‘Updated on July 12, 2021’
What is the multiannual financial framework?
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.
The Multiannual Financial Framework for 2021-2027 was adopted on 17 December 2020 following the negotiations that lasted for about two and a half year. The agreed long-term budget amounts to € 1 074.3 billion in 2018 prices (€1 210.9 billion in current prices). It is implemented through more than 40 programmes and funds under seven main categories of spending known as headings.
For details analysis of the 2021-2027 MFF see the package of the EPRS briefings:
- Heading 1: Single market, innovation and digital (briefing by M. Pari)
- Heading 2: Cohesion, resilience and values (briefing by M. Sapala)
- Heading 3: Natural resources and environment (briefing by K. Kowald)
- Heading 4: Migration and border management (briefing by A. D’Alfonso)
- Heading 5: Security and defence (briefing by S. Mazur)
- Heading 6: Neighbourhood and the world (briefing by V. Lilyanova)
- Heading 7: European public administration (briefing by V. Lilyanova)
Who decides about the MFF?
The EU’s 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.
See our Animated Infographic on
Visualising the 2021-2027 MFF and the recovery instrument
Milestones on the road to agreement on the 2021‑2027 MFF and the Recovery Instrument NextGenerationEU
In the spring of 2018, with the MFF for 2014‑2020 entering its final stretch, the EU began preparing the post-2020 plan. 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 had 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 had simultaneously prepared 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 proved lengthy. Despite the efforts of successive EU 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 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 would not be concluded 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 (this idea was later rejected by the Council).
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-coronavirus recovery package, in which it bundled the amended MFF and the proposal for the new own resources with the recovery instrument (known as ‘NextGenerationEU’). In addition, the package included the rule of law regulation 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.
On 23 July 2020, the European Parliament adopted a resolution in which it once again outlined its negotiating mandate for the forthcoming negotiations. The negotiations between the Parliament, the German Presidency of the Council and the Commission began on 27 August 2020. Three months later, on 10 November 2020, the three institutions reached a political agreement covering all elements of the budgetary package, i.e. the 2021‑2027 MFF, the new own resources, the Next Generation EU and the rule of law budget conditionality.
In one of the biggest successes, European Parliament negotiators considered reinforcing ten flagship EU programmes with an additional €15 billion (see figure below) and the flexibility instruments with extra €1 billion. In addition, important improvements concerned the process of introducing the new own resources, more ambitious targets and better methods of tracking of spending on climate, biodiversity and gender equality policy.
However, the final steps on the road to the new MFF were delayed by another month, due to a dispute between the Member States around the mechanism linking the EU budget with the rule of law. It was only on 10 December 2020 that EU leaders, gathered at the European Council meeting, found a solution that unblocked the procedure.On 16 December 2020, the European Parliament gave its consent to the 2021‑2027 MFF. The next day, on 17 December 2020, the MFF regulation was unanimously approved by the Council.
Once the new MFF was agreed, the related interinstitutional negotiations on sectorial programmes and funds could also be finalised. However, due to the late agreement on the MFF, the formal approval procedures for some of them could not take place before the start of the new programming period on 1 January 2021, and have continued throughout the spring of 2021.
2021-2027 MFF and the Next Generation EU: by headings and selected programmes (commitments, 2018 prices, € billion rounded):
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, such as the European added value and the focus on delivering European public goods, designed and implemented with a view to enhanced performance, efficiency, agility and simplification. Another very important issue that was part of the package under the negotiations concerned links between the disbursement of EU funds and respect for the rule of law.
Changes were also expected on the revenue side of the EU budget. There was broad consensus that the own resources system needed to be reformed. However, while many ideas for alternative own resources that would radically simplify the system and endow the EU budget with greater financial autonomy, have been proposed, achieving significant reform has proven notoriously difficult.
The 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. A more dramatic change in the circumstances and the priorities for the negotiations was triggered by the outbreak of the Covid‑19 pandemic in March 2020. The amended proposals for the 2021‑2027 MFF and own resources were bundled with the temporary recovery instrument (NextGenerationEU) and presented as a budgetary, recovery package for Europe struggling with the economic and social consequences of the Covid‑19 pandemic.
The final months of the negotiations have been dominated by yet another difficulty. The proposal for a regulation that would introduce a general rule of law conditionality in the EU’s financial rules has raised objections from some Member States. Poland and Hungary’s threat to veto the entire financial package delayed the final agreement by several weeks.
Key EPRS publications
Publications on 2021-2027 MFF, Own Resources and Next Generation EU
- M. Sapala, N. Thomassen, Recovery plan for Europe: State of play.
- A. D’Alfonso, National ratification of the Own Resources Decision.
- A. D’Alfonso, A. Delivorias, N. Milotay, M. Sapala, Economic and Budgetary Outlook for the EU in 2021.
- M. Pari, Single market, innovation and digital: Heading 1 of the 2021-2027 MFF
- Sapala, Cohesion, resilience and values: Heading 2 of the 2021-2027 MFF
- K. Kowald, Natural resources and environment: Heading 3 of the 2021-2027 MFF
- A.D’Alfonso, Migration and border management: Heading 4 of the 2021-2027 MFF
- S.Mazur, Security and defence: Heading 5 of the 2021-2027 MFF
- V. Lilyanova, Neighbourhood and the World: Heading 6 of the new 2021-2027 MFF
- V. Lilyanova, European public administration: Heading 7 of the 2021-2027 MFF
- A.D’Alfonso, Multiannual Financial Framework for the years 2021-2027: The future of EU finances ‘EU Legislation in progress’
- M. SAPALA, M. PARU, N. KRESNICHKA-NIKOLCHOVA, EU financing for 2021-2027
- Alessandro D’ALFONSO, Opinion on the EU own resources system
- 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)
- Agnieszka WIDUTO, REACT-EU recovery assistance
- Alessandro D’ALFONSO, InvestEU programme
- Marcin SZCZEPANSKI, Solvency Support Instrument
- Rachele ROSSI, Financial management of the future CAP
- Miroslava Kostova KARABOYTCHEVA, Recovery and Resilience Facility: Key features and developments
- James MCELDOWNEY, CAP strategic plans
- Stefano SPINACI, Technical Support Instrument
- Alessandro D’ALFONSO, Sustainable Europe Investment Plan
- Nicole SCHOLZ, EU4Health programme
- Pernilla JOURDE, Agnieszka WIDUTO, Just Transition Fund
- Sorina IONESCU, Giulio SABBATI, FREDERIK SCHOLAERT, A Just Transition Fund for climate-neutral EU regions
- 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