Analytics, Budget, EU – Baltic States, Financial Services, Modern EU

International Internet Magazine. Baltic States news & analytics Friday, 22.11.2019, 23:31

Modern long-term EU budget for the period 2021-2027

Eugene Eteris, LZA Senior Adviser,BC International Editor, Copenhagen, 11.10.2019.Print version
The next multiannual financial framework (MFF) should be fit for the EU’s present and future challenges to deliver on the member states and citizens’ expectations. The Commission calls on EU Heads of State and/or Government to provide political guidance and new impetus to the negotiations in order to reach an agreement on a fair and balanced MFF.

In May and June 2018, the Commission put forward a proposal for a new and modern long-term budget, tightly geared to the Union's priorities, including the legislative proposals for the 37 sectoral programmes. On that basis, a lot of work has already been done in both the European Parliament and the Council; progress has been made on the overall framework and on many of the sectoral proposals.


The Commission’s communication (ahead of the European Council meeting on 17-18.x.) outlines the main points for consideration in order to reach a swift agreement by the EU leaders; these points include:

- the overall level of funding to match the Union's shared priorities;

- a modern budget with the right balance between policies and a strong focus on EU added value;

- a more transparent approach to financing the EU budget and the introduction of new sources of revenue to support priorities and reduce the burden on national contributions; and

- a greater policy coherence, through a closer link between funding and policy priorities and through stronger tools for protecting the EU budget from rule of law deficiencies.

Strategic decisions on these elements should help advance the ongoing negotiations on the EU's next long-term budget in view of an agreement by the end of the year, as agreed by EU leaders this June. Budget’s detail analysis follows below.


See the June’s conclusion and EU strategic agenda for 2024 in: https://www.consilium.europa.eu/media/39922/20-21-euco-final-conclusions-en.pdf

 

European Commission President Jean-Claude Juncker underlined that the MFF is “an investment in Europe-wide, world-leading future”, as the budget is funding cross-border infrastructure, provides support for SMEs and a safety net for farmers, and supporting education in another European country for young Europeans. These priorities, he stressed, were forward-looking, responsible and pragmatic “on how to do more with less”.


European Commissioner in charge of budget and human resources, Günther H. Oettinger mentioned that already in spring 2018, the Commission made a proposal for the next MFF as a solid basis for negotiations. However, he stressed, “everyone must now work towards a compromise”: at a time of great challenges, Europe cannot afford a delay its long-term budget.


Financing the Union’s priorities

EU’s strategic guidance includes a new program to be launched on January 2021.

-   Getting a budget that is up to the task. The Commission proposed a long-term budget equal to 1.114% of EU 27 gross national income (GNI-27); presently, the Union invests 1.16% of the GNI-27, including the European Development Fund. The proposed budget is therefore already smaller compared to the current one. If the EU budget is reduced further, this would make it difficult for the Union to deliver on its priorities and to provide the much needed support to its farmers, students, researchers, and hundreds of thousands of other beneficiaries of the EU budget. The EU leaders should therefore aim for a realistic budget that is up to the task.

-   Finding a fairer approach to financing the EU budget. Today, some of the EU's richest Member States get reductions from their contributions to the EU budget (known as rebates) and as a result pay least compared to their gross national income per capita (see the Table below). The departure of the United Kingdom, because of which the system of rebates was introduced back in 1984, gives an opportunity to reform the revenue side of the EU budget and address a system that has become opaque and distorted. Leaders should make use of this opportunity and endorse a fairer way to finance the EU budget.




-   Modernising the EU budget: the revenue side. The MFF discussion is a moment to look at new sources of revenue to the EU budget which are more closely linked to the EU policy priorities. Possible sources include revenue from the Emissions Trading System or contributions based on non-recycled plastic. Leaders should make use of the increasing momentum in favour of these new own resources and agree to diversify the sources of revenue to the EU budget.

-   Modernising the EU budget: the expenditure side. In its proposal for the MFF, the Commission included “a new balance” between the policy areas funded by the EU budget. While cohesion policy and the Common Agricultural Policy continue to play a vital role in shaping Europe's future, they are being modernized in line with the new priorities. At the same time, more money goes to key policy areas such as research and innovation, student mobility, climate action, migration, border management and security, digitalisation, as well as defence and the Union's external action. The EU-27 leaders should support these efforts to modernise the EU budget and make sure it delivers in areas people care about.

 

More information in the following web-links: 

Factsheet: A modern EU budget rising to future challenges (9 October 2019); - Factsheet: EU budget financing (9 October 2019); 

Commission Communication “Time to decide on the Union's financial framework for 2021-2027” (9 October 2019);

 - Press release on the Commission proposal of 2 May 2018 for Europe's next long-term budget; and - EU budget for the future.

 







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