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Political agreement on EU budget and Next Generation EU recovery fund: What happens now?

Flags in front of the European Parliament in Strasbourg

European Parliament in Strasbourg, © abaca

12.11.2020 - Article

On 10 November, the negotiators for the Council of the European Union, under the German Presidency, and the European Parliament reached agreement on a comprehensive recovery fund to fight the effects of the COVID‑19 pandemic as well as on the MFF 2021‑2027.

On 10 November, the negotiators for the Council of the European Union, under the German Presidency, and the European Parliament reached agreement on a comprehensive recovery fund to fight the effects of the COVID‑19 pandemic as well as on the Multiannual Financial Framework (MFF) 2021‑2027. What does that actually mean? Here are some brief answers to frequently asked questions.

What has been decided?

The volume of the negotiated package is unprecedented in the history of the EU, at 1.8 trillion euro, with 1.074 trillion for the MFF and 750 billion for the COVID‑19 recovery fund. The package sets clear priorities for spending on climate change mitigation and digitisation.

What does the agreement with the European Parliament mean?

The agreement between the Council and European Parliament negotiators on 10 November removed a major hurdle on the way to the adoption of the package. Foreign Minister Maas commented: “Getting Europe’s economic recovery underway is a mammoth task which we assumed along with our Council Presidency. Today we took a huge step towards achieving this goal. This is a ray of hope for the economy and society in Europe.”

What happens next?

The agreement now needs to be transposed into several laws. Some of them have to be endorsed once again by the European Parliament and the member states in the Council. In some cases, the Council approval needs to be unanimous. The Own Resources Decision, the legal foundation for the financing of all EU expenditure, also needs to be ratified in all member states. In most member states, this involves the national parliaments.

What’s the compromise?

The European Parliament wanted several areas of expenditure to be given more money; these will now get an additional 16 billion euro. These priorities include the Horizon Europe research and innovation programme, the Erasmus exchange programme and increased funding for health and humanitarian assistance.

What is the Multiannual Financial Framework (MFF)?

The Multiannual Financial Framework (MFF) lays down the maximum amount the EU can spend on its political priorities over a seven-year period, or how much the EU wants to invest in particular areas. The EU’s annual budget is adopted each year in accordance with the requirements set forth in the Multiannual Financial Framework.

Why does the EU need a Multiannual Financial Framework?

The Multiannual Financial Framework ensures that the EU’s expenditure is predictable. Moreover, a long-range planning horizon is useful for larger-scale projects. The MFF is also intended to help maintain budgetary discipline. A long-term perspective is also important for potential recipients of EU funding. The EU member states’ budgetary authorities, too, depend on long-term planning.

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