Written by Matthew Parry and Magdalena Sapała,
This in-depth analysis is a follow-up to the EPRS briefing ‘Post-2020 MFF and own resources – Ahead of the Commission’s proposal’, published in April 2018, shortly before the Commission published its proposals for a multiannual financial framework (MFF) for the 2021-2027 period and a new system of own resources. It provides an assessment of some of the proposals’ most important elements, as well as an overview of how they respond to a series of issues raised by the European Parliament.
For the expenditure side of the EU budget, the European Commission has proposed an MFF for 2021-2027 totalling €1 134 583 million in commitments, and €1 104 805 million in payments (2018 prices). Proposed commitments are equivalent to 1.11 %, and proposed payments to 1.08 %, of the EU-27’s GNI. Superficially, this amounts to an increase on the 2014-2020 MFF, which is an estimated 1.02 % of EU-28 GNI (commitments), but a number of factors make comparisons difficult. To begin with, the Commission’s proposed new MFF would incorporate the European Development Fund for the first time. Additionally, the United Kingdom’s expected withdrawal from the EU means that the next MFF will be for a Union of 27 countries. A smaller EU means a smaller GNI, affecting how the EU budget measures up in relative terms. Depending on one’s perspective, the proposal can be seen as either an increase or a decrease on the current MFF. What is clear, however, is that the proposal is significantly less than the 1.3 % of GNI called for by Parliament.
The proposal for the future MFF also differs structurally from the current version. The headings chosen by the Commission show a move away from the current nomenclature based on the Europe 2020 strategy, such as ‘smart and inclusive growth’, towards other EU priorities, such as the digital economy, migration, border management and defence. This shift in priorities can be seen in the choices made to increase or decrease funding: increases are most visible in the areas of research and innovation, support for investment, migration and border management, and security and defence. Cuts have mainly fallen on cohesion policy and the EU’s Common Agricultural Policy. Instruments outside the MFF have generally been boosted and the rules adapted to afford the EU more flexibility within its seven-year financial plan.
On the revenue side of the EU budget, the Commission has taken the political opportunity presented by Brexit to propose a gradual phasing-out of most of the correction mechanisms that discount certain Member States’ contributions to the EU budget. The proposal for a new own resources decision also takes up the recommendation of the High-Level Group on Own Resources to introduce new own resources explicitly linked to EU policies.
A comparison of the Commission’s proposals with the EP’s position shows that they broadly coincide when it comes to the areas in need of additional funding, to enhancing the flexibility of the MFF (for example, by creating a Union Reserve and increasing the amounts budgeted for special instruments), to setting up a budgetary mechanism to uphold the rule of law, to budgetisation of the EDF, and to reforming the EU’s system of own resources. However, the proposal differs from Parliament’s position as far as the overall size of the next MFF, and proposed cuts to cohesion and agricutural policy are concerned. Unlike the EP, the Council has yet to express a common position on the future MFF and own resources. National governments have expressed a range of views.
The MFF will be adopted by Council after the Parliament has given its consent. The new own resources decision will also be adopted by Council, after consulting the EP. However, Parliament has made clear that it sees the two files as a package, and has insisted on linking consent to the MFF with progress on reform of own resources. To this end, the EP has already taken steps to organise itself internally, in order to coordinate its interaction with Council and the Commission.
Read the complete in-depth analysis on ‘2021-2027 multiannual financial framework and new own resources‘.