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First Reaction of the German Federal Government to the Commission Proposal of 29 June 2011 for the 2014-2020 Multiannual Financial Framework

15.07.2011 - Article

On 29 June 2011 the Commission presented a proposal for the EU’s next Multiannual Financial Framework, starting in 2014. The Federal Government regards this proposal as a basis for negotiation, since it reflects an effort to align the EU budget more closely with promoting smart, sustainable and inclusive growth in Europe and simultaneously strengthens the EU’s capacity for action as a global player. Many areas nonetheless still need careful review. It is on this basis that the Federal Government will put forward German interests in the negotiations.

It should be noted that the Commission proposal for the next Multiannual Financial Framework comes at a time when the member states are undertaking considerable efforts to stabilize the common currency while simultaneously having to consolidate their national budgets significantly. It is therefore indispensable to strictly limit expenditure in the EU budget.

The Commission proposal significantly exceeds (by 110 billion euro) what Germany called for together with France, the United Kingdom, the Netherlands and Finland on 18 December 2010. As such, it needs to be brought into line with the spending limit on commitment appropriations of no more than 1% of the EU’s gross national income. The Federal Government rejects the Commission’s suggestion that individual tasks be financed using instruments outside of the budget.

To limit the rise of payments appropriations, it is necessary to limit what is carried over from the current Multiannual Financial Framework to the next because of as yet unspent funds. The Federal Government awaits the Commission’s proposals on this issue.

Strictly limiting expenditure means that new challenges need to be met also by reallocations within the budget. In this way, even a straitened budget can be an ambitious one.

The Federal Government welcomes the Commission’s plans for a safety net to avoid disruptions and provide regions with the continuity in financing they need for the catching-up process when they lose their status as convergence regions.

However, the Federal Government rejects the European Commission’s further proposal to introduce a general new category of “transition regions” (regions where gross domestic product per capita lies between 75% and 90% of the EU average). Any support measure must have a finite timeframe and degressive levels of support.

Germany considers indispensable that all EU regions benefit from structural funding. It is encouraging that the Commission proposal is fundamentally in line with this view.

In the view of the Federal Government, the Commission’s proposals for a new infrastructure fund (“Connecting Europe”) require further elucidation.

With regard to innovative financial instruments, the Federal Government is of the opinion that the EU budget cannot take on any additional risks. The Community only finances or collateralizes for projects which are desirable in principle and for which private and member-state involvement does not suffice.

In its draft of the new decision on own resources, the Commission proposes a European value added tax and a European financial market tax. The Federal Government rejects the idea of introducing any new own resources, since they would damage the acceptance of the European budget in public opinion and increase administrative costs for the member states. In contrast to existing own resources, these problems are not balanced out by any measurable advantage.

The reductions in contributions envisaged by the Commission are not enough to stabilize Germany’s net position. The Federal Government calls on the Commission to present a proposal which guarantees that the net positions will not rise and that the net contributors will end up on an equal footing.

The Federal Government welcomes the Commission’s decision not to alter the timeframe and structure of the financial framework.

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