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EU Financing / Budgetary Affairs, PUBLICATIONS

Multiannual Financial Framework for the years 2021-2027 and the New Own Resources

Updated on March 27, 2020.

Written by Magdalena Sapała,

Euro bandiera
© oraziopuccio / Fotolia

If you are looking for a comprehensive source of information, analysis and infographics on the preparation of the EU’s post-2020 multiannual financial plan, you are in the right place. This blog post will lead you through a collection of publications, prepared by researchers at the European Parliamentary Research Service, covering the proposals on the EU multiannual financial framework for 2021-2027 and own resources as well as all proposed sector-specific acts for new and continued programmes and funds.

Who decides about the next MFF?

MFF 2021-2027: Total

MFF 2021-2027: Total

The future multiannual financial framework (MFF) is high on the EU agenda once more. With the current MFF for 2014-2020 entering its final stretch, the EU has started preparing the post-2020 plan. The MFF sets the annual limits on EU commitments in different policy areas and on overall annual payments (expenditure side of the budget). It must cover at least five years. In practice, in most cases its duration has been set at seven years. This multiannual plan of spending is usually negotiated as a package, together with proposals for own resources (revenue side of the budget) and for new and continued programmes and funds.

Formally, these elements are adopted in different legislative procedures, with different roles for the European Parliament, the Council and the Commission. While the Parliament’s consent is necessary before the Council can adopt the MFF Regulation (Article 312 TFEU), it is only consulted by the Council before adopting the Own Resources Decision (Article 311 TFEU). The sectoral regulations in turn are agreed under the ordinary legislative procedure, with the Parliament acting on an equal footing with the Council (Articles 289 and 294 TFEU). In addition, although, according to the Treaties, the European Council ‘shall define the general political directions and priorities’ of the Union, and ‘it shall not exercise legislative functions’, experience of the last MFF negotiations shows that it plays a decisive role in taking decisions, including on the figures and on many detailed aspects of the spending programmes.

What has been done so far?

MFF timeline

MFF timeline

On 2 May 2018, the Commission presented a package of legislative proposals on the 2021-2027 MFF, on own resources to finance the EU budget and on linking the EU budget with the rule of law. The proposals were followed by a series of further legislative proposals for new and continued spending programmes and funds under the next MFF.

On 14 November 2018, the European Parliament adopted its negotiating mandate including its expectations for the post-2020 MFF and the reform of own resources. In addition, the document forms the basis for the Parliament’s mandates for legislative negotiations on the rules for EU spending programmes and funds proposed by the Commission. Parliamentary committees have been working on these proposals since the summer of 2018. Some of them were already approved in plenary, and negotiations with the Council were begun before the end of the parliamentary term (April 2019). Following the May 2019 European elections, the Parliament re-established its MFF negotiating team, confirmed its determination to reach an agreement as soon as possible, and urged the Council to immediately intensify the interinstitutional talks.

The MFF package has also been examined by the Council under the direction of successive presidencies (Bulgarian, Austrian, Romanian and Finnish). Moreover, the EU leaders exchanged views on the topic at the European Council summits in June, October and December 2019. In December 2019, the Finnish Presidency for presented a negotiating box (document including issues, which need to be addressed during the negotiations and require political guidance from EU leaders) the first time, including figures. On 20 February 2020, President Charles Michel organised a special European Council to discuss the next long-term budget. The starting point for negotiations was a new version of the negotiating box (draft conclusions of the European Council), put forward by Charles Michel. However, the two-day negotiations ended without an agreement and without determining the calendar for the next steps or meetings.

Given the lack of progress in the MFF negotiating process, the European Parliament political group leaders decided to freeze negotiations on sectorial legislation related to the new MFF until the Council agrees a full negotiating mandate. Moreover, in March 2020, the Members called on the Commission to prepare, by 15 June, a contingency plan with a view to providing a safety net to protect the beneficiaries of Union programmes by ensuring continuity of funding and implementation, should agreement on the 2021-2027 MFF not be reached in time to enter into force on 1 January 2021. This possibility is provided for in Article 312(4) TFEU. According to the Parliament, an automatic and temporary extension of the ceilings and other provisions of the last year of the 2014-2020 MFF would result in an overall ceiling of €162 243 million in 2018 prices, or €172 173 million in current prices, in 2021. This would be the equivalent of 1.15 % of the GNI of the EU27.

 


See our Animated Infographic on 
Visualising the proposed Multiannual Financial Framework 2021-2027


The context of the negotiations

Comparison of 2014-2020 MFF allocations with the Commission’s 2021-2027 proposal and the EP position

Comparison of 2014-2020 MFF allocations with the Commission’s 2021-2027 proposal and the EP position

The preparation of the next MFF is taking place amid a broader debate on the future of Europe. The new political priorities, set out by the Member States in the Bratislava Declaration in September 2016 and the Rome Declaration in March 2017, must be translated into concrete measures, which require financial means. Therefore, one of the key questions of the debate is how to ensure the financing of the EU’s new priorities in the areas of security and defence, protection of external borders, asylum and migration policy, and climate policy. While new financial needs emerge, existing, long-standing budgetary priorities remain relevant, and some have even gained in importance. Increased resources are needed for instance for EU programmes for youth, and research and innovation. In addition, the future MFF will be the EU’s first ‘post-Brexit’ financial plan and has to take the financial consequences of the United Kingdom’s withdrawal into account.

Furthermore, the discussion on the next MFF is an opportunity to reform EU finances and re-emphasise some of the underpinning principles upon which they are built. The future EU budget, as often pointed out by the European Commission, must focus on the European added value to a greater extent, meaning that pooling resources at European level delivers results that spending at national level cannot. It has to be focused on delivering European public goods, designed and implemented with a view to enhanced performance, efficiency, agility and simplification. The other issues include extending existing links between the EU budget and the EU’s economic governance framework, as well as links between the disbursement of EU funds and respect for the rule of law.


See our Topical Digest on
2021-2027 MFF


Changes are also needed on the revenue side of the EU budget. There is broad consensus that the current own resources system needs to be reformed. It is seen as complex and opaque and encouraging Member States to focus on securing ‘fair return’, from the EU budget, rather than thinking strategically about how best to finance European public goods. However, while there is no shortage of ideas for alternative own resources that would radically simplify the system and endow the EU budget with greater financial autonomy, achieving significant reform has proven notoriously difficult.

Negotiations on the 2021-2027 MFF - comparison of proposals (March 2020).

Negotiations on the 2021-2027 MFF – comparison of proposals (March 2020)

Key EPRS publications

Publications on the proposal for the 2021-2027 MFF and Own Resources

Publications on the sector-specific proposals (new and continued programmes and funds)

Initial appraisals of European Commission impact assessments accompanying the MFF proposals


Visit the European Parliament homepage on the EU’s long term budget 2021-2027.

Or The EU’s long term budget explained.


 

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