The discussion on a new multi-annual financial framework (MFF) or budget for the EU for the years after 2020 began with a two-day conference in Brussels this week. The formulation of a budget is usually one of the most contentious debates in the EU and this time around it has the potential to be even more contentious than usual.
The discussion on a new multi-annual financial framework (MFF) or budget for the EU for the years after 2020 began with a two-day conference in Brussels this week.
The formulation of a budget is usually one of the most contentious debates in the EU and this time around it has the potential to be even more contentious than usual.
It will be framed against the background of a perfect storm with the loss of the UK’s net contribution of around €12bn annually and a need for the EU to commit expenditure to new areas of activity.
Farming
Farmers are concerned in each negotiation about the pressure that will come to reduce the Common Agricultural Policy (CAP) budget, which is currently just under 40% of the total EU budget.
While there will be pressure, there was a general consensus that an increased contribution was needed.
The European Commission President Jean Claude Junker urged an increase in budget contribution from the current 1% of national expenditure, and a move away by countries from talking about net contributor and net recipient of EU funds.
The theme that we are all net beneficiaries was repeated by several EU contributors.
Juncker highlighted the new areas of activity that the EU had to become more involved in such as migration/border protection, defence, and counter terrorism.
He resisted the temptation to suggest that the CAP should be cut to meet these new commitments, describing the idea as a “false analysis of agricultural matters.”
His analysis was that the EU should determine its ambitions and then set about funding them. As an aside, he also warned against any expectation that there would be a change in the UK’s leaving the EU and the expectation should be that after 30 March 2019 they would no longer be a member.
The detail
It was left to the Budget Commissioner Gunther Oettinger to put more detail on how future finances might be worked out.
He was more or less in alignment with what he told the outlook conference before Christmas that the Brexit gap should be filled by a 50:50 split in savings and introduction of new money.
In terms of the new areas of activity envisaged for the EU post-2020, the Commissioner suggested that funding for these should be split between 80% new money and 20% savings or reallocation from current budget.
Funding rethink
Other contributors were positively disposed in recognising the need to find additional money and step away from the net contribution debate.
The German foreign minister, whose country is the biggest contributor of funds to the EU, said that they were net winners and the French minister for EU affairs expressed similar sentiments urging that there not be a reduced budget.
However, the reports from Paris suggest that the French are undergoing something of a rethink on funding, with the previously unthinkable questioning of CAP funding.
May
It is the ambition of the Commission to reveal its budget proposals by May, with the president suggesting that member states adopt the new budget ahead of elections to the EU Parliament in June 2019.
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