts are not a ‘massacre’ for either the CAP or cohesion. Oettinger said that the reduction in direct payments to farmers was limited to 4%.
Speaking to the press, the European Commissioner for Agriculture, Phil Hogan, referred to the figure of €17 billion in savings in the post-2020 CAP budget. He also spoke of an average 3.9% cut (in current prices) for the EU countries concerning direct payments (5% reduction for the entire ‘agriculture’ heading) and capping aid to farmers at €60,000 per undertaking.
Additionally, to take account of the new priorities, the cohesion policy will play an increasingly important role in support for the structural reforms and the long-term integration of migrants.
Rule of law. A closer link between awarding EU funds and member states’ compliance with the fundamental values, such as the rule of law, is a considerable new element of the proposed budget. Compliance with the rule of law is a prerequisite for proper financial management and the effective financing of the EU, Juncker stressed.
The Commission has therefore proposed a new mechanism aiming to protect the EU budget from financial risks due to general deficiencies in the rule of law in the member states (see other article).
The new instruments proposed will allow the EU to suspend, reduce or restrict access to EU funds in proportion to the nature, gravity and scale of the deficiencies of served.
Such a decision would have to be proposed by the Commission and adopted by the Council in a qualified majority vote at the Council of the EU, a process already in place in the framework of the Stability Pact. Basically, just a qualified majority of member states would be able to reject the Commission’s proposal.
EMU. Under the new MFF, two new instruments aiming to promote socio-economic convergence are proposed: - a new reform support programme; - a European investment stabilisation mechanism (see article).
A simpler budget. The Commission is furthermore proposing a modern, simple and flexible budget. It proposes reducing the number of programmes by more than one third (from 58 at the moment to 37 in the future), for instance by bringing together fragmented sources of financing in new integrated programmes and streamlining the use of financial instruments.
The proposal on the table will increase flexibility in and between programmes, by reinforcing crisis management instruments and creating a new ‘EU reserve’ to deal with contingencies and respond to emergency situations in fields such as security and the management of the migration challenge.
Timetable. Oettinger said that Parliament and the Council should give the highest priority to negotiations on the forthcoming MFF. It should be possible to reach an agreement ahead of the European Parliament elections of May 2019 and before the European summit of Sibiu (Romania) of 9 May 2019, the Commission hopes.
Over at the European Parliament, a number of voices, including that of the chair of the EPP group, Germany’s Manfred Weber, echoed this argument. However, many experts feel that this timetable is unrealistic, as it requires the unanimous agreement of the 27 member states.
The proposal is available at: https://ec.europa.eu/commission/sites/beta-political/files/communication-modern-budget-may2018_en.pdf . (Original version in French by Lionel Changeur)