Neighbourhood and the world: Heading 6 of the 2021-2027 MFF

In May 2018, the European Commission published its first proposal for the multiannual financial framework (MFF) for the 2021-2027 period, and a set of individual sectoral proposals. After months of negotiations and given the significantly changed context following the outbreak of the Covid-19 pandemic, the Commission updated its proposals in May 2020. In the new MFF, external action is covered by Heading 6: Neighbourhood and the World, replacing the previous Heading 4: Global Europe. Taking into account the evolving international and EU context and the conclusions of the previous MFF's mid-term review, the Commission has aimed to make the EU's external action budget simpler and more flexible, to enable the EU to engage more strategically with partner countries throughout the financing period starting in 2021. Heading 6 comes with a slightly increased budget and important structural changes. Most hitherto stand-alone external financing instruments have been merged in a single one, the Neighbourhood, Development and International Cooperation Instrument (NDICI), which also integrates the biggest EU external financing fund, the European Development Fund, previously an off-budget instrument. Another new element is the establishment of an off-budget instrument, the European Peace Facility, to fund security and defence-related actions. With these changes, the Commission aims in part to take into account the need for the EU to align its actions with its international commitments under the UN's 2030 Sustainable Development Agenda, the Paris Climate Agreement, the new EU Global Strategy, the European consensus on development, and European neighbourhood policy. It also aims to make EU added value, relevance and credibility more visible. Parliament and Council reached a compromise on the 2021-2027 MFF in November 2020. In December, Council adopted the MFF Regulation by unanimity, with Parliament's consent. Political agreement on the NDICI regulation, in particular, was reached in mid-December, and Parliament gave its provisional agreement to the instrument in mid-March 2021. Finalisation of the text and other legislative documents relating to the other external financing instruments continues in 2021. This is an update of a briefing from January 2020.