EU Budget for the Future

Commission proposes a pragmatic and focused long-term budget with modernised programmes to deliver efficiently on the EU’s priorities

The Commission proposed today a pragmatic, modern, long-term budget for the 2021-2027 period.

It is an honest response to today’s reality in which Europe is expected to play a greater role in providing security and stability in an unstable world, at a time when Brexit will leave a sizeable gap in the EU budget. The Commission’s proposal aligns the Union’s budget to the Commission’s political priorities – as reflected in the positive agenda set out by President Jean-Claude Juncker in his State of the Union address on 14 September 2016 and agreed by the EU27 Leaders in Bratislava on 16 September 2016 and in the Rome Declaration of 25 March 2017. By focusing on the areas where the Union is best placed to deliver, it is a budget for a Europe that protects, empowers and defends.

Overall, the Commission proposes a long-term budget of €1.135 billion in commitments (expressed in 2018 prices) over the period from 2021 to 2027, equivalent to 1.11% of the EU27’s gross national incomeThis level of commitments translates into €1.105 billion (or 1.08% of gross national income) in payments in 2018 prices.

European Commission President Jean-Claude Juncker said: “Today is an important moment for our Union. The new budget is an opportunity to shape our future as a new, ambitious Union of 27 bound together by solidarity. With today’s proposal we have put forward a pragmatic plan for how to do more with less. The economic wind in our sails gives us some breathing space but does not shelter us from having to make savings in some areas. We will ensure sound financial management through the first ever rule of law mechanism. This is what it means to act responsibly with our taxpayers’ money. The ball is now in the court of Parliament and Council. I strongly believe we should aim to have agreement before the European Parliament elections next year.”

To fund new and pressing priorities, current levels of funding will need to be increased. Investing now in areas such as research and innovation, young people, the digital economy, border management, security and defence will contribute to prosperity, sustainability and security in the future. For instance, the budget of Erasmus+ and the European Solidarity Corps will be doubled.

At the same time, the Commission has critically examined where savings can be made and efficiency improved. The Commission is proposing that funding for the Common Agricultural Policy and Cohesion Policy is moderately reduced – both by around 5% – to reflect the new reality of a Union at 27. These policies will be modernised to ensure they can still deliver with less and even serve new priorities. For example, Cohesion Policy will have an increasingly important role to play in supporting structural reform and in the long-term integration of migrants.

The result of these changes will be a rebalancing of the budget and an increased focus on the areas where the EU budget can make the biggest difference.

The Commission proposes a modern budget where further cutting of red tape for beneficiaries and managing authorities is foreseen by making rules more coherent on the basis of a single rulebook. It also means setting clearer objectives and focusing more on performance.

The Commission proposes a simple budget, with a clearer structure which is more closely aligned with the Union’s priorities. Today, funds are spread over too many programmes and instruments, both within and outside the budget. The Commission therefore proposes to reduce the number of programmes by more than a third (from 58 currently to 37 in the future), for example by bringing fragmented funding sources together into new integrated programmes and radically streamlining the use of financial instruments, including through the InvestEU Fund.

In order to react quickly and efficiently enough to challenges, such as the migration and refugee crisis, the Commission proposes a flexiblebudget within and between programmes, strengthening crisis management instruments and creating a new “Union Reserve” to tackle unforeseen events and to respond to emergencies in areas such as security and migration.

A major innovation in the proposed budget is the strengthened link between EU funding and the rule of law. Respect for the rule of law is an essential precondition for sound financial management and effective EU funding. The Commission is therefore proposing a new mechanismto protect the EU budget from financial risks linked to generalised deficiencies regarding the rule of law in the Member States. The new proposed tools would allow the Union to suspend, reduce or restrict access to EU funding in a manner proportionate to the nature, gravity and scope of the rule of law deficiencies.

A strong and stable Economic and Monetary Union is a precondition for jobs, growth, investment and social fairness in the Union as a whole. This is why the Commission proposes:

  • A new Reform Support Programme which – with an overall budget of €25 billion – will offer financial and technical support to all Member States for the pursuit of priority reforms, especially in the context of the European Semester. In addition, a Convergence Facility will provide dedicated support to non-euro area Member States on their way to joining the common currency.
  • A European Investment Stabilisation Function which will help to maintain investment levels in the event of large asymmetric shocks. It will start in the form of back-to-back loans under the EU budget of up to €30 billion, coupled with financial assistance to Member States to cover the costs of the interest. The loans will give extra financial support at a time when public finances become stretched and priority investments must be maintained.

The Commission proposal also foresees modern sources of fundingfor the EU budget. Concretely, the Commission proposes to fund the new priorities through a combination of fresh money (roughly 80%), redeployments and savings (roughly 20%).

The United Kingdom leaving the EU provides an opportunity to address the complicated system of rebates and even “rebates on rebates”. The Commission proposes to eliminate all rebates and to reduce from 20% to 10% the amount Member States keep when collecting customs revenues.

Building on today’s proposals, the Commission will present, in the weeks to come, detailed proposals for the future sector-specific financial programmes. The decision on the future long-term EU budget will then come to the Council, acting by unanimity, with the consent of the European Parliament. Negotiations should therefore be given the utmost priority, and agreement should be reached before the European Parliament elections and the summit in Sibiu on 9 May 2019. The Commission will do everything in its power to allow for a swift agreement.

Compliments of the European Commission