Review and revision of the 2014-2020 multiannual financial framework [European Parliament impact 2014-2019]

The 2014-2020 Multiannual Financial Framework (MFF) was agreed in 2013, during the previous terms of office of the European Parliament and European Commission. Negotiated against a background of economic downturn and fiscal constraints in the Member States, the 2014-2020 MFF was the first to have lower resources than the previous framework (2007-2013). The Parliament, therefore, made its consent to the MFF Regulation conditional on the inclusion of an obligatory mid-term review and revision, so as to enable the new institutions elected in 2014 to assess the implementation of the programmes and adjust the spending priorities to the new challenges. Moreover, the Parliament demanded increased flexibility of the MFF in order to encourage full use of available funds, and improve the EU budget’s ability to react to unforeseen crises and needs. As a result of intensive negotiations, additional provisions making the MFF more flexible were introduced and the compulsory review/revision was stipulated in the legislation. The Parliament gave its consent to the MFF Regulation, but expressed concern that the overall ceilings set by the European Council were low and might not be sufficient to endow the EU with the necessary means to achieve its objectives.

Very early on, the Parliament’s concerns proved to be right. Already in the first two years of the implementation of the 2014-2020 MFF, the need for funding increased dramatically. The EU had to tackle a number of unforeseen challenges, such as the migration and refugee crisis, internal security threats, persistently low level of investment, high youth unemployment, crisis in agriculture, as well as growing pressure on neighbourhood policies and actions in the field of environment policy. In addition, the EU budget had to absorb the abnormal backlog of payments that had built up since 2011. As a consequence, the expenditure ceilings for several headings were pushed to their limits and special ‘last-resort’ flexibility instruments had to be mobilised. The scale of the challenges and their budgetary consequences raised questions about the smooth functioning of the MFF through to 2020.

Given the exceptionally difficult circumstances, the European Parliament was determined to use its power of consent in the legislative procedure and ensure that the opportunity to adjust the MFF, created by the provisions on the mid-term review/revision, was not missed. In an own-inititiave resolution adopted ahead of the Commission’s proposal, the Parliament assessed the first years of functioning of the MFF and concluded that a genuine revision of the 2014-2020 MFF was absolutely indispensable. In particular, Parliament’s requests for the second half of the MFF included the provision of additional resources in key areas of concern, such as competitiveness for growth and jobs, research, internal security and migration; and the strengthening of flexibility provisions and special instruments in order to enable full use of available MFF resources and increase the EU capacity to react to unforeseen challenges.

Subsequently, the Parliament’s assessment of the situation and the changes it demanded were to a large extent reflected in the European Commission’s MFF review and in the subsequent package of legislative and budgetary proposals, including the proposal for the MFF revision. The compromise on the package, reached after the interinstitutional negotiations in early spring 2017, was approved on 5 April 2017. The Council formally adopted the mid-term revision on 20 June 2017.^[7]

As a result, a series of changes were introduced to strengthen the capacity of the MFF to react to unforeseen events and to further orient the EU budget towards growth and jobs, and address the migration crisis. The revised MFF increased the resources in the EU priority areas by some €6 billion for the years 2017-2020 without modifying the MFF ceilings. The top-ups would finance the EU actions aimed at job creation and growth (€2.7 billion) and the actions addressing migration, security and external border control (€3.93 billion). The additional resources would stimulate such programmes as Horizon 2020, the Connecting Europe Facility, the Youth Employment Initiative, Erasmus+, the COSME programme for small and medium-sized enterprises, Wifi4EU and the European Fund for Strategic Investments (EFSI).

As emphasised by Jan Olbrycht (EPP, Poland), co-rapporteur for the procedure, the European Parliament ‘rightly advocated a revision of the multiannual financial framework to meet new challenges the European Union is facing.’ According to him, the revised MFF would guarantee a better budgetary system for the remaining years of the framework, more room for manoeuvre to respond to new challenges, and extra resources for some EU programmes. The other co-rapporteur on the file, Isabelle Thomas (S&D, France), also welcomed the revision as a step in the right direction but stressed that ‘it should have gone even further, which we will endeavour to do in the future budget negotiations’, insisting that efforts would be made to go even further in future budget negotiations.

Budgetary powers

The European Parliament and the Council of the European Union are the two arms of the EU budgetary authority. However, their powers differ in the various pieces of legislation underpinning the EU finances system. The legislative powers of the Parliament with regard to the EU budget vary depending on whether it is acting in the context of the annual budgetary procedure, the decision on the design of the EU own resources system or the establishment of a multiannual financial framework (MFF). The Parliament also has powers of scrutiny of the implementation of the budget and is discharge authority.

For the annual budgetary procedure, the European Parliament acts on an equal footing with the Council. The decision on the design of the own resources system requires the unanimity of the Member States in the Council after obtaining the opinion of the European Parliament. In order to adopt the regulation on the MFF, the Council must obtain the European Parliament’s consent beforehand, while the Parliament gives discharge on the implementation of the annual budget after obtaining the recommendation of the Council. Finally, the European Parliament, together with the Council, and in accordance with the ordinary legislative procedure, decides about the principles and rules governing the establishment, implementation and control of the EU budget. These are included in a regulation known as the financial regulation applicable to the general budget of the Union.

Read the complete study on ‘The power of the European Parliament: Examples of EP impact during the 2014-19 legislative term‘ in the Think Tank pages of the European Parliament.