Tuesday, 20 February 2018

European Commission publishes its priorities for the EU Budget Post-2020

On 14 February the European Commission published a Communication outlining the various options and their financial consequences for the next long-term EU budget (the Multi-annual Financial Framework or MFF) after 2020. The Communication, entitled ‘A new, modern Multiannual Financial Framework for a European Union that delivers efficiently on its priorities post-2020’, was prepared ahead of an informal meeting of EU Leaders that takes place on 23 February 2018.

The Communication argues that the first step for reforming the EU budget is to define what Europe wants to do together and agree on priorities. Secondly, the EU needs the right instruments to be able to act quickly in response to external developments.

Commenting on the Communication, European Commission President Jean-Claude Juncker said: "Budgets are not bookkeeping exercises – they are about priorities and ambition. They translate our future into figures. So, let's first discuss about the Europe we want. Then, Member States must back their ambition up with the money to match. And whilst we all need to understand that business as usual is not an option for this upcoming discussion, I firmly believe that we can square the circle and agree on a budget where everyone will be a net beneficiary.”

The Commission is contributing to the MFF discussion in three ways: First, by providing the necessary facts about the EU budget, its benefits, achievements and added value. Second, by drawing up scenarios which illustrate the financial impact of various possible policy choices. And third, by showing the consequences for students, researchers, infrastructure projects and others should the adoption of the new EU budget be delayed.

EU added value for innovation 
The Communication covers numerous areas of interest to innovation and sustainability and argues that investment is increasingly focused on programmes directly managed at European level and in areas such as research and innovation, trans-European transport and energy networks, mobility programmes for young people and Europe's external action, and that the principle of European added value should shape the future MFF.

Research and innovation and digitisation – clear SusChem priorities - are high on the Commission’s list. The EU currently spends close to EUR 80 billion on the Horizon 2020 programme. The Commission states that maintaining or lowering this budget post 2020 would not address the problem of underfunding, while an increase by 50% to EUR 120 billion would create an estimated 420,000 additional jobs by 2040. Doubling the Framework Programme to EUR 160 billion would create an estimated 650,000 jobs by 2040.

For digitalisation the current EU spend for data infrastructure, connectivity and digital skills is around EUR 35 billion. The Commission notes that maintaining or even lowering current investment levels would risk compromising the EU’s ability to remain competitive while doubling the amounts invested in the digital economy to around EUR 70 billion would deliver strong progress.

Modernisation and financing
The paper also examines how the EU ‘can do more with less’ and sources of finance for the budget.
One option to improve the efficiency and impact of instruments aiming at investment support would be to integrate them into one single investment support instrument. This would further reinforce the European Fund for Strategic Investment and have a positive impact on investment levels, economic growth and employment across the EU. The Commission foresee that wider uptake could more than double the investments mobilised over the next MFF up to EUR two trillion.

Ideas for sources of finance for the MFF include a revamped EU Emissions Trading System (ETS) that could generate revenues up to EUR 105 billion over seven years; access to VAT-based resources, and a Common Consolidated Corporate Tax Base.

Other areas covered in the Communication include mobility of young people, specifically the ‘Erasmus+’ programme; Economic and Monetary Union; Cohesion Policy; the Common Agricultural Policy (CAP); external borders and defence.

Next steps
The European Commission will table its formal proposal for the next long-term EU budget in the coming months, at the latest in early May 2018. In the meantime, the Commission will continue listening to all stakeholders, including via the public consultations on the priorities of the EU that were launched in January 2018.

For more detailed information on the MFF process and to access ongoing stakeholder consultations on the shape of the MFF post 2020, please visit the DG Budget website.

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