Multiannual Financial Framework

There have been five multiannual financial frameworks (MFFs) to date. The Treaty of Lisbon transformed the MFF from an interinstitutional agreement into a legally binding act. Established for a period of at least five years, an MFF must ensure that the Union’s expenditure develops in an orderly manner and within the limits of its own resources, and sets out provisions with which the annual budget of the Union must comply, thus laying down the cornerstone of financial discipline.

Legal basis

  • Article 312 of the Treaty on the Functioning of the European Union;
  • Council Regulation (EU, Euratom) No 1311/2013 of 2 December 2013 laying down the multiannual financial framework for the years 2014-2020[1];
  • Council Regulation (EU, Euratom) 2017/1123 of 20 June 2017 amending Regulation (EU, Euratom) No 1311/2013 laying down the multiannual financial framework for the years 2014-2020[2].
  • The Interinstitutional Agreement of 2 December 2013 between the European Parliament, the Council and the Commission on budgetary discipline, on cooperation in budgetary matters and on sound financial management[3].

Background

In the 1980s, a climate of conflict in relations between the institutions arose out of a growing mismatch between resources and requirements. The concept of a multiannual financial perspective was developed as an attempt to lessen conflict, enhance budgetary discipline and improve implementation through better planning. The first interinstitutional agreement (IIA) was concluded in 1988. It contained the financial perspective for 1988-1992 (also known as the Delors I package), which was intended to provide the resources needed for the budgetary implementation of the Single European Act. A new IIA was agreed on 29 October 1993, together with the financial perspective for 1993-1999 (the Delors II package), which enabled the Structural Funds to be doubled and the own resources (1.4.1) ceiling to be increased. The third IIA, on the financial perspective for 2000-2006, also known as Agenda 2000, was signed on 6 May 1999, and one of its main challenges was to secure the necessary resources to finance enlargement. The fourth IIA, covering the period 2007-2013, was agreed on 17 May 2006.

The Treaty of Lisbon transformed the multiannual financial framework from an interinstitutional agreement into a legally binding act. In addition to determining the ‘amounts of the annual ceilings on commitment appropriations by category of expenditure and of the annual ceiling on payment appropriations’, the Treaty on the Functioning of the European Union (TFEU) states that the MFF shall also ‘lay down any other provisions required for the annual budgetary procedure to run smoothly’. The MFF Regulation is accompanied by an IIA covering the areas of budgetary discipline, cooperation in budgetary matters and sound financial management. The fifth and current MFF, covering the period 2014-2020, was adopted on 2 December 2013. The current MFF was the first to be adopted under the new provisions of the Treaty of Lisbon, according to which the Council, acting in accordance with a special legislative procedure, must unanimously adopt the MFF Regulation after having obtained the consent of Parliament.

The Multiannual Financial Framework 2014-2020

In its amended proposal of 6 July 2012, the Commission proposed, for the period 2014-2020, increasing the ceiling for commitment appropriations to EUR 1 033 billion (1.08% of the EU’s gross national income (GNI)) and that for payment appropriations to EUR 988 billion (1.03% of EU GNI). In the light of the current economic climate, the Presidents of the Commission, Parliament and the Council reached a political agreement on 27 June 2013 on an MFF package which reduced the overall ceiling for commitment appropriations to EUR 960 billion (1.00% of EU GNI) and that for payment appropriations to EUR 908 billion (0.95% of EU GNI). In its resolution of 3 July 2013 on the political agreement on the Multiannual Financial Framework 2014-2020, Parliament recalled that adoption of the MFF Regulation and the new IIA was linked to the adoption of amending budgets needed to provide extra payment appropriations for the financial year 2013, to political agreement on the legal bases of relevant multiannual programmes, and to the setting-up of a high-level group on own resources.

When these conditions were fulfilled, Parliament gave its consent to the draft regulation, on 19 November 2013, and the Council adopted the MFF Regulation (Council Regulation No 1311/2013) for the years 2014-2020 on 2 December 2013. On 21 April 2015 Council Regulation No 1311/2013 was amended by Council Regulation No 2015/623, which transferred the commitment appropriations not used in 2014 (over EUR 21 billion at current prices) to subsequent years (2015, 2016 and 2017) for subheading 1b, heading 2 and heading 3.

Article 6(1) of the MFF Regulation requires the Commission to make each year, ahead of the budgetary procedure for year n+1, a technical adjustment to the MFF in line with movements in EU GNI and prices, and to communicate the results to Parliament and the Council.

On 15 September 2017, the Commission adopted the technical adjustment of the MFF for 2017 in line with movements in EU GNI and adjustment of cohesion policy envelopes. The result of this technical adjustment brings total commitment appropriations (EUR 159 514 million) to 1.02% of EU GNI and total payment appropriations (EUR 154 565 million) to 0.98% of EU GNI. The GNI for 2018 is established at EUR 15 704 241 million at current prices for the EU-28.

Multiannual Financial Framework (EU-28) adjusted for 2018 (EUR million, current prices)

COMMITMENT APPROPRIATIONS 2014 2015 2016 2017 2018 2019 2020 Total
2014-2020
1. Smart and inclusive growth 52 756 77 986 69 304 73 512 76 420 79 924 83 661 513 563
2. Sustainable growth: natural resources 49 857 64 692 64 262 60 191 60 267 60 344 60 421 420 034
of which: market-related expenditure and direct payments 43 779 44 190 43 951 44 146 44 163 44 241 44 264 308 734
3. Security and citizenship 1 737 2 456 2 546 2 578 2 656 2 801 2 951 17 725
4. Global Europe 8 335 8 749 9 143 9 432 9 825 10 268 10 510 66 262
5. Administration 8 721 9 076 9 483 9 918 10 346 10 786 11 254 69 584
of which: Administrative expenditure of the institutions 7 056 7 351 7 379 8 007 8 360 8 700 9 071 56 224
6. Compensations 29 0 0 0 0 0 0 29
TOTAL COMMITMENT APPROPRIATIONS 121 435 162 959 154 738 155 631 159 514 164 123 168 979 1 087 197
as a percentage of GNI 0.90% 1.17% 1.05% 1.04% 1.02% 1.04% 1.03% 1.04%
TOTAL PAYMENT APPROPRIATIONS 135 762 140 719 144 685 142 906 154 565 154 286 157 358 1 025 429
as a percentage of GNI 1.01% 1.02% 0.98% 0.95% 0.98% 0.97% 0.96% 0.98%
Margin available 0.22% 0.21% 0.25% 0.28% 0.22% 0.26% 0.27% 0.25%
Own resources ceiling as a percentage of GNI 1.23% 1.23% 1.23% 1.23% 1.20% 1.23% 1.23% 1.23%

Role of the European Parliament

a.The MFF 2014-2020

In July 2010, Parliament established a special committee on policy challenges and budgetary resources for a sustainable EU after 2013 (SURE), with the brief of preparing a report on the next MFF before the Commission presented its proposals. On the basis of the SURE report, Parliament adopted a resolution on 8 June 2011 entitled ‘Investing in the future: a new Multiannual Financial Framework (MFF) for a competitive, sustainable and inclusive Europe’.

In its resolution of 3 July 2013, Parliament gave political confirmation, before its legal endorsement of the MFF package on 19 November 2013, to the agreement on the 2014-2020 MFF reached by the Presidents of Parliament, the Council and the Commission following an intense series of negotiations, during which Parliament secured:

  • Flexibility for commitments and payments across headings and across years to allow the use of the full amounts foreseen for 2014 to 2020;
  • An obligatory revision clause making it possible to reassess the budgetary needs during the MFF period and adjust them if necessary, allowing the newly elected European Parliament to play its role, and a commitment to reviewing the duration of future MFFs; a clear understanding on a viable way and timetable for the setting-up of a true system of own resources for the EU;
  • Enhanced flexibility to tackle youth unemployment and strengthen research without reducing resources for other programmes[4];
  • Enhanced flexibility to provide help in the event of major disasters through the Solidarity Fund;
  • Ring-fencing of funds for the large-scale projects ITER, Galileo and Copernicus in order to protect other programmes in the event of cost overruns;
  • Budgetary unity and transparency, ensuring full information for citizens on all expenditure and revenue resulting from decisions taken by, or in the name of, the EU’s citizens, and adequate parliamentary control.

b.Mid-term review/revision of the MFF 2014-2020

A mid-term revision (MTR) was one of Parliament’s preconditions for accepting the MFF 2014-2020. On 14 September 2016, the Commission issued a communication on the mid-term review of the MFF 2014-2020, accompanied by a legislative proposal for the revision of the MFF Regulation (Proposal for a Council Regulation amending Regulation No 1311/2013 laying down the MFF for the years 2014-2020), urging Parliament and the Council to swiftly adopt it. Parliament’s Committee on Budgets (BUDG) was in charge of preparing the ground for Parliament’s negotiation mandate for MFF revision, and it started its preparations well in advance. On 29 June 2016 it issued a report covering assessment of the first years of functioning of the MFF, expectations as regards the Commission’s revision, and the key elements for the post-2020 MFF. This report was the basis for the adoption of Parliament’s resolution of 6 July 2016, which includes Parliament’s demands for the current MFF as well as considerations for the next MFF. On 26 October 2016, Parliament adopted, by a large majority, a follow-up resolution to the Commission’s proposal, which welcomed the modifications to the MFF proposed by the Commission.

Finally, after the negotiations and the agreement of the Council of 7 March 2017 on the revision of the MFF 2014-2020, Parliament adopted a resolution[5] amending the MFF Regulation on 5 April 2017. On 20 June 2017, the Council adopted the revised MFF for 2014-2020 by a unanimous vote. The Council and Parliament agreed on additional support of EUR 6 billion (15% redeployments, 85% unallocated resources), subject to the annual budgetary procedure, which will be made available to migration-related measures (EUR 3.9 billion) and jobs and growth (EUR 2.1 billion, out of which EUR 1.2 billion will boost the Youth Employment Initiative). The reinforcement of the Flexibility Instrument and the Emergency Aid Reserve will allow more funds to be shifted more easily between budget headings and years, in order for the Union to be able to react to unforeseen events and new priorities.

[1]OJ L 347, 20.12.2013, p. 884.

[2]OJ L 163, 24.06.2017, p. 1.

[3]OJ C 373, 20.12.2013, p. 1.

[4]EUR 2 543 million (at 2011 prices), to be frontloaded (i.e. spent more quickly in 2014 and 2015) for the following programmes: Youth Employment: EUR 2 143 million; Horizon 2020: EUR 200 million; Erasmus: EUR 150 million; and COSME: EUR 50 million.

[5]European Parliament legislative resolution of 5 April 2017 on the draft Council regulation amending Regulation (EU, Euratom) No 1311/2013 laying down the multiannual financial framework for the years 2014-2020 (14942/2016 – C8-0103/2017 — 2016/0283(APP)) (Special legislative procedure - consent) - Texts adopted, P8_TA(2017)0112.

Vera Milićević

10/2017