Skip to main content

The EU Budget and Recovery Plan: A Chance for EU Ambition?

  • Chapter
  • First Online:
The EU Political System After the 2019 European Elections

Part of the book series: Palgrave Studies in European Union Politics ((PSEUP))

  • 627 Accesses

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.

This is a preview of subscription content, log in via an institution to check access.

Access this chapter

Chapter
USD 29.95
Price excludes VAT (USA)
  • Available as PDF
  • Read on any device
  • Instant download
  • Own it forever
eBook
USD 119.00
Price excludes VAT (USA)
  • Available as EPUB and PDF
  • Read on any device
  • Instant download
  • Own it forever
Softcover Book
USD 159.99
Price excludes VAT (USA)
  • Compact, lightweight edition
  • Dispatched in 3 to 5 business days
  • Free shipping worldwide - see info
Hardcover Book
USD 159.99
Price excludes VAT (USA)
  • Durable hardcover edition
  • Dispatched in 3 to 5 business days
  • Free shipping worldwide - see info

Tax calculation will be finalised at checkout

Purchases are for personal use only

Institutional subscriptions

Notes

  1. 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. 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. 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. 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. 5.

    See footnote 4.

  6. 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. 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. 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. 9.

    Footnote 7, op. cit.

  10. 10.

    Informal comment by European Council President H. Van Rompuy ahead of the 2014–2020 MFF negotiations.

  11. 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. 12.

    Informal comment by A. Lamassoure, former Chair of the Budget Committee, during the 2014–2020 MFF negotiations.

  13. 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. 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. 15.

    J. Van Overtveldt, Chairman; J. Olbrycht and M. Marques, MFF Co-Rapporteurs; J. Manuel.

  16. 16.

    Fernandes and V. Hayer, Own Resources Co-Rapporteurs; R. Andresen, Member.

  17. 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. 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. 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. 20.

    See footnote 1.

  21. 21.

    With an estimated revenue of EUR 6 billion a year, but destined to gradually phase-out.

  22. 22.

    With an estimated revenue of up to EUR 10 billion a year.

  23. 23.

    With an estimated revenue of EUR 5 to 14 billion a year.

  24. 24.

    With an estimated revenue of EUR 1.3 billion a year.

  25. 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.

    Google Scholar 

  • 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.

    Google Scholar 

  • 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

  • European Commission, European Economic Forecast – Spring 2020, Institutional Paper 125, May 2020.

    Google Scholar 

  • European Commission, Proposal for a Council Regulation amending Council Regulation (EU, EURATOM) No 1311/2013 laying down the multiannual financial framework for the years 2014–2020, 18 May 2020, COM/2020/446 final.

    Google Scholar 

  • European Council, Conclusions of the special meeting of the European Council (17, 18, 19, 20 and 21 July 2020), 21 July 2020, EUCO 10/20.

    Google Scholar 

  • European Parliament, Resolution of 29 March 2007 on the future of the European Union’s own resources, P6_TA-Prov(2007)0098.

    Google Scholar 

  • European Parliament, Resolution of 8 June 2011 on Investing in the future: a new Multiannual Financial Framework (MFF) for a competitive, sustainable and inclusive Europe, P7_TA(2011)0266.

    Google Scholar 

  • European Parliament, Resolution of 15 April 2014 on negotiations on the MFF 2014–2020: lessons to be learned and the way forward, P7_TA(2014)0378.

    Google Scholar 

  • 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.

    Google Scholar 

  • European Parliament, Resolution of 14 March 2018 on reform of the European Union’s system of own resources, P8_TA(2018)0076.

    Google Scholar 

  • European Parliament, Resolution of 30 May 2018 on the 2021–2027 multiannual financial framework and own resources, P8_TA(2018)0226.

    Google Scholar 

  • 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.

    Google Scholar 

  • 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.

    Google Scholar 

  • 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.

    Google Scholar 

  • 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.

    Google Scholar 

  • 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.

    Google Scholar 

  • 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.

    Google Scholar 

  • 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.

    Google Scholar 

  • European Parliamentary Research Service, 2021–2027 multiannual financial framework and new own resources. Analysis of the Commission’s proposal, PE 625.148, July 2018.

    Google Scholar 

Literature

  • d’Oultremont, C., & Mijs, A. (2013) Reforming the system of financing the EU budget. Egmont.

    Google Scholar 

  • De Feo, A. (2020). The multiannual financial framework 2021–2027: Ambition or continuity? In B. Laffan & A. De Feo (Eds.), EU financing for next decade: Beyond the MFF 2021–2027 and the next generation EU (pp. 1–14). European University Institute.

    Google Scholar 

  • Debreu P. (2018). Budget européen 2021–2027: doter l’Europe des moyens de nos ambitions. Terra Nova, 8 novembre 2018.

    Google Scholar 

  • Fuest, C., & Pisani-Ferry, J. (2020). Financing the European Union: new context, new responses. In Policy contribution 2020/16. Bruegel.

    Google Scholar 

  • Monnet, J. (1988), Mémoires. Fayard.

    Google Scholar 

  • Vitrey, A. (2020). How and why did the European Parliament influence the reform of the own resources system? In B. Laffan & A. De Feo (Eds.), EU Financing for next decade: Beyond the MFF 2021–2027 and the next generation EU (pp. 71–88). European University Institute.

    Google Scholar 

  • Vitrey, A., & Lumet, S. (2020). Cadre financier pluriannuel 2021–2027, quelles avancées ? Tour d’horizon d’une séquence budgétaire européenne inédite et tumultueuse. Question d’Europe, n°575, Fondation Robert Schuman, 26 octobre 2020.

    Google Scholar 

  • Von der Leyen U. (candidate for President of the European Commission), Political Guidelines for the next European Commission 2019–2024—A Union that strives for more—My agenda for Europe, 16 July 2019.

    Google Scholar 

Download references

Author information

Authors and Affiliations

Authors

Corresponding author

Correspondence to Frederik Mesdag .

Editor information

Editors and Affiliations

Rights and permissions

Reprints and permissions

Copyright information

© 2023 The Author(s), under exclusive license to Springer Nature Switzerland AG

About this chapter

Check for updates. Verify currency and authenticity via CrossMark

Cite this chapter

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

Download citation

Publish with us

Policies and ethics