The budget of the EU is used to implement the European Union’s programmes and projects on the ground, in the member states and beyond, for regional development, agriculture and research policies and much more. It is agreed every seven years in the form of a multiannual financial framework (MFF).
The EU budget is primarily an investment budget and cannot run a deficit, which makes it unique. Around 93% of the EU budget directly benefits citizens, regions, cities, farmers, universities and businesses. Common investment triggers efficiency gains and helps member states save public money in many areas.
Read more on Mapping the Cost of Non-Europe 2019-2025.
The current MFF (2014-2020) runs out on 31 December, so a new long-term budget is needed for the next seven years (2021-2027).
The EU’s member states (the Council) decide on the size of the budget and its priorities on the basis of a proposal by the European Commission. They must, however, reach an agreement with the European Parliament, which has a right of veto.
Negotiations are usually lengthy and difficult. The future of Europe is at stake: whether the EU can do more, the same or less to support the EU’s citizens, regions, cities, farmers, universities and businesses, to fight climate change, boost the economy and jobs and do much more.
The Commission tabled its proposal for the 2021-2027 MFF in May 2018. Parliament adopted its position in November 2018, and reconfirmed it after the May 2019 European elections in October of that year.
The Council, so far, has not been able to agree on a common position.
In a nutshell, the European Parliament wants a post-2020 budget that ensures the continuity of the EU’s main policies, like the regional and agricultural policies. Priority areas like research, digitalisation, support for young people (Erasmus+, youth employment) and for SMEs should be boosted. Recent endeavours, such as addressing the investment gap in the aftermath of the financial and economic crisis, migration and security, should be financed with fresh means, i.e. not at the expense of other programmes.
Fighting climate change is a central challenge. Parliament has recently called (in its October 2019 resolution) for climate mainstreaming in the EU budget to be further stepped up, to guarantee sufficient resources allowing a just transition to a carbon-neutral economy.
Based on a bottom-up assessment of the resources needed to meet objectives in each EU policy area, Parliament estimates that the new MFF should be set at 1.3% of EU-27 GNI. The EU Commission proposes 1.11%, mainly by proposing cuts in agricultural and cohesion policies.
View the Commission’s proposal and the EP position in a comparative factsheet:
The EU budget is financed by three main sources of revenue: traditional own resources (customs duties and sugar levies), the own resource based on a harmonised base of value added tax (VAT), and the own resource linked to member states' GNIs, which plays the role of balancing the budget. Currently, the bulk of revenue (around 68% in 2017) is a GNI-based and a VAT-based resource.
The EP advocates maintaining existing own resources and progressively introducing new ones. GNI-based direct contributions from EU member states should be reduced accordingly.
Parliament underlines that it “will not give its consent to the MFF without an agreement on the reform of the EU own resources system”. Expenditure and revenue should thus be treated as a single package. It further insists on the abolition of all rebates from which some member states benefit.
In November 2018, Parliament adopted its position on the reform of the EU’s system of own resources along with the one on the 2021-2027 MFF in their MFF interim report. It confirmed their position after the European elections in October 2019.
Johan Van Overtveldt (ECR, BE), Chair of the Committee on Budgets
Jan Olbrycht (EPP, PL), MFF co-rapporteur
Margarida Marques (S&D, PT), MFF co-rapporteur
José Manuel Fernandes (EPP, PT), Own Resources co-rapporteur
Valérie Hayer (RENEW, FR), Own Resources co-rapporteur
Rasmus Andresen (Greens/EFA, DE)
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