In the run-up to the European Summit on 14 and 15 December, discussions are progressing within the Council of the European Union in an attempt to bring the EU27 to an agreement on a mid-term review of the 2021-2027 Multiannual Financial Framework (MFF), which is considered “essential” to addressing the crises of recent years.
The European Commission had proposed an increase of more than €65.8 billion in June 2023 (see EUROPE 13205/1) to support Ukraine, meet the rising borrowing costs for Next Generation EU, respond to migration and external challenges and finance the STEP platform (see EUROPE 13205/3) to strengthen the EU’s sovereignty.
The European Parliament subsequently agreed on a €10 billion increase (see EUROPE 13263/7). Parliamentarians have been insisting for several weeks that this revision of the MFF should take place as soon as possible so that the budget for 2024, which was recently adopted by the Parliament (see EUROPE 13298/9) and the Council (see EUROPE 13296/24), can be increased on the basis of the current unrevised framework.
Redeployments supported by “frugal” countries
At the European summit in October, the Member States revealed their priorities for revising the MFF during a preliminary debate (see EUROPE 13280/4). Discussions then continued at ambassadorial level (Coreper) within the Council of the EU.
The so-called “frugal” countries, including Germany, Sweden, Denmark, Austria and the Netherlands, are opposed to any increase in the financial framework, apart from aid to Ukraine, and are calling for priority to be given to redeployment by reducing spending on certain programmes and instruments.
However, the European Commissioner for the Budget, Johannes Hahn, reminded a handful of journalists that the redeployment option would result in a 30% reduction in existing spending programmes.
The tense budgetary situation in Germany has only strengthened this position of frugal countries and, as Mr Hahn explained: “The real obstacle, quite frankly, is that Germany is not involved in this debate at the moment, other than to say no [...]”. However, he acknowledged that the German government had never questioned its support for Ukraine.
He also explained that, for a majority of Member States, there was no question of agreeing solely on this aid to Ukraine amounting to €50 billion (see EUROPE 13205/9).
The case of Hungary
Hungary is also accused of jeopardising the negotiations, as it would make its support for Ukraine conditional on the release of funds frozen by the EU (a total of €21.7 billion in cohesion funds) due to the country’s failure to comply with several conditions relating to the rule of law (see EUROPE 13300/20).
Proposed linear cuts
In the run-up to the December European Council, a number of Member States have put forward proposals, and the Spanish Presidency of the EU Council recently put forward three scenarios for budget cuts in an attempt to meet the demands of the “frugal” countries.
Each of these scenarios would see a percentage of linear cuts applied to all MFF programmes, with the exception of the Common Agricultural Policy (CAP) and cohesion funds (3.4, 6.8 and 13.5%), which would see cuts of around €5 billion, €10 billion and €20 billion respectively, not including other additional cuts for certain programmes, such as the Brexit adjustment reserve.
The distinction with funds invested above the MFF ceilings
According to Eulalia Rubio, a senior researcher at the Jacques Delors Institute, posting on the social network X, it is important to distinguish between the enhancement of MFF programmes, which implies an increase in the MFF ceilings, and the strengthening of special instruments and/or the creation of new instruments ‘over and above’ the MFF ceilings.
As these new instruments are mobilised on the basis of future needs, which are roughly estimated but not known in advance, as is the case, for example, for the EURI instrument (designed to meet the increased borrowing costs of Next Generation EU), it is not certain that “all [of these] additional funds in excess of the MFF ceilings will be guaranteed”, explained Ms Rubio. Some of these could also be financed by redeployment.
“You could say that this is classic EU budgetary politics, with the frugal lobbying for cuts, the net beneficiaries fighting to keep cohesion/CAP funds and unallocated EU spending from being sacrificed”, she said.
“But after Next Generation EU, two major crises behind us and a new geopolitical context that is forcing the EU to take a more strategic turn, it is very worrying to see that we could be entering a new era of EU budgetary austerity”, she concluded. (Original version in French by Pauline Denys)