With just a few months to go before the start of negotiations on the 2028-2034 Multiannual Financial Framework (MFF) (see EUROPE 13776/4), on Wednesday 28 January the European Court of Auditors delivered two opinions on the European Commission’s proposals (see EUROPE 13682/1) concerning the European Union’s spending rules and future system of own resources.
According to these documents, while the auditors recognise the extent of the budgetary effort envisaged, many risks relating to the governance, predictability and complexity of the future European budget are raised.
The Commission is proposing €2,000 billion in current prices, an increase of 59% on the current MFF. As a percentage of EU gross national income (GNI), the ceiling would be 1.26%.
However, once the appropriations intended for the reimbursement of the NextGenerationEU post-pandemic recovery instrument are excluded, the increase appears to be smaller, since the ceilings would rise from 1.13% of GNI in the 2021-2027 MFF to 1.15% in the current proposal. This is a difference that the Court of Auditors considers essential if we are to fully understand the financing of European policies.
Expenditures. With regard to expenditure, the Court of Auditors notes the desire to simplify the budget architecture.
According to the auditors, the benefits for the final beneficiaries will be the corollary of the implementation rules and control mechanisms, which have yet to be defined.
The reports also point to changes in management methods, with the proportion of expenditure under shared management with the Member States set to fall from 66% to 46%. This development would result in a greater direct and indirect management burden for the Commission, which would entail administrative risks as well as consequences for the geographical distribution of funding.
The auditors are also concerned about budget flexibility.
While the rationalisation of special instruments is in line with the Court’s previous recommendations, the institution regrets the lack of a quantitative assessment linking the size of the new instruments to the risks and shocks likely to affect the budget. The Court also points out that certain margins of flexibility can only be used halfway through the MFF.
Revenue. As far as revenue is concerned, the Commission is counting on an average of €58 billion extra per year, thanks in particular to five new own resources, including uncollected electronic waste, excise duties on tobacco and a flat-rate contribution from large companies.
According to the Court of Auditors, the argument that these new resources would lighten the burden on the Member States needs to be qualified, since, according to its calculations, 77% of the additional revenue would ultimately remain financed by national budgets. Annual national contributions would thus increase by 48% compared with the current MFF.
The abolition of the correction mechanisms, considered beneficial for transparency, is welcomed by the auditors, who nonetheless warn of the downsides relating to the greater complexity of the own resources system and the risks that certain new contributions, particularly those levied on companies, could hamper European competitiveness objectives.
In addition, the Court of Auditors believes that the own resources ceilings will have to be re-examined following the agreement on a €90 billion loan to Ukraine.
These reservations echo those shared by the European Parliament’s co-rapporteur on the MFF, Siegfried Mureşan (EPP, Romanian) (see EUROPE 13771/26), according to whom they show that “the budget must go beyond the Commission’s proposal, with a targeted increase of 10%”, in order to allow for “real investment”. And he called for the conclusions of the Court of Auditors to be taken “seriously”.
Reports: https://aeur.eu/f/kge; https://aeur.eu/f/kgh (Original version in French by Nithya Paquiry)