Lawmakers sealed the next common long-term budget

Parliament topped up key EU programmes with extra €15bn

Photo: EP Johan Van Overtveldt.

At its plenary session, on Wednesday, MEPs gave the go-ahead for the common long-term budget 2021-2027, which is making possible the fund to get to the economy in the Member States from January next year.

The text agreed with Council on 10 November on the next Multiannual Financial Framework received 548 votes in favour, 81 against and 66 abstentions. The text on the Interinstitutional Agreement was backed with 550 votes in favour, 72 against and 73 abstentions.

Lawmakers also topped up key EU programmes with extra €15bn. Parliament’s negotiating efforts gave positive result to boost 10 selected EU flagship programmes over the next seven years to better protect citizens from the COVID-19 pandemic, provide opportunities to the next generation.

Thus, the envelope for EU4Health triples. Parliament also secured the equivalent of an additional year of financing for Erasmus+ and it safeguarded that research funding would continue to grow.

It became clear that €11bn of the top-up will be withdrawn mainly from the amounts collected from the fines, which companies have to pay when they do not comply with EU competition standards. This is in line with Parliament’s long-standing request that money generated by the EU should stay in the common budget.

So the amount of €11bn will gradually increase the overall MFF ceiling, set at €1,074.3 billion in 2018 prices, to €1,085.3bn.

In addition, €4bn of the newly beefed up budget will be financed from reallocations and margins within the MFF and €1bn will be set aside to meet any future needs and crises and could also be added to the flagship programmes.

The medium- to long-term costs of repaying the debt from the recovery fund should neither come at the expense of well-established investment programmes in the MFF, nor result in much higher GNI-based contributions from member states, the negotiators agreed.

EP negotiators have devised a roadmap, a slice of the legally binding ‘Interinstitutional Agreement’, to introduce new own resources to feed into the EU budget during the next seven years.

Besides the contribution made as of 2021, based on how much unrecycled plastic a country has, the roadmap includes an Emissions Trading System -based own resource. From 2023 it will be possibly linked with a carbon border adjustment mechanism.

It also includes a digital levy from 2023, and a financial transaction tax-based own resource as well as a financial contribution that the corporate sector must make or a new common corporate tax base from 2026.

In a statement, Johan Van Overtveldt (ECR, BE), Chair of the Committee on Budgets underscored that the shift to more research and innovation, with a focus on entrepreneurship, initiated with the redesigned European budget of 2020, will now also be continued in the MFF. This shift is imperative for our growth, job creation and competitiveness, he opined.

Van Overtveldt also outlined that with the conclusion of these negotiations, the European Recovery Plan can finally be put into action. This fund is very important to get us through the crisis, but it stands or falls with its use, he said adding that the resources need to get to the people that actually need them and “here too the European Union must prove its credibility”.

He also thanked the various delegations for their efforts and constructive cooperation, and called on the European Council to take responsibility for ratifying the reached agreement.

To ensure the orderly spending of the €750bn Next Generation EU funds, designed for recovery of the most affected areas due to the Covid-19 crisis, Parliament secured regular meetings between the three institutions. The EP, together with the Council will checkup any deviation from previously agreed plans.

As the Next Generation EU instrument is based on Art. 122 of the EU treaty that does not provide for any role for the Parliament. But the EP negotiators have insisted and obtained a new procedure, setting up a “constructive dialogue” between Parliament and Council.

An improved tracking will ensure that at least 30% of the total amount of the EU budget and Next Generation EU expenditures will support climate protection objectives, and that 7.5% of annual spending will be dedicated to biodiversity objectives from 2024 and 10% from 2026 onwards.

For every programme under the new budget and recovery fund will be carried out a thorough gender impact assessment and monitoring.

Earlier on the same day, MEPs approved the regulation designed to protect EU funds from being misused by EU governments who bend the rule of law. This item became somehow the 'apple of discord' over the last few weeks. Before a compromise was reached by EU leaders on 10 December, Hungary and Poland threatened to veto the entire financial package - the MFF and the recovery fund - if the mechanism was not clearly aimed at protecting the EU's financial interests rather than extending to more broad ideological interpretations of rule of law.

It foresees that EU budget payments can be withheld from countries in which established breaches of the rule of law compromise management of the EU funds. At the same time, the EU is ensuring that final beneficiaries do not end up footing the bill.

It’s the law now and no one-sided declaration can change this fact, said co-rapporteur Petri Sarvamaa (EPP,FI). He asserted that the conditionality regime will enable MEPs to scrutinise dubious plans to apply EU funds against the EU's values.

During the morning debate in the plenary, EC President Ursula von der Leyen reassured MEPs that the conditionality mechanism will apply from 1 January 2021 onwards.

As I understand it, there is a fear that the application of the regulation will be delayed and that justice delayed might be justice denied, but this will not happen, she said promising that  any breach that occurs from that 1 January next year onwards will be covered. “I can assure you, the Commission will always act in full autonomy, full respect of the law and full objectivity,” von der Leyen pointed out.


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