The EU Council and Parliament definitively approved the EU Multiannual financial framework (MFF) for the 2021-2027 period. On the 16th of December, the plenary session of the EU Parliament adopted the Regulation on the new EU budget, the following day the EU Council gave its formal approval. Hence, on the 1st of January 2021 the Multiannual financial framework became officially effective.
Plenary session approves the EU budget 2021-2027
The President of the European Commission David Sassoli states that it is “an historical budget for an historical moment”. “We received 15 billion more to sustain public health, research, cultural field, common migration and asylum policy” he said, specifying that “for the very first time in EU history the European budget resources are subject to compliance with the rule of law and democracy throughout Europe”. The interinstitutional agreement on budgetary discipline, cooperation and sound financial management has been reached. Furthermore, declarations that took place last November guaranteed the Parliament democratic scrutiny on the expenditure of the Next Generation EU package. In order to repay the debts incurred for the financing of the Recovery Fund, the agreement also contains a roadmap for the introduction of new own resources. Both the funds of the MFF and the Recovery Fund will be subject to a budgetary conditionality based on the rule of law. National parliaments of the 27 member states are responsible for ratifying the decision on their own resources. In fact, by increasing the fiscal margin of the Union, the Commission will be able to borrow on the capital markets to finance Next Generation EU. Budget commissioner Hahn assures that to start the Recovery Fund by next spring, it is strictly necessary to speed up the process and close it in a few months.
1.074 billion for the European budget, an additional 15 billion fundings for flagship programmes
The plenary vote confirmed the provisional agreement on the Multiannual financial framework, reached last November by the European Parliament and the European Council: the new budget is worth 1.074,3 billion euros, compared to the initial 1.100 billion proposed in May by Ursula Von der Leyen, President of the European Commission. Maximum expenditure ceilings set by the European Council in July have been definitively confirmed, but an additional 16 billion will be available. As a matter of fact, MEPs requested more resources to look beyond the Covid emergency and to reach the targets previously set by the Union: research, digitization, fight against climate change, support for young people. Of these additional funds, 15 will strengthen flagship programmes, while one billion will contribute to increase budgetary flexibility to respond to any future crises. Fines imposed on companies for violations of EU competition rules will increase the MFF by 11 billion (from 1074,3 to 1085,3 billion euros). On the other hand, 4 billion euros come from reallocations of funds within the financial framework. The key programs receiving the additional funds are the following:
– EU4Health: from 1,7 to 5,1 billion; – Erasmus+: from 21,2 to 23,4 billion; – Horizon Europe: from 80,9 to 84,9 billion; – InvestEU: from 8,4 to 9,4 billion; – Integrated Border Management Fund: from 5,5 to 6,5 billion; – Frontex Agency (European Border and Coast Guard), from 5,1 to 5,6 billion; – Creative Europe, from 1,6 to 2,2 billion; – Rights and Values programme, from 0,6 to 1,4 billion; Humanitarian aids, from 9,8 to 10,3 billion; The Neighbourhood, Development and International Cooperation Instrument (NDICI), from 70,8 to 71,8 billion.
The 7 headings of the Multiannual financial framework
Heading 1 – Single Market, innovation, and digital agenda: 132 billion and 781 million euros distributed among:
- Research and Innovation Programme Horizon Europe: 76 billion, increasing to 84,9 with additional funds and the Next Generation EU contribution;
- The new ICT Programme, Digital Europe: 6 billion and 761 million;
- The programme combining financial instruments, InvestEU: 2,8 billion, becoming 9,8 thanks to the additional funds and the Next generation EU contribution;
- The new European Space Programme: 13 billion and 202 million;
- The international thermonuclear experimental reactor project (ITER): 5 billion;
- Connecting Europe Facility (CEF), to connect Europe: 18,4 billion plus 10 billion from the Cohesion Fund, reaching a total amount of 28,3 billion distributed as follows:
- Transport infrastructures: 21 billion and 384 million;
- Energetic infrastructures: 5 billion and 180 million;
- Digital infrastructures: 1 billion and 832 million.
Heading 2 – Cohesion, resilience and values: 377 billion and 768 million financing:
- Cohesion politics: 330,2 billion, of which 200,4 billion for the European Regional Development Fund (ERDF), 42,6 billion for the Cohesion Fund (CF) and 88 billion for the European Social Fund Plus (ESF+);
- Erasmus+: 21,2 billion becoming 23,4 billion with additional funds;
- RescEU: 1 billion and 106 million;
- EU4Health: 1,7 billion, becoming 6,1 billion with additional funds;
- Creative Europe: 1,6 billion becoming 2,2 billion with additional funds;
- Rights and Values Programme: 0,6 billion becoming 1,4 billion with additional funds.
Heading 3 – Natural resources and environment: 356 billion and 374 million euros, including:
- Common Agricultural Policy (CAP): 336,4 billion, with 258 billion and 594 million for market measures and direct payments, and 77 billion and 850 million for ENRD rural development programmes;
- European Maritime and Fisheries Fund (EMFF): 6,1 billion (current prices);
- LIFE Programme: 4,8 billion;
- Just Transition Fund: 7,5 billion.
Heading 4 – Migration and border management: 22 billion and 671 million, of which 8,705 billion for Asylum, Migration and Integration Fund (AMIF)
Heading 5 – Security and Defense: 13 billion and 185 million euros, of which 7 billion for the European Defense Fund
Heading 6 – Neighbourhood and the rest of the world: 98 billion and 419 million euros
Heading 6 includes Neighbourhood, Development and International Cooperation Instrument, which goes from 70,8 billion to 71,8 billion with additional funds, as well as the Humanitarian Aids Instrument and the Pre-Accession Assistance Instrument.
Heading 7 – European Public Administration: 73 billion and 102 million euros
Including MFF and Recovery Fund, at least 30% of total resources should contribute to climate goals of the Union, while starting from 2024, 7,5% of the annual spending should contribute to the goals related to the biodiversity protection and conservation, percentage rising to 10% starting from 2026.
Recovery Fund democratic scrutiny
Even though the tool for recovery Next generation EU is based on an article of the EU treaty (n. 122) which does not include any role for the European Parliament, MEPs finally managed to establish a “positive dialogue” with the Council. Regular meetings to assess the available fund’s implementation and any deviations from the provisions of the National Recovery Plans. NGEU 750 billion, will be distributed among:
- The Recovery and Resilience Facility (RRF), with 672,2 billion euros, of which 360 billion for loans and 312,5 billion for grants;
- ReactEU, the bridge mechanism between the actual Cohesion Policy and the programmes 2021-2027, with 47,5 billion euros;
- Horizon Europe, the research and innovation programme, with 5 billion euros;
- InvestEU, combining all the financial instruments in line with the European Fund for Strategic Investments (EFSI) of the Junker Plan, with 5,6 billion;
- The Rural Development Plans, within the Common Agricultural Policy framework, with 7,5 billion;
- The Just Transition Fund, which sustain fossil fuels exit from the European regions most dependent on it, with 10 billion.
- The Civil Protection Mechanism of the RescEu Union, with 1,9 billion.