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Wednesday, April 1, 2020

Negotiations on the multiannual financial framework 2021-2027 challenged by the health crisis in Europe

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News The coronavirus health crisis currently affecting Europe makes the task of the Member States in this last programming year more complex. The negotiation of the future budget for the period 2021-2027 will necessarily have to take account of the new challenges facing the EU.

On Saturday 28 March the President of the European Commission Ursula von der Leyen said that the next multiannual financial framework, currently under negotiation, should be geared towards the recovery of the European Union and its Member States from the consequences of the coronavirus health crisis.

Indeed, while the Union is still far from the end of the crisis, the economic repercussions are already being felt. The numerous measures put in place by the Commission and the Member States to support the economy (up to 40 billion euros of financing for SMEs by the European Investment Bank) demonstrate the severity of the economic situation. These circumstances complicate already difficult negotiations on the future EU budget. While all agree on the need for budgetary measures to recover the economy and European growth in the wake of the crisis, the question of the source of this funding remains a hiatus, already with the budget cut by 60-75 billion euros following the departure of the UK.

The eyes of some are turning to funding for agriculture and the Cohesion Fund, the biggest spending areas in the current budget. A fringe of the Member States proposes to tackle this in order to preserve certain expenditure such as the European Defence Fund, the European Space Programme and European mobility. However, the Cohesion Fund is already experiencing a reduction in its budget in the European Parliament's proposal to decrease its budget from 63.4 billion euros to 41.3 billion euros. Advocates of the fund, however, point to the role the Cohesion Fund played in the EU's recovery from the 2008 financial crisis.

What seems certain, as the President of the Commission has stated, is that the future budget will not depart from its current priorities, notably the Green Deal, but will also target growth and investment, as soon as possible and as early as 2021. Hence the need to relaunch negotiations as soon as possible, as underlined by the European Parliament leaders last week when they urged the Commission to update its budget proposal to take account of recent developments due to the crisis. Postponing the negotiations and extending the current budget could only have a disastrous economic impact at national and regional level. However, the EU will have to take into account the consequences of this crisis, both in terms of economic fallout and cross-border health threats.

Further negotiations are, however, uncertain, as shown by disagreements such as those over the proposal for "coronabonds" (pan-European bonds) and Member States focusing on managing the crisis at national level.

Source :  Financial Times




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