The Multiannual Financial Framework (MFF) of the European Commission, also called the financial perspective, is a seven-year framework regulating its EU annual budget. It is laid down in a unanimously adopted Council Regulation with the consent of the European Parliament. The financial framework sets the maximum amount of spendings in the EU budget each year for broad policy areas ("headings") and fixes an overall annual ceiling on payment and commitment appropriations. [1]
The common budget of the 2007 to 2013 perspective was fixed to 1.045% of the European GDP.[ citation needed ] UK Prime Minister Tony Blair accepted to review the British rebate, negotiated by Margaret Thatcher in 1984. French President Jacques Chirac declared that this increase in budget will permit Europe to "finance common policies" such as the Common Agricultural Policy – which represents about 44% of the EU's spending – or the Research and Technological Development Policy. However, France's demand to lower the VAT in catering was refused.
The MFF for 2014 to 2020 set a ceiling for expenditure at 1% of European Gross National Income, a reduction from the prior framework. [2] Per the European Council, €959.51 billion in commitments and €908.40 billion in payments for the given timeframe were allotted for expenditure. [3]
The EU's expenditure in this period was in six categories or "headings" with respective ceilings for spending. [4]
1. Smart and inclusive growth
a. Competitiveness for growth and jobs: the ceiling for this program, supporting research and innovation, investment in trans-European networks and development of small and medium-sized enterprises, was €125.61 billion, which exceeded the previous ceiling for 37%.
b. Economic, social and territorial cohesion: with ceiling in amount of €324.94 billion for this subheading. The main goal was reduction of asymmetric levels of development of the EU's regions and expansion of the support of the Union's cohesion policy.
2. Sustainable growth, natural resources: the ceiling equals to €372.93 billion. Aimed covering environmental action, the common fisheries policy and the common agricultural policy (CAP).
3. Security and citizenship: the set limit in amount of €15.67 billion. Asylum and migration related actions were financed, as well as initiatives connected with internal security and external borders.
4.Global Europe: the spending limit of €58.70 billion. Mainly covered Union's activities on international level (humanitarian aid, development assistance).
5. Administration: with €61.63 billion limit on expenditure, which was decreased in amount of €2.5 billion in comparison with the previous MFF in order to consolidate public finances.
6. Compensations: ceiling in sum of €27 million was set to support Croatia in contributing less than gained benefits during the first year after its accession to the European Union.
Below are the ‘special instruments’ used for the MFF of this period: [4]
Emergency aid reserve, with annual amount of €280 million, was used to deal with unpredictable events such as financing humanitarian aid, managing civilian crisis and conducting protection operations in non-EU countries.
EU solidarity fund, with annual budgeted amount of not more than €500 million, was designed for the cases of major disasters in any of the member states or in countries negotiating with EU regarding accession.
Flexibility instrument, with fixed annual amount of €471 million, was dedicated to clearly identified needs out of the scope of the MFF ceilings.
European globalization adjustment fund, with mobilization up to €150 million annually, aiming to support workers, who became unemployed because of globalization, economic crisis, etc., in finding new opportunities of employment.
Contingency margin equals to 0.03% of the EU's gross national income (approximately €4 billion) was intended to be used as last-resort instrument in reacting to unforeseen circumstances.
Specific flexibility to tackle youth unemployment and strengthen research was giving an opportunity to spend an additional €2.543 billion on youth unemployment and research. In order to maintain the total annual ceilings and headings' allocation the same, the amount was fully balanced out within and/or between headings.
The framework did receive a number of amendments and changes during its effective period following a midterm review. [4] Particularly, the budget was shifted towards cushioning labor impacts resulting from the migration crisis straining the budget at the time. [4]
The European Union's MFF for the period 2021-2027 is equipped with a budget of €1,074.3 billion in 2018 prices to address the EU's long-term priorities. [5] It goes together with the Next Generation EU recovery package (NGEU) of €750 billion in grants and loans over the period 2021–2024 to meet the unparalleled socio-economic challenge of the COVID-19 pandemic. [6] An overall of 30% of the total expenditure from MFF and NGEU is to target climate-related spending.
The MFF will incorporate the European Development Fund for the first time. As revenues for MFF and NGEU, the EU will establish new own resources by raising levies. Germany and the Frugal Four will benefit from increased national rebates of €53.2 billion. [7]
MFF and NGEU will cover seven areas providing the framework for the funding of 40 spending programs. [8]
| Spending area | % MFF | MFF | NGEU | Total area | |
|---|---|---|---|---|---|
| 1 | Single market, innovation and digital | 14,7 | 132,78 | 10,60 | 143,38 |
| 2 | Cohesion, resilience and values | 34,5 | 377,77 | 721,90 | 1099,67 |
| 3 | Natural resources and the environment | 29,7 | 356,37 | 17,50 | 373,87 |
| 4 | Migration and border control | 2,7 | 22,67 | 22,67 | |
| 5 | Security and defence | 2,1 | 13,19 | 13,19 | |
| 6 | Neighbourhood and the world | 9,6 | 98,42 | 98,42 | |
| 7 | European public administration | 6,7 | 73,10 | 73,10 | |
| Total expenditure | 100,0 | 1074,30 | 750,00 | 1824,30 |
This is topped-up by additional €12.5 billion agreed with the European Parliament. [10]
The total of national rebates is 53.2 billion € [7] funded by all Member States according to their GNI. [14]
| EU-member | Amount |
|---|---|
| Denmark | 0,377 |
| The Netherlands | 1,921 |
| Austria | 0,565 |
| Sweden | 1,069 |
| Germany | 3,671 |
The European Investment Bank (EIB) is the European Union's investment bank and is owned by the 27 member states. It is the largest multilateral financial institution in the world. The EIB finances and invests both through equity and debt solutions companies and projects that achieve the policy aims of the European Union through loans, equity and guarantees.
The Common Agricultural Policy (CAP) is the agricultural policy of the European Commission. It implements a system of agricultural subsidies and other programmes. It was introduced in 1962 and has since then undergone several changes to reduce the EEC budget cost and consider rural development in its aims. It has however, been criticised on the grounds of its cost, its environmental, and humanitarian effects.
A spending review, or occasionally a comprehensive spending review, is a governmental process in the United Kingdom carried out by HM Treasury to set firm expenditure limits and, through public service agreements, define the key improvements that the public can expect from these resources.
The economy of the European Union is the joint economy of the member states of the European Union (EU). It is the second largest economy in the world in nominal terms, after the United States, and the third largest at purchasing power parity (PPP), after China and the US. The European Union's GDP is estimated to be $19.35 trillion (nominal) in 2024 or $26.64 trillion (PPP), representing around one-sixth of the global economy. Germany has the biggest national GDP of all EU countries, followed by France and Italy.
The military budget of the United States is the largest portion of the discretionary federal budget allocated to the Department of Defense (DoD), or more broadly, the portion of the budget that goes to any military-related expenditures. The military budget pays the salaries, training, and health care of uniformed and civilian personnel, maintains arms, equipment and facilities, funds operations, and develops and buys new items. The budget funds six branches of the US military: the Army, Navy, Marine Corps, Coast Guard, Air Force, and Space Force.
The UK rebate was a financial mechanism that reduced the United Kingdom's contribution to the EU budget in effect since 1985. It was a complex calculation which equated to a reduction of approximately 66% of the UK's net contribution – the amount paid by the UK into the EU budget less receipts from the EU budget. Based on a net contribution of €11.7 (£9.6) billion in 2016, the UK Treasury estimated the 2017 rebate amounted to €6.6 (£5.6) billion reducing the ultimate UK contribution for the 2017 budget to €10.4 (£8.9) billion. Although the rebate was not set in the EU treaties, it was negotiated as part of the Multiannual Financial Framework (MFF) every seven years and had to be unanimously agreed.
Jan Marian Olbrycht is a Polish politician of the Civic Platform who has been serving Member of the European Parliament (MEP) for Silesian Voivodeship since 2004. Olbrycht sits as part of the European People's Party. Before entering European politics, he was the first Marshal of Silesian Voivodeship between 1999 and 2002.
The Regional Policy of the European Union (EU), also referred as Cohesion Policy, is a policy with the stated aim of improving the economic well-being of regions in the European Union and also to avoid regional disparities. More than one third of the EU's budget is devoted to this policy, which aims to remove economic, social and territorial disparities across the EU, restructure declining industrial areas and diversify rural areas which have declining agriculture. In doing so, EU regional policy is geared towards making regions more competitive, fostering economic growth and creating new jobs. The policy also has a role to play in wider challenges for the future, including climate change, energy supply and globalisation.
The European Structural and Investment Funds are financial tools governed by a common rulebook, set up to implement the regional policy of the European Union, as well as the structural policy pillars of the Common Agricultural Policy and the Common Fisheries Policy. They aim to reduce regional disparities in income, wealth and opportunities. Europe's poorer regions receive most of the support, but all European regions are eligible for funding under the policy's various funds and programmes. The current framework is set for a period of seven years, from 2021 to 2027.
The budget of the European Union is used to finance EU funding programmes and other expenditure at the European level.
The European Social Fund Plus (ESF+) is one of the European Structural and Investment Funds (ESIFs), which are dedicated to improving social cohesion and economic well-being across the regions of the Union. The funds are redistributive financial instruments that support cohesion within Europe by concentrating spending on the less-developed regions.
Copernicus is the Earth observation component of the European Union Space Programme, managed by the European Commission and implemented in partnership with the EU Member States, the European Space Agency (ESA), the European Organisation for the Exploitation of Meteorological Satellites (EUMETSAT), the European Centre for Medium-Range Weather Forecasts (ECMWF), the Joint Research Centre (JRC), the European Environment Agency (EEA), the European Maritime Safety Agency (EMSA), Frontex, SatCen and Mercator Océan.
The European Development Fund (EDF) was the main instrument for European Union (EU) aid for development cooperation in Africa, the Caribbean, and Pacific countries and the Overseas Countries and Territories (OCT). Funding was provided by voluntary donations by EU member states. Until 2020 the EDF was subject to its own financial rules and procedures, and was managed by the European Commission (EC) and the European Investment Bank. The EDF has been incorporated into the EU's general budget as of the 2021–2027 multi-annual financial framework.
The Budget of His Majesty's Government is an annual budget set by HM Treasury for the following financial year, with the revenues to be gathered by HM Revenue and Customs and the expenditures of the public sector, in compliance with government policy. The budget statement is one of two statements made by the Chancellor of the Exchequer in the House of Commons, with the Spring Statement being made the following year.
Andrey Grishev Novakov, Bulgarian: Андрей Гришев Новаков is a Bulgarian politician who is currently serving as a Member of the European Parliament. A member of the GERB party, which is affiliated with the European People's Party on a European level, he was previously a leader of a youth wing of his party.
The term "Brexit divorce bill" refers to payment due to the European Union (EU) from the United Kingdom (UK) when it left the EU to settle the UK's share of the financing of all the obligations undertaken while it was a member of the EU. In the Withdrawal Agreement, it is officially referred to as the "financial settlement".
The European Defence Fund (EDF) is a component of the European Union's (EU) Common Security and Defence Policy (CSDP) which aims to coordinate and increase national investment in defence research and improve interoperability between national armed forces. It was proposed in 2016 by Commission President Jean-Claude Juncker and established in 2017. The fund has two stands; Research and Development & Acquisition. In July 2018, the European Commission announced that the EDF budget for 2021-2027 would be €13 billion. This sum was later revised by the European Commission as part of the new EU budget proposed on May 27, 2020, as a result of the COVID-19 pandemic, according to which the EDF will be allocated €8 billion over this budget period.
Horizon Europe is a 7-year European Union scientific research initiative, successor of the Horizon 2020 programme and the earlier Framework Programmes for Research and Technological Development. The European Commission drafted and approved a plan for Horizon Europe to raise EU science spending levels by 50% over the years 2021–2027.
Next Generation EU (NGEU) is a European Commission economic recovery package to support the EU member states to recover from the COVID-19 pandemic, in particular those that have been particularly hard hit. It is sometimes styled NextGenerationEU and Next Gen EU, and also called the European Union Recovery Instrument. Agreed in principle by the European Council on 21 July 2020 and adopted on 14 December 2020, the instrument is worth €750 billion. NGEU will operate from 2021 to 2026, and will be tied to the regular 2021–2027 budget of the EU's Multiannual Financial Framework (MFF). The comprehensive NGEU and MFF packages are projected to reach €1824.3 billion.
The Rule of Law Conditionality Regulation is a regulation of the European Union and Euratom, which allows the European Commission to adopt measures, including the suspension of payment of funds from the EU budget, to member states which violate the principles of rule of law enshrined in article 2 of the Treaty on European Union.
