Abstract
The European elections of May 2019 paved the way for a new era for the European Union (EU): new institutions, new membership (Brexit), a new political agenda, and a new Multiannual Financial Framework (MFF). In addition, the COVID-19 crisis spread over Europe in Spring 2020 creating an unprecedented shock with severe consequences for European societies and economies. In what was an existential matter for the EU, the budget found itself at the core of EU action. This article looks at the past budgetary negotiations and progressive reform of the EU financing and own resources from an insider point of view. It aims at showing how the evolution of the 2021–2027 MFF and Next Generation EU negotiations were a chance for EU ambition and how they became the instrument on which to build a response to an unparalleled crisis.
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Notes
- 1.
Being a net contributor, the United Kingdom’s (UK) withdrawal from the EU creates a gap in the EU budget of EUR 12–14 billion a year. The OR ceiling will therefore be under a new constraint, with an automatic decrease by approximately 16% in nominal terms, i.e. the share of the UK’s GNI (Vitrey, 2020, p. 79). At constant rates, this would mean a yearly loss of approximately EUR 25 billion.
- 2.
In a resolution of 10 October 2019, (paragraph 5 reads: “[The European Parliament] (…) underlines that Parliament will not give its consent to the MFF without an agreement on the reform of the OR system, including the introduction of a basket of new own resources that are better aligned and incentivise progress on major EU policy priorities” (P9_TA (2019) 0032)).
- 3.
Despite the so-called British rebate, the UK had been a net contributor. Over the period 2014–2016, the average share of UK contribution slightly exceeded EUR 17 billion while the amounts received from the EU budget have been just above EUR 7 billion (Vitrey, 2020).
- 4.
These changes mainly concern the headings (7 instead of 5), the list of programmes (37 instead of 58) grouped into 17 ‘policy clusters’, the funds, as well as their distribution between headings (including two new headings in the MFF proposals: Migration and Borders Management and Security and Defence).
- 5.
See footnote 4.
- 6.
“The ball is now in the court of Parliament and Council and I believe we should aim to have an agreement before the European Parliament elections next year”, J.-C. Juncker, President of the European Commission, 2 May 2018.
- 7.
In the final agreement, the reduction on their national contribution even increased slightly, totalling a ‘loss’ of EUR 53 billion over the next seven years.
- 8.
Article 312,2: “The Council, acting by a special legislative procedure, shall adopt a regulation laying down the multiannual financial framework. The Council shall act unanimously after obtaining the consent of the European Parliament […]”.
- 9.
Footnote 7, op. cit.
- 10.
Informal comment by European Council President H. Van Rompuy ahead of the 2014–2020 MFF negotiations.
- 11.
The New Hanseatic League (created in February 2018 by the Finance Ministers of DK, SE, NL, EE, LV, LT) supports more fiscal conservatism within the EU.
- 12.
Informal comment by A. Lamassoure, former Chair of the Budget Committee, during the 2014–2020 MFF negotiations.
- 13.
Remarks by President C. Michel after the special meeting of the European Council on 20–21 February 2020, https://www.consilium.europa.eu/en/press/press-releases/2020/02/21/remarks-by-president-charles-michel-after-the-special-meeting-of-the-european-council-on-20-21-february-2020/.
- 14.
Resolutions of 14 March 2018 (P8_TA(2018)0075 and P8_TA(2018)0076), 30 May 2018 (P8_TA(2018)0226) and 14 November 2018 (P8_TA(2018)0449).
- 15.
J. Van Overtveldt, Chairman; J. Olbrycht and M. Marques, MFF Co-Rapporteurs; J. Manuel.
- 16.
Fernandes and V. Hayer, Own Resources Co-Rapporteurs; R. Andresen, Member.
- 17.
The recovery plan, therefore, initiates a deep change in the use of loans: changes of scale (EUR 1.100 billion plus EUR 750 billion) and a change of purpose (subsidies and loans granted to member states to reinforce European policies [Next Generation EU]).
- 18.
In 2007, French MEP A. Lamassoure demonstrated that the current financing system had reached its limits. He urged for a two-stage approach to reform the financing of the EU budget: first, abolish all corrections and rebates, and second a progressive implementation of a new system of own resources (European Parliament, Resolution of 29 March 2007, P6_TA-PROV (2007) 0098). During the negotiations on the 2014–2020 MFF, the Parliament managed to secure the creation of a High Level Working Group on Own Resources (HLGOR) under the leadership of former Italian Prime Minister M. Monti and composed of members representing the European Parliament, the Council and the Commission. The final Monti Report, presented in the Parliament and the Council in January 2017, advocated for substantial reforms of the EU budget, requiring changes both on the expenditure and revenue sides, based on nine recommendations (Monti Report, December 2016).
- 19.
According to article 311 TFEU, the decisions related to the own resources are adopted at unanimity by the Council after consultation of the European Parliament. Moreover, the own resource decisions only enter into force once approved by the member states according to their respective constitutional rules (won and Borders Managemeement by the national parliaments).
- 20.
See footnote 1.
- 21.
With an estimated revenue of EUR 6 billion a year, but destined to gradually phase-out.
- 22.
With an estimated revenue of up to EUR 10 billion a year.
- 23.
With an estimated revenue of EUR 5 to 14 billion a year.
- 24.
With an estimated revenue of EUR 1.3 billion a year.
- 25.
The income would be variable, depending on the revenue which would be taxed (from EUR 3.5 billion a year to EUR 57 billion).
Bibliography
Institutional Documents
European Commission, Reflection Paper on the Future of EU Finances, 28 June 2017, COM (2017)358.
European Commission, Proposal for a Council Regulation laying down the multiannual financial framework for the years 2021 to 2027, 2 May 2018, COM/2018/322 final.
European Commission, A modern budget for a Union that protects, empowers and defends: Questions and Answers, Memo, 2 May 2018, https://ec.europa.eu/commission/presscorner/detail/en/MEMO_18_3621
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European Parliament, Resolution of 14 March 2018 on the next MFF: Preparing the Parliament’s position on the MFF post-2020, P8_TA(2018)0075.
European Parliament, Resolution of 14 March 2018 on reform of the European Union’s system of own resources, P8_TA(2018)0076.
European Parliament, Resolution of 30 May 2018 on the 2021–2027 multiannual financial framework and own resources, P8_TA(2018)0226.
European Parliament, Resolution of 14 November 2018 on the Multiannual Financial Framework 2021–2027 – Parliament’s position with a view to an agreement, P8_TA(2018)0449.
European Parliament, Resolution of 10 October 2019 on the 2021–2027 multiannual financial framework and own resources: time to meet citizens’ expectations, P9_TA (2019)0032.
European Parliament, Resolution of 13 May 2020 with recommendations to the Commission on a safety net to protect the beneficiaries of Union programmes: setting up an MFF contingency plan, P9_TA (2020)0065.
European Parliament, Resolution of 23 July 2020 on the conclusions of the extraordinary European Council meeting of 17–21 July 2020, P9_TA(2020)0206.
European Parliament, Legislative resolution of 16 September 2020 on the draft Council decision on the system of own resources of the European Union, TA/2020/0220.
European Parliament, Legislative resolution of 16 September 2020 on the draft Council decision on the system of own resources of the European Union, P9_TA(2020)0220.
European Parliament, Legislative resolution of 16 December 2020 on the draft Council regulation laying down the multiannual financial framework for the years 2021 to 2027, P9_TA(2020)0357.
European Parliamentary Research Service, 2021–2027 multiannual financial framework and new own resources. Analysis of the Commission’s proposal, PE 625.148, July 2018.
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Vitrey, A., Mesdag, F. (2023). The EU Budget and Recovery Plan: A Chance for EU Ambition?. In: Costa, O., Van Hecke, S. (eds) The EU Political System After the 2019 European Elections. Palgrave Studies in European Union Politics. Palgrave Macmillan, Cham. https://doi.org/10.1007/978-3-031-12338-2_16
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