Looking ahead: The next EU Budget

Article written by Mark Abdilla – Executive, MEUSAC
Published in Malta Today – 20.11.19

One of the primary points for discussion currently being undertaken within EU institutions is the formulation of the next Multiannual Financial Framework (MFF) for the 2021-2027 period. It presents a range of opportunities for the EU to effectively re-allocate its resources towards areas which are considered as being a ‘top priority’.

The MFF is the instrument through which the EU finances its activities and operations, ranging from an array of EU funding opportunities afforded to EU citizens and businesses, and the operations of the different EU institutions, agencies and bodies. This includes programmes such as the Cohesion Policy and those dealing investments in research and innovation.

In May 2018, the European Commission made a number of proposals aimed at achieving a far-reaching EU budget, which covers a wide-range of policy areas. The objective of the proposal is to put in place a new MFF which reflects rapid modern-day developments in innovation, the economy, the environment and geopolitics. The proposal focuses on six distinct areas: cohesion, natural resources, the single market, the EU’s role outside Europe, migration, as well as security and defence.

The MFF is funded primarily through contributions made by Member States, including contributions made through national VAT rates and import duties on goods entering from outside the EU. The main challenge in funding the upcoming budget revolves around the issue of the United Kingdom’s withdrawal from the EU. While the previous budget was financed by 28 Member States, the next MFF will experience a moderate decrease. As such, the EU and its Member States must look towards ensuring they may do more with less. The European Commission’s proposed budget amounts to 1.11% of the EU’s Gross National Income (GNI).

As such, the current proposal would see an increase in funds allocated to research and innovation, Erasmus, border management, and security. Such increases would be offset, with slight decreases in funding going towards cohesion policy and agriculture.

The changes being proposed on how the EU budget would be allocated highlights those policy areas which the EU is looking to address, particularly when it comes to climate change. In fact, current proposals would see 25% of the next MFF be dedicated exclusively to climate-related actions. Additionally, the areas of cohesion policy and agriculture would also have important climate-related objectives.

The European Parliament, in its review of the Commission’s proposal, has suggested that the total budgetary allocation for the upcoming MFF be increased to 1.3% of the EU’s GNI. This would translate to a 16.7% increase in budgetary allocations, particularly to keep funding allocations for cohesion policy and agriculture similar to their 2014-2020 budgetary allocations.

Negotiations are still ongoing between Member States within the Council of the EU, particularly because of opposing views on the overall size of the new budget and the reduction in agricultural and cohesion funding. The uncertainty surrounding the United Kingdom’s membership is also making it difficult for the Council to reach a final united position, and developments are expected early in 2020.

The drawing up of the next EU budget is a long and complicated process which will have important ramifications for the future of the EU and its Member States. The MFF is an important instrument which will play an integral role in the EU’s operations in the upcoming years, and their effectiveness. It presents an opportunity for the EU to prioritise those areas which are most important in the current global climate, and to tackle the many challenges on its doorstep.

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