EPRSLibrary By / December 16, 2013

EU budget for growth and employment – In Focus

The EU has recently set its budgetary priorities for the next seven years, adopting the 2014-20 Multiannual Framework Programme (MFF)….

© Trueffelpix / Fotolia

The EU has recently set its budgetary priorities for the next seven years, adopting the 2014-20 Multiannual Framework Programme (MFF). Two briefings present the key points of the agreement and its flexibility provisions allowing some additional room for maneuver in multi-year planning to promote growth and to fight unemployment.

Overall, the 2014-20 MFF allocates up to €450.7 billion (or 47% of the total resources) specifically to spending on smart and inclusive growth, while other spending categories can also contribute to job creation and growth. In practice, the MFF is implemented through EU programmes addressed to a wide range of beneficiaries. Examples of funds relevant for the key objectives of growth and employment include those in the policy areas of enterprise, research and cohesion.

Enterprises, research and innovation

EU budget for growth and employment
© Trueffelpix / Fotolia

Accounting for over 98% of all businesses in the EU, small- and medium-sized enterprises (SMEs) are the backbone of the European economy and can play a crucial role in economic recovery. From 2014, the COSME programme will help European SMEs to seize business opportunities. Our keysource takes a look at this new EU programme.

In today’s highly competitive world, research and innovation are identified as key drivers of business success. The Horizon 2020 programme aims to streamline EU funding support in these areas, so as to increase the participation of enterprises and researchers, while facilitating the market uptake of results (see our briefing). Over time, the EU budget has devoted increasing resources to space research and applications, a niche sector with significant potential for positive knock-on effects on the wider economy. Another briefing focuses on how the EU is shaping an industrial policy for space.

Employment and cohesion

Europe 2020, the EU growth strategy, underlines the need for growth to be inclusive, with job creation as well as promotion of economic, social and territorial cohesion.  The European Globalisation Adjustment Fund helps redundant workers find new jobs. Two briefings explore its main results up to now and its expected evolution.

The EU’s main funding tool to support employment is the European Social Fund (ESF). Our briefing gives a snapshot of the main features of the Fund from 2014.  The ESF is one of the funds implementing the EU cohesion policy, to which an important share of the EU budget is allocated. Another briefing investigates the reasons why some regions – and often the most economically disadvantaged ones – have experienced difficulties in making full use of these resources. For details on what should change from next year, see this short overview.

Innovative financial instruments

In addition to traditional grants, most of these funding programmes foresee the use of innovative financial instruments (IFIs). These trigger equity or debt funding from other public and/or private sources, thus resulting in total investments higher than the EU contribution proper and increasing the effect of the EU budget. See our briefing to find out more details on how IFIs are expected to support economically viable investments in line with EU objectives.  A keysource provides a practical example of such an IFI under the Project Bonds Initiative, which aims to finance large EU infrastructure projects in the fields of transport, energy and telecommunications.

Impact on the economy

But can the EU budget make a significant difference? Or is it small too small to this end? Our keysource introduces the debate on the economic impact of the EU budget. In the context of the efforts to tackle the euro crisis, some analysts have argued that the objectives of economic and financial stability – a necessary precondition for growth – would require the creation of a dedicated “fiscal capacity” for the currency area. For more details on the rationale behind the idea of a euro area budget, see our briefing.

For your eyes only

Members and EP staff have full access to our collection of various information sources on EU budgetary affairs. It includes subject-relevant books, articles and some analytical publications from the Library such as navigators which are only published in the intranet.

With respect to the present topic we would like to recommend the following items:

Furthermore, our information specialists monitor latest publications of think tanks and research institutes and post a selection of them to our Library Policy Area page: EU budget and budgetary control.

To keep up-to-date MEP’s offices and EP staff can subscribe to an e-mail alert that delivers both our in-house analysis and hand-picked external information sources.

Note that for most information sources mentioned above, intranet access is required.

EU budget for growth and employment

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