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Tuesday, July 28, 2020

2021-2027: A budget on the cheap

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An extraordinary European Council was held between the 17th and the 21st July in order to reach agreement on the Recovery plan and the future multiannual financial framework (MFF). Although the overall amount of the MFF 2021-2027 has been reduced only slightly (€1 074 billion instead of €1 100 billion), many concessions were made. 



First of all, one missing: the EU4Health programme. How can we not be surprised by the disappearance of the programme which was supposed to strengthen health systems thanks to a budget of €9.4 billion? Indeed, the health crisis makes it more necessary than ever to dedicate an entire programme to health! 

How can the EU fight against the health crisis with a €1.7 billion health programme, and with the reduction of funding opportunities for research (Horizon Europe budget was cut by €19 billion)?

Climate action and the environment have not been spared neither. 30% of the Recovery plan's budget is devoted to the fight against climate change. But what about the Just Transition Mechanism? The Just Transition Fund has been cut by 2/3 of its budget! Carbon neutrality by 2050 is seriously compromised under these conditions, as Parliament and the Court of Auditors asserted. 

Even the popular Erasmus + programme is affected. It has lost €3.4 billion. The European Development Fund (almost halved) and the Common agriculture policy (-10%) must be added to the long list of budget cuts. The external action, defence and security instruments also see important cuts in their budget.

Another casualty of the new MFF is the European Structural Funds (EFSI). Rural development will be allocated €7.5 billion instead of the €15 billion originally planned. Similarly, the EFSF will not benefit from the €5 billion increase envisaged by the Commission. On the positive side, the overall co-financing rate is increased and new criteria for the allocation of funds have been introduced. The metropolitan territory will thus be able to benefit from an overall more favourable co-financing rate.

With the abandonment of the solvency instrument for companies, it seems that the Heads of State have almost forgotten its essential elements. Next Generation EU, the instrument for reviving Europe, has plundered the main programmes of the EU budget - including those aimed at fighting the crisis and relaunching the Union. The European Parliament, disappointed by this agreement, which it considers too unambitious, is threatening to block its adoption. 


Source :  Consilium - Press corner


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