Written by Sidonia Mazur and Tim Peters (updated on 22 June 2023).
The annual EU budget funds the EU policies and programmes that translate the Union’s political priorities and legal obligations into action. On 7 June 2023, the European Commission adopted the annual EU draft budget for 2024 under the title of ‘Enabling Europe to address its priorities’, with an overall volume of €189.3 billion. On the same day, Budget Commissioner Johannes Hahn presented the 2024 draft budget at a meeting of Parliament’s Committee on Budgets (BUDG).
The European Parliament is one of the two arms of the budgetary authority of the European Union, the Council being the other. The two institutions, assisted by the European Commission, decide on the budget in the annual EU budgetary procedure, within the limits of the long-term EU budget – the multiannual financial framework (MFF).
Parliament’s general rapporteur for the 2024 EU budget, Siegfried Mureșan (EPP, Romania), has pointed out that the proposed annual budget has fallen victim to an EU multiannual budget that was too tight from the very beginning. The 2021‑2027 MFF had ‘no room for manoeuvre, not enough margin, and not enough flexibility to face unexpected developments’. The current MFF needed a significant revision before the end of the year so that the EU could adopt a final budget for 2024, capable of properly financing all its priorities.
Siegfried Mureșan further criticised that, against Parliament’s specific advice, the borrowing costs generated primarily by the NextGenerationEU (NGEU) and the Recovery and Resilience Facility (RRF) were made part of the EU budget inside the ceilings. Those costs have nearly doubled – from €2.1 billion initially envisaged in the financial programming for 2024 – to €3.9 billion in the draft budget. Siegfried Mureșan underlined that those costs would be a ‘ticking time bomb’ in the budget. To defuse that bomb, all borrowing costs should be placed outside the budget ceilings.
On 10 May 2023, Parliament adopted a resolution on the impact of rising borrowing costs for the Recovery and Resilience Facility (RRF) on the 2024 EU budget, which called for an urgent revision of the 2021‑2027 MFF and for proposals for a second basket of new own resources.
On 20 June 2023, the European Commission adopted a proposal for a revision of the MFF, aimed at addressing the ongoing challenges, particularly Russia’s war of aggression against Ukraine and inflation. Parliament’s rapporteurs, Jan Olbrycht (EPP, Poland) and Margarida Marques (S&D, Portugal), welcomed the Commission proposal to revise the MFF. They underlined the need to support Ukraine, mitigate the economic and social consequences of war and build a more resilient and competitive Union.
The Council is expected to adopt its position on the draft budget and forward it to Parliament. Under Article 314(3) of the Treaty on the Functioning of the EU, this must be submitted by 1 October at the latest – in reality, under a pragmatic timetable, it is sent by the end of July.
Subsequently, Parliament may either approve the Council’s position or propose amendments. In the likely case that Parliament adopts amendments, a conciliation procedure will follow, seeking to reach a compromise between Parliament and Council. The deadline for finding a compromise is 13 November 2023.
The European Commission adopted a proposal for the MFF on 20 June 2023, together with a set of new own resources and a financing instrument for Ukraine. A successful revision would have a significant impact on the 2024 EU budget, as the margins and flexibilities of the current MFF are practically exhausted. A revised MFF would mobilise new funds, in particular for solidarity with Ukraine. It is unclear whether a revision of the MFF will be finalised before the annual budget for 2024 has to be agreed. If not, the Commission would have to present an amending budget at a later moment.
For more on Parliament’s role in the EU annual budgetary procedure see: Annual EU budgetary procedure: An introduction to the steps in the EP
For more on the impact on the 2024 EU budget of increasing borrowing costs for the European Union Recovery Instrument see: Impact on the 2024 EU budget of increasing borrowing costs for the European Union Recovery Instrument