Described as constructive, the first discussion between the leaders of the countries of the European Union on the 2028-2034 Multiannual Financial Framework (MFF) in Nicosia on Friday 24 April made it possible to include this thorny issue among the priorities to be tackled quickly, while the President of the European Council, António Costa, is aiming for a unanimous political agreement by the EU27 by the end of 2026.
The discussion focused on the financing of the post-2027 EU budget, in particular the creation of New Own Resources, as suggested by the European Commission for 2021 and 2023: tax on uncollected electronic waste, excise duty on tobacco, tax on the turnover of large companies and a levy on revenue from the ‘ETS’ emissions trading scheme and the EU’s Carbon Border Adjustment Mechanism (CBAM) (see EUROPE 13728/20, 13680/2).
These new resources would make it possible to increase the size of the budget in order to fund new priorities (defence, innovation) and maintain the level of funding for traditional policies (agriculture, cohesion), without necessarily asking Member States to increase their national contributions.
To resolve this equation, the EU budget’s own resources are “indispensable”, said the President of the European Commission, Ursula von der Leyen. Otherwise, she added, “the choice is stark: more national contributions or lower spending capacity, it would mean less Europe”.
According to our information, the need for New Own Resources is shared by many Member States. And, even if there is no unanimity on the issue, they are ready to continue the work.
The Netherlands, for example, considers that this discussion should form part of a global agreement. They are opposed to a tax on the turnover of large companies. Germany takes the same line, with the German Chancellor, Friedrich Merz, considering that the Commission does not have “the legal basis” to do so.
An own resource from revenue collected through the ‘ETS’ system does not seem to be very popular within the European Council either.
“Our debate today confirmed that New Own Resources will have to play an important role to fund the budget”, said Mr Costa. He noted “a certain openness” on the part of his counterparts to other proposals for own resources, “namely those put forward by the European Parliament”.
MEPs, who will adopt their position on a post-2027 budget of 1.27% of EU GNI next week (see EUROPE 13849/14), are putting forward the idea of taxing digital services, online gambling and crypto-assets.
European Parliament President Roberta Metsola, present in Nicosia, warned the European Council: “Europe cannot face a new era with an old framework”. She reaffirmed Parliament’s support for giving greater priority to competitiveness and defence, while calling for openness to new own resources and warning against the risk of burdening future generations with the debt inherited from the past.
Co-rapporteur on the 2028-2034 MFF, Siegfried Mureșan (PPE, Romanian) welcomed the European Council’s commitment to deliver a 'timely' budget and 'to take Parliament’s priorities into account'. 'Now the Council must turn this into concrete progress: on the numbers, on the substance, and on own resources', he said to Agence Europe.
Postpone repayment of the Next Generation EU plan? From 2028 until 2058, the EU must start repaying the loan taken out to finance the post-Covid-19 European recovery plan, Next Generation EU, to the tune of €25 billion a year.
Several European leaders have put forward the idea of postponing the repayment of the recovery plan or, at the very least, reviewing the architecture adopted to repay the interest on this plan (see EUROPE 13341/1).
Traditional divisions are reappearing. At the Nicosia summit, the traditional divisions between frugal Member States and countries advocating an ambitious MFF inevitably reappeared.
For the Czech Prime Minister, Andrej Babiš, who negotiated the 2021-2027 MFF in July 2020, the situation is classic: the Commission is asking for more own resources, around “€60 billion”, the net contributor countries do not want to pay more, while the net beneficiary countries want to receive more.
“If we want the EU’s strategic autonomy, we need adequate resources”, said Cypriot President Nikos Christodoulides.
Highlighting his country’s progress in terms of relative wealth (from 61% to 78% of the EU’s GDP), Croatian Prime Minister Andrej Plenković nonetheless expressed the wish to “preserve cohesion policy and agriculture (...), while freeing up room for manoeuvre to make concrete investments in the economy, security and defence”.
The President of the Italian Council, Giorgia Meloni, sounded a similar note. “There is no point in seeking to strengthen our competitiveness if we do not understand that cohesion - that is, the ability of all regions to be on an equal footing - is the prerequisite for any form of competitiveness”, she argued. She also rejected the renovation of the European Council headquarters, which she put at “€800 million”.
On the other hand, Mr Merz, speaking on behalf of the country that contributes most to the MFF, advocated “defining new priorities”, such as defence and competitiveness, an approach that will necessarily involve “a reduction in spending in other areas of the European budget”. “We will have to make horizontal cuts in all categories of the proposal in order to hopefully reach an agreement this year”, he said.
Believing himself to have the support of many of his colleagues, the Chancellor also considered that any “additional indebtedness of the EU, whether by borrowing or by issuing European bonds”, was “inconceivable”.
The Netherlands is in favour of a thorough modernisation of the EU budget. For the Dutch Prime Minister, Rob Jetten, “it is also crucial that the size of this budget is considerably reduced”, particularly the funding for agriculture.
Timetable for negotiations. This initial discussion at the highest political level will provide food for thought for the Cyprus Presidency of the Council of the EU, which will draw up a ‘negotiating box’ with figures for the European summit in June.
Mr Christodoulides also pointed out that his country had recently submitted a revised framework for negotiations without figures (see EUROPE 13848/1). The Cyprus Presidency will also endeavour to reach a political agreement in the EU Council on future programmes to manage the European budget, such as the European Competitiveness Fund and national and regional partnerships.
Mr Costa would like the EU27 to address the issue at each of their meetings. A dedicated European summit could be held at the end of November with a view to facilitating an agreement before 2027 (see EUROPE 13798/21), an election year in several Member States, notably France.
Like Mr Babiš, however, Mr Plenković doubted that the Member States would be able to reach an agreement by the end of 2026, given the “divergent” positions expressed. “In my experience, there have always been postponements”, he noted. (Original version in French by Mathieu Bion and Solenn Paulic)