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Europe's budget

Since 27 June 2013, the multiannual financial framework has been in place as the EU budget plan for the period 2014–2020. A total of almost 1000 billion euros is available for the different policy areas. In the allocation of these funds, greater priority is being 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 concluded. During the negotiation process the Federal Foreign Office served as lead ministry within the German Government. This framework will determine all EU revenue and spending over the next seven years.

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 own resources. The annual EU budget – which is laid down in a special procedure – is embedded in the financial framework and must be kept within this framework. Funds are allocated with the aim of financing the EU’s political goals, thereby ensuring its future viability. With regard to budget funding, the prime concern is to ensure that the level of national contributions paid by each member state is fair.

Agreement on the draft for a new MFF

In Germany’s view the negotiations were a success as the most important goals were achieved:

  1. Excluding certain specific instruments, the ceiling on spending under the new MFF is limited to 960 billion euros.
  2. Germany will keep all its rebates on payments to the EU; in 2011 these amounted to 2.3 billion euros.
  3. “Better spending” instead of “more spending”: more efficient use of the funding available instead of a budget increase.

In light of the economic crisis and the difficult situation for national budgets, the German Government was opposed to an increase in EU spending, wanting instead to see the available funds used more efficiently. And in this it was successful: the budget for the period 2014–2020 was limited to 960 billion euros, whereas in the previous period it was almost 1000 billion euros. Despite this successful consolidation, Germany remains the largest net contributor of the EU, paying almost 20 per cent of the EU budget.

Euro banknotes and coins

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© picture alliance / ZB

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Euro banknotes and coins

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The German Government has been particularly keen to ensure that spending is effective. 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 will be made available to combat youth unemployment. Where cuts have been made, this has been done with moderation: regions in the new Länder that will no longer get maximum support will continue to receive 64 per cent of their previous support through a combination of various measures. The funds 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 reviewed 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.

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In detail: the path towards the MFF 2014–2020

In June 2011 the Commission presented its proposal for the next MFF for the years 2014 to 2020. In addition, by the end of 2011 work had been completed 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. 

This was when the negotiations entered the home stretch. As the 27 member states were, as was expected, unable to agree on the MFF package on 22–23 November 2012, the heads of state and government managed to reach an agreement on 7–8 February 2013. The Irish EU Council Presidency then began the "trilogue negotiations" with the Commission and the European Parliament and this resulted on 27 June in a political agreement.

Agreement still needs to be reached during the Lithuanian EU Council Presidency on some 70 legal acts governing spending under various headings in specific sectors. Similarly, the European Parliament meeting in plenary session still needs to formally approve the relevant Council Regulation and Interinstitutional Agreement on the MFF. Lastly, the Commission is expected to submit shortly a draft Own Resources Decision, which needs to be ratified in all 28 member states.

More on the multiannual financial framework on the European Commission website


Last updated 28.05.2014