The European Union has faced a series of unprecedented and unexpected challenges since the adoption of the Multiannual Financial Framework (MFF) in 2020.
The European Commission says that “barely out of one of the deepest global economic crises in more than a century, Russia’s brutal invasion of Ukraine had huge humanitarian, economic and budgetary consequences.”
Within its current bounds, the EU budget has powered a strong EU response, by drawing from its limited built-in flexibilities and through extensive reprogramming, says the EC.
Addressing these multiple challenges “has pushed the resources of the EU budget to the point of exhaustion, hindering the EU budget’s capacity to address even the most urgent challenges.”
The EC has now tabled proposals for a review of the 2021-2017 Multiannual Financial Framework (MFF) and a package on raising additional own resources.
The key set of new proposals, outlined on 20 June, seek to provide for targeted reinforcements in a limited number of priority areas, to ensure that the EU budget can continue to deliver on the most essential objectives.
The main elements are:
· A Ukraine facility, based on grants, loans and guarantees, with an overall capacity of €50 billion in the period 2024-2027 to cater for Ukraine’s immediate needs, recovery and modernisation on its path towards the EU.
· A reinforcement of the EU budget to address internal and external dimensions of migration as well as needs arising from the global consequences of Russia’s war of aggression in Ukraine, and to strengthen partnerships with key third countries with €15 billion.
· A Strategic Technologies for Europe Platform (STEP) to promote the EU’s long-term competitiveness on critical technologies, in the fields of digital and deep tech, clean tech and biotech.
· An efficient mechanism to cater for the higher NextGenerationEU funding costs due to the unprecedented surge in interest rates.
Commenting on the European Commission’s proposals and package on raising additional own resources,BusinessEurope Director General Markus J. Beyrer said: “The EU needs an adequate budget, but raising additional funds should not deter investments.”
“The long-term EU budget needs to be adequate enough to address common challenges. Higher than expected inflation has reduced in real terms the size of the EU budget agreed in 2020, and it is also important that the EU has the resources to properly support Ukraine. Still, before increasing the budget, we should strive for improving the efficiency of EU expenditure, including through the use of financial instruments.”
“It is crucial to ensure that any proposals to raise additional funds for the EU budget do not have an adverse impact, either directly or indirectly, on companies’ costs and investment incentives.”
