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Europe’s budget

At the European Council on 27 June 2013 the Council, the Commission and the European Parliament reached political agreement on the EU’s multiannual financial framework (MFF) for the period 2014-2020. The overall budget for the various policy areas amounts to nearly 1000 billion euros. Greater priority is to be given to boosting growth and employment. In a consensus reached during the final negotiations, additional funds are to be allocated to combating youth unemployment.

This means that the negotiations on this key European project have now been virtually concluded. During the negotiating process the Federal Foreign Office had served as lead ministry within the German Government. Before the European Parliament gives the MFF its formal approval, the lawyer linguist services must also have their say. Once these final steps are completed, the EU’s entire revenue and expenditure system for the next seven years will have been decided.

Agreement on the draft for a new MFF

In terms of total volume and the funds allocated under the various headings, the agreement reached with the European Parliament is based on the parameters stipulated by the Heads of State and Government at the European Council held on 7 and 8 February. Germany has thus achieved its objectives: excluding certain specific instruments, the ceiling on spending under the new MMF is 960 billion euros. In addition, Germany keeps all its rebates on payments to the EU; in 2011 these amounted to 2.3 billion euros.

More money is envisaged for research and education, areas crucial for the future. Spending on infrastructure and transport is to be doubled. And in the first two years alone 6 billion euros are to be made available to combat youth unemployment. Where cuts have been made, this has been done with moderation: regions in the new Länder which will no longer get maximum support will continue to receive 64 percent of their previous support through a combination of various measures. The money for agriculture in the EU budget will be further cut, without this meaning abrupt reductions for German farmers.

Given the difficult financial situation, allocations are to be retrieved at the end of the first two years (review clause).

Speaking at the EU summit in Brussels, Federal Chancellor Angela Merkel welcomed the agreement, which was of the utmost importance, she noted, especially if headway was to be made in combating youth unemployment.

The EU’s multiannual financial framework (MFF, previously known as the financial perspective) is the central planning instrument for the use of European Union funds. It is intended to ensure that the EU manages its spending in an orderly manner and within the limits of its budget. Funds are allocated with a view to advancing the EU’s political goals, thereby ensuring its future viability. With regard to budget funding, the prime concern is to ensure fair burden sharing.

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Germany wants to see “better spending”

Euro banknotes and coins

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© picture alliance / ZB

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Euro banknotes and coins

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The EU’s current MFF for 2007-2013 encompasses nearly 1000 billion euros, of which Germany contributes around 20 percent. At a time of tight budgets in nearly all EU member states, Germany was keen to see limits on EU spending in the new MFF. While the intended budget consolidation has been achieved, Germany remains the EU’s largest net contributor.

The German Government is particularly keen to ensure that spending is effective. On 6 February Foreign Minister Westerwelle summed up Germany’s position: “What is needed,” he explained, “is not more spending but better spending aimed at boosting competitiveness and growth.” Speaking in the run up to the European Council in Brussels on 7 February, Michael Georg Link, Minister of State at the Federal Foreign Office, likewise called for “a modern EU budget”. The days of allocating funding according to the “scatter gun principle” were over, he argued.

Interview with Minister of State Link on the EU budget

In June 2011 the Commission presented its proposal for the next MFF for the years 2014 to 2020. By the end of 2011 work had been completed also on drafting some 70 regulations dealing with specific policy fields. In the first half of 2012, the Danish EU Council Presidency created a document known as the “negotiating box” to keep track of how the negotiations were proceeding. The work was taken forward on this basis by the Cypriot EU Council Presidency, which in late October presented the first proposals for the allocation of funds under the various expenditure headings. So the negotiations entered the end spurt. After Heads of State and Government of the 27 member states failed, as anticipated, to reach agreement on the MFF package at their meeting on 22/23 November 2012, the package was finally agreed at their meeting on 7/8 February. The Irish Presidency then started so called trialogue negotiations with the Commission and the European Parliament, culminating in the political agreement reached on 27 June.

More on the multiannual financial framework on the European commission website


Last updated 02.07.2013