Updated on August 27, 2020.
Written by Magdalena Sapała.
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 the Next Generation EU, own resources as well as all proposed sector-specific acts for new and continued programmes and funds.
Who decides about the next MFF?
The EU’s long-term budget, officially known as the multiannual financial framework (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 European 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.
The proposal to link the new MFF with the proposed Recovery Instrument (next generation EU) to support the EU economic revival following the Covid‑19 pandemic introduced yet another legal base and decision-making procedure to this complex picture. The European Commission’s proposal for a regulation establishing the Recovery Instrument is based on article 122 TFEU and requires a decision from the Council alone. The European Parliament is informed of the decision taken.
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Visualising the proposed Multiannual Financial Framework 2021-2027
What has been done so far?
In the spring of 2018, with the current MFF for 2014-2020 entering its final stretch, the EU began preparing the post-2020 plan. Since then, the future MFF has been high on the EU agenda. In the first formal step in the procedure, on 2 May 2018, the European Commission proposed a 2021-2027 MFF worth €1 134.6 billion (2018 prices), which corresponds to 1.11 % of EU-27 gross national income (GNI). The Commission also proposed changes to the EU’s system of own resources and to link the EU budget with the rule of law. This was followed by a series of further legislative proposals for new and continued spending programmes and funds under the next MFF.
Parliament has been ready to negotiate with the Council since November 2018, when its interim report estimated that the new MFF should be endowed with €1 324.1 billion (1.3 %) to meet EU policy objectives. The newly elected Parliament confirmed and updated its negotiating mandate in October 2019. Since the summer of 2018, Parliament has simultaneously been preparing the mandates for legislative negotiations on the rules for EU spending programmes and funds proposed by the Commission. Some of these mandates were already approved in plenary – and negotiations with the Council begun – before the end of the parliamentary term (April 2019). However, the lack of progress in the MFF negotiating process impeded this work. As a result, in December 2019, the European Parliament political group leaders decided to freeze negotiations on sectoral legislation related to the new MFF until the Council agrees a full negotiating mandate.
The negotiations on the MFF package in the Council and the European Council have proved lengthy. Despite the efforts of successive presidencies (Bulgarian, Austrian, Romanian and Finnish) and several occasions for EU leaders to exchange views on the topic at European Council summits (June, October and December 2019), agreement proved elusive. A special two-day summit, organised by Charles Michel on 20 February 2020, also failed to find an agreement and ended without specifying next steps or dates in the negotiating process.
The outbreak of the coronavirus pandemic and its massive socio-economic impact have complicated negotiations further. On 23 April 2020, the European Council asked the Commission to come up with a proposal for a recovery fund of ‘a sufficient magnitude’, and linked to the MFF. This idea then featured as part of the Franco-German initiative (18 May), and in a non-paper from Austria, Denmark, the Netherlands and Sweden (23 May 2020).
The European Parliament outlined its expectations for the recovery plan and the revised proposal for the next MFF in a resolution of 15 May 2020. Furthermore, given the significant risk that the negotiations on the MFF will not conclude in time for it to enter into force on 1 January 2021, the Parliament requested that the Commission submit a proposal for an MFF contingency plan to protect the beneficiaries of Union programmes by ensuring continuity of funding and implementation.
On 27 May 2020, two years after the initial legislative package for the 2021-2020 MFF was presented, the Commission put forward its proposal for the post-Covid‑19 recovery package, in which it bundled the amended MFF and proposal for the new Own Resources with the Recovery Instrument (known as the ‘next generation EU’). In addition, the package included the Rule of Law regulation, as proposed by the Commission in May 2018. The crucial negotiations between the Member States took place at a special European Council summit on 17-21 July 2020. The agreement reached by the EU leaders opened the way to formal negotiations between the European Parliament and the Council. However, one should keep in mind that different elements of the legislative package under the negotiations are adopted in different procedures with different roles for the EU institutions (see above).
On 23 July 2020, the European Parliament voted a resolution in which it outlined its negotiating mandate for the forthcoming negotiations. It is focused around the following issues: creation of the effective rule of law mechanisms; reform of the EU’s own resources system, including the introduction of the basket of new resources to facilitate repayment of the costs related to the NGEU; reinforcements of funding for flagship EU programmes, in particular in such areas as climate, digital transition, health, youth, culture, research, border management; legally binding mid-term revision of the MFF by the end of 2024 at the latest; improvements in the flexibility provisions; the Parliament’s role in the governance and scrutiny of the Recovery and Resilience Facility.
The context of the negotiations
The preparation of the next MFF was launched amid a broader debate on the future of Europe. Member States set out the political priorities in the Bratislava Declaration of September 2016 and the Rome Declaration of March 2017, including security and defence, protection of external borders, asylum and migration policy, and climate policy, priorities which had to be translated into concrete measures and financial means. At the same time, the long-standing budgetary priorities remained relevant, and some have even gained in importance. Increased resources were expected for youth, research and innovation, as well as for cohesion and agriculture policies. The new long-term financial plan also had to take account of the financial consequences of the United Kingdom’s withdrawal from the EU.
Furthermore, the new round of preparation for the MFF was seen as an opportunity to reform EU finances and re-emphasise some of the underpinning principles upon which they are built. The future EU budget, as is often pointed out by the European Commission, must focus to a greater extent on the its European added value, where pooling resources at European level delivers results that spending at national level cannot. The budget has to focus 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
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Changes were also expected 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, opaque and encouraging Member States to focus on securing a ‘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.
The context and expectations for the MFF negotiations process changed slightly following the European elections of May 2020. The new European Commission announced its political agenda and brought new elements – with budgetary consequences – to the debate. The most prominent among these being the European green deal and digital transition. In addition, the outbreak of the Covid‑19 pandemic in March 2020 has dramatically changed both the circumstances and the priorities for the negotiations. The amended proposals for the 2021-2027 MFF and own resources were bundled with the temporary recovery instrument (Next Generation EU) and presented as a budgetary, recovery package for Europe struggling with the economic and social consequences of the Covid-19 pandemic.
Key EPRS publications
Publications on the proposal for the 2021-2027 MFF and Own Resources
- Alessandro D’Alfonso, M. Pari, M. Sapala, Negotiations on the next MFF and the EU recovery instrument, Briefing, July 2020
- Alessandro D’Alfonso, N. Kresnichka-Nikolchova, Future financing of the Union: MFF, Own Resources and Next Generation EU
- M. Sapala, N. Kresnichka-Nikolchova, Amended proposal for the 2021-2027 MFF and 2021-2024 recovery instrument ‘Next Generation EU’ in figures
- Alessandro D’Alfonso, Next Generation EU: A European instrument to counter the impact of the coronavirus pandemic
- R. Drachenberg, The European Council and the 2021-27 Multiannual Financial Framework
- Animated Infographic on Visualising the proposed Multiannual Financial Framework 2021-2027
- G. Sabbati, M. Sapala, The 2021-2027 Multiannual Financial Framework in figures
- Marianna Pari, Single market, innovation and digital in the 2021-2027 MFF. European Parliament position on Heading 1
- Magdalena Sapała, Cohesion funds, values and economic and monetary union in the 2021-2027 MFF
- Karoline Kowald, Heading 3 of the MFF 2021-2027: Natural resources and environment
- Alessandro D’Alfonso, Migration and border management: Heading 4 of the 2021-2027 MFF
- Sidonia Mazur, Financing EU security and defence in the 2021-2027 MFF. European Parliament position on Heading 5
- Velina Lilyanova, EU external action in the new MFF, 2021-2027: Heading 6 ‘Neighbourhood and the World’
- Velina Lilyanova, Heading 7 – MFF 2021-2027: Administration
- Alessandro D’Alfonso, Mainstreaming of climate action in the EU budget: Impact of a political objective
- Alessandro D’Alfonso, Angelos Delivorias, Magdalena Sapała, Carla Stamegna, Economic and budgetary outlook for the European Union 2020
- M. PARRY, M. SAPALA, Post-2020 MFF and own resources: Ahead of the Commission’s proposal
- A. DOBREVA, Multiannual Financial Framework 2021-2027: Commission’s proposal. Initial comparison with the current MFF
- M. PARRY, M. SAPALA, 2021-2027 multiannual financial framework and new own resources. Analysis of the Commission’s proposal
- Alessandro D’ALFONSO, Own resources of the European Union: Reforming the EU’s financing system
- Alessandro D’ALFONSO, Multiannual financial framework 2021-2027: Interim report on the Commission proposals
- Rafał MAŃKO, Protecting the EU budget against generalised rule of law deficiencies
- Magdalena SAPAŁA, Cohesion funds, values and economic and monetary union in the 2021-2027 MFF
- A. D’ALFONSO, Multiannual Financial Framework for the years 2021-2027: The future of EU finances
- Legislative train schedule on the 2021-2027 MFF
- Legislative train schedule on the system of own resources after 2020
- M. PARRY, EU policies – Delivering for citizens: Future financing of EU policies
- A. D’ALFONSO, Post-2020 EU budget
Publications on the sector-specific proposals (new and continued programmes and funds)
- A. WIDUTO, European Regional Development Fund and Cohesion Fund 2021-2027
- V. MARGARAS, Common Provisions regulation. New rules for cohesion policy for 2021-2027
- A. WIDUTO, Reform Support Programme 2021-2027
- F. SCHOLAERT, European Maritime and Fisheries Fund 2021-2027
- Magdalena PASIKOWSKA-SCHNASS, Creative Europe programme 2021-2027
- Cemal KARAKAS, Horizon Europe: Framework programme for research and innovation 2021–2027
- Marketa PAPE, Connecting Europe Facility 2021-2027: Financing key EU infrastructure networks
- Beatrix IMMENKAMP, A new neighbourhood, development and international cooperation instrument: Proposal for a new regulation
- Laura PUCCIO, Reform of the European Globalisation Adjustment Fund
- Marcin SZCZEPAŃSKI, Digital Europe programme. Funding digital transformation beyond 2020
- Dessislava YOUGOVA, LIFE programme for 2021-2027: Financing environmental and climate objectives
- Marie LECERF, European Social Fund Plus (ESF+) 2021-2027
- Marcin SZCZEPAŃSKI, Supporting the single market beyond 2020
- Cemal KARAKAS, EU space programme
- Denise CHIRCOP, Erasmus 2021-2027: The Union programme for education, training, youth and sport
- Vivienne HALLEUX, European territorial cooperation (Interreg) 2021-2027
- Rachele ROSSI, CAP horizontal regulation. Financing, management and monitoring of the common agricultural policy for 2021-2027
- Christiaan VAN LIEROP, Mechanism to resolve legal and administrative obstacles in a cross-border context
- Velina LILYANOVA, Martin SVÁŠEK, Instrument for Pre-accession Assistance (IPA III)
- Vera VIKOLAINEN, Establishing a programme for the environment and climate action (LIFE)
- Cemal KARAKAS, European Defence Fund: Multiannual financial framework 2021-2027
- Patrick KELLY and James MCELDOWNEY, CAP strategic plans
- Eric PICHON, A new association of the Overseas Countries and Territories (including Greenland) with the European Union
- Christian SCHEINERT, European Investment Stabilisation Function (EISF)
- M. SVASEK, EU anti-fraud programme 2021-2027
- A. DELIVORIAS, I. ZACHARIADIS, The InvestEU programme Continuing EFSI in the next MFF
- Beatrix IMMENKAMP, Nuclear Safety outside the EU
Initial appraisals of European Commission impact assessments accompanying the MFF proposals
- Esther KRAMER, European Regional Development Fund, Cohesion Fund, a cross-border mechanism and Interreg. Initial Appraisal of a European Commission Impact Assessment
- Ulla-Mari TUOMINEN, European Social Fund Plus and European Globalisation Adjustment Fund
- Katharina EISELE, Launching the Digital Europe programme
- Vadim KONONENKO, Establishing the Neighbourhood, Development and International Cooperation Instrument
- Stefano VETTORAZZI, Establishing the Connecting Europe Facility 2021-2027
- Vadim KONONENKO, Establishing the European Defence Fund
- Ulla-Mari TUOMINEN, Establishing the InvestEU programme
- Esther KRAMER, Reform Support Programme
- Katharina EISELE, Promoting the Rights and Values, Justice, and Creative Europe programmes
- Vera VIKOLAINEN, Establishing the European space programme
- Hubert DALLI, The Horizon Europe framework programme for research and innovation 2021-2027
- Mari TUOMINEN, Establishing the single market programme
- Hubert DALLI, The migration, borders and security cluster of the 2021-2027 MFF
- Vadim KONONENKO, Establishing the ‘Customs’ programme 2021-2027
- Esther KRAMER, Establishing a European Investment Stabilisation Function
- Laura ZANDERSONE, European Maritime and Fisheries Fund 2021-20
- Vera VIKOLAINEN, Modernising and simplifying the common agricultural policy
- Vera VIKOLAINEN, Establishing a programme for the environment and climate action (LIFE)
- Laura ZANDERSONE, Erasmus 2021-2027