Negotiations between Head of States on the new EU long-term budget and Next Generation EU

Created on Monday, 17 Aug 2020 17:11:27

On 21 June, after four days and nights of complex and intense discussions, the 27 EU leaders have, finally agreed on their position on the future EU budget for the next seven years. The MFF 2021 – 2027, is planned to be €1.074 trillion and be accompanied by a €750 billion EU recovery fund (“Next Generation EU”). A unique agreement which has been positively presented by President Charles Michel, declaring “We did it. Europe is strong. Europe is united”. Linking to Commission’s priorities, EU budget will aim at powering the European Green Deal and accelerating the digitalisation of EU economy. Commission President Von der Leyen said in her statement, that “thanks to NextGenerationEU, national reforms will be boosted. We invest in Europe's future.”  The agreement still needs to be validated by the European Parliament after interinstitutional negotiations.  

Different elements of the new MFF have been the subject of intense negotiations between European leaders notably the balance between grants and loans in Next Generation EU. In the end, under the Recovery and Resilience Fund which aims to help countries get their economies through the crisis, €390 billion will be redistributed to Members States in the form of grants and €360 billion in the form of loans. The grants are linked to national recovery plans, which would be evaluated by the Commission and by a qualified majority of 27 Members States. In addition, €47,5 billion will be added to cohesion policy funds via the REACT-EU mechanism. The proposal to link the EU budget to the "rule of law" was also an issue leading to intense negotiations during the EU summit.   Finally, “a regime of conditionality to protect the budget and Next Generation EU will be introduced,” with possible sanctions to be adopted by a qualified majority in the Council, according to its conclusions.  

Some EU policies such as health, external relations, InvestEU and migration have seen their programmes and funds considerably cut, creating a significant decrease in the innovative part of the EU budget. Even if the overall budget of Erasmus+, including the Sport chapter, will increase up to 21 208 million € in the Council proposal, this amount is less important than the reinforced Commission's proposal from May 2020 (24 890 million), or the original proposal from 2018 (26 368 million €).  

On Thursday, Parliament has voted its position on Council’s conclusions. A large majority of MEPs adopted a mandate for negotiations with the Council asking to deeply improve the long-term budget deal. Although they acknowledge an “historic" agreement, the resolution denounces the "massive cuts to the future-oriented programmes" and calls for the full involvement of the Parliament in the recovery instrument. MEPs are fully prepared to not give their consent until "a satisfactory agreement is reached in the upcoming negotiations between Parliament and the Council, preferably by the end of October at the latest for a smooth start of the EU programmes from 2021". So, in the case that the new MFF will not be adopted on time, MEPs recalled for a temporary extension of the ceiling of the last year of the present MFF (2020) provided by the Article 312(4) of the TFEU, which would be "fully compatible with the recovery plan and the adoption of the new MFF programmes."   

On 29 July, President Von der Leyen, President David Sassoli and President Charles Michel discussed with Angela Merkel, as chair of the rotating presidency of the Council of the European Union, regarding the next steps in ‘the adoption of the EU's recovery package Next Generation EU and the next Multiannual Financial Framework.’ The aim of the discussion was to prepare the interinstitutional negotiations which enable a swift adoption of the package by taking into account both Council’s conclusions and the Parliament’s resolution adopted on 23 July. EU leaders affirmed the need to reach rapidly an agreement for the coming weeks and agreed “on a method and a calendar to ensure that the recovery package will be in place by 1 January 2021.” To achieve it and to enable Next Generation EU to start operating, the European Parliament “is ready to give its opinion on the Own Resources Decision as quickly as possible”. And, with regards to the revised MFF, the negotiation on sectoral programmes need to be completed before the end of the year.  

Then, in the framework of the EU recovery plan, on 30 July, Commissioners Ferreira and Schmit sent a letter to each EU Ministers in charge of Cohesion Policy to inform Member States on the condition of the use of the REACT-EU fund. As part of the NextGenerationEU, this 47.5 billion € instrument will focus on "supporting labour market resilience, jobs, SME’s and low-income families, as well as  laying down future-proof foundations for the digital and green transitions and a sustainable socio-economic recovery." Thus, for a rapid deployment of REACT-EU, the Commission advises Member States to follow its recommendations which address geographic areas that are the most impacted economically. Sport organisations should be in contact with the relevant ministers to explore possibilities for to be included in these activities.

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