After months of complex negotiations, the European Parliament finally approved the EU’s budget for 2014-2020 yesterday (19 November). The budget regulation was approved by 537 votes to 126, with 19 abstentions. The accompanying Inter-Institutional Agreement was approved by 557 votes to 118, with 11 abstentions.
The Parliament passed the legislative resolution laying down the multi-annual financial framework (MFF) for the years 2014–2020 (click here, for pages 1 to 31). According to the Parliament, all the conditions which MEPs had set out in July (see background) were met.
The overall budget for the next seven years is €960 billion in commitments and €908 billion in payments (at 2011 prices).
Pro-European MEPs regretted that the other EU institutions had blocked a more ambitious budget. But the feeling prevailed that under the current circumstances, the compromise reached was the best possible, and that Parliament was able to leave its mark on the inter-institutional agreement.
Payments shortfalls remedied
Firstly, Parliament wanted the recurring shortfall in payments, which made it almost impossible for the Commission to fulfill its legal financial obligations in recent years, to be remedied so as to avoid starting 2014 in the red. Member states agreed to add another €3.9 billion to the 2013 budget.
Legal bases for all EU programmes agreed
Secondly, Parliament also insisted that all legal bases for the various EU programmes be finalised on the basis of co-decision between the Council and Parliament. This is now the case and as a result many programmes are being voted on during this week's plenary session.
High-level group on own resources
Thirdly, Parliament insisted on the setting up of a high-level working group on “own resources” to work on reforming the EU’s income arrangements, as the current system, with all its exceptions, rebates, different sources of funding and dependence on national budgets, has become complex and inexplicable. Member states agreed to the setting up of this group, which will start its work in the coming months.
Flexibility: making best use of every euro
In the June 2013 agreement (see background), Parliament already secured the key priorities set out in its negotiating mandate. These included close to full flexibility to move unpaid funds (payment appropriations) between years and wide flexibility for commitments, both between years and between categories of expenditure. This flexibility is needed to ensure that every euro is used where it is most needed, especially now that annual budgets will decrease.
Another key achievement for Parliament was to insert a "revision clause", which will require the European Commission to present a review of the functioning of the EU’s long-run budget in 2016, taking full account of the economic situation at the time. Particular emphasis will be given to aligning the future duration of the MFF - currently seven years - with the five-year political cycles of the EU institutions. The review will be accompanied by a legislative proposal for revision.
The President of the European Parliament Martin Schulz said the important vote will allow EU funds to flow, on time, starting from 1 January 2014.
“It means much needed EU funds can be invested into programmes ranging from combatting youth unemployment, support for less-well off regions in the EU via the structural funds, to much needed funding in research and development and support for agriculture.
“However, the amounts available from the MFF are far from perfect. The European Parliament would have preferred a much more ambitious MFF targeted more towards the key challenges facing the EU today. A more ambitious MFF would have seen higher amounts available in the EU budgets and would have boosted a job-rich recovery,” he said.
Commission President José Manuel Barroso welcomed the vote: "This is a great day for Europe. […] The European Union will invest almost 1 trillion euros in growth and jobs between 2014 and 2020. The EU's budget is modest in size compared to national wealth. But one single year's budget represents more money - in today's prices - than the whole Marshall plan in its time!
“Our modern, future-oriented budget can make a real difference to people's lives. It will help to strengthen and sustain the recovery underway across the European Union. There is funding so we can build our way out of the crisis, financial support for those below the poverty line or looking for a job, investment opportunities for small companies, and assistance for local communities, farmers, researchers and students. This is a deal which helps every family across Europe. Europe is part of the solution."
Budget Commissioner Janusz Lewandowski said: "We have finally made it; with today's vote in the European Parliament we can provide predictability of funding to some 20 million European small and medium enterprises, millions of the poorest people in the world, some 100,000 towns and regions as well as thousands of laboratories and universities: Europe has delivered! You will have European funds to invest in economic growth, in research, in education, in helping the young unemployed and in humanitarian aid for the next seven years. I cannot think of a better message Europe could send to its citizens a few months ahead of the next European elections: Europe works, Europe is working!"
Jean-Luc Dehaene MEP (EPP, Belgium), who negotiated with the member states on behalf of the Parliament, said the European Parliament managed to improve the functioning of the MFF, despite a lack of increase in the figures:
“We have turned the financial framework 2014-2020 into an investment fund for growth and jobs, by ensuring European money will be used where it is most needed and where our policy priorities lie.”
The president of the group of Socialists and Democrats (S&D), Hannes Swoboda, said: "We are not very excited but our rapporteur, Ivailo Kalfin, did a very good job in improving the original compromise agreed by EU governments.
"It is the best compromise we could get in these times of fiscal tightening across Europe. We managed to limit the damage of their cuts.
"The European Parliament which will be elected next year will have the chance in 2016 to reopen the discussions to adapt to the post-crisis needs of Europe.
S&D MEP and European Parliament negotiator Ivailo Kalfin (Bulgaria) said: "For the first time since the Lisbon treaty, the European Parliament has played a substantial role in the adoption of the multi-annual financial framework (MFF). The Parliament exercised this role very responsibly and I am very happy so say that the S&D Group has achieved a clear impact on the final decision. The result is that this budget – despite the cuts – is much better focused towards ending the crisis and reducing the damaging social effects of it.
"We have introduced a new flexibility mechanism to maximise the use of the funds available and to help compensate for the reduction in the budget. The 'frontloading' of funding will ensure that important expenditures related to youth unemployment (€6 billion) and to support small and medium-sized businesses, youth mobility and research and development can be brought forward to the first two years of the budget.
"The Socialists and Democrats have also succeeded in defending the fund for the most deprived people in the EU. There is a clear social-democratic influence in many of the 65 legal regulations defining the different policies of the EU."
Guy Verhofstadt, ALDE group president (Belgium), said: "The Liberals and Democrats campaigned actively until the end, so that MEPs' demands were duly taken into account by a Council enclosed in their intergovernmental logic which is induced by the current system of own resources based on national contributions. This is why I welcome the firm commitments finally made this morning during the debate by the Commission and the Council Presidency, for the creation of a high-level group responsible for proposing a profound reform of own resources so that future common policies will no longer be dependent on intergovernmental arbitration "
Anne Jensen (ALDE, Denmark), rapporteur for the 2014 budget, the first year of the next MFF and co- rapporteur for the reform of the system of own resources, said:
"Our main demand was that the Council balance the outstanding commitments and the various amending budgets for 2013, allocating 11.2 billion for payments, which allowed the objectives to be met, thus lightening the 2014 budget. Being aware of the budgetary constraints, our group has never challenged the overall amount, although it would have preferred the funds to be allocated differently.
"This is why I stress the importance of the mid-term review of the MFF and remind you that the parliamentary resolution clearly states that the next Commission President must commit to proposing such a review to assess its possible shortcomings and correct them if necessary. "
Greens/EFA Co-President Daniel Cohn-Bendit said: "While the low overall ambition of the EU's future budgetary framework was already known, this final deal leaves little or no scope for redressing this. The EU will be stuck with a budget with no vision for the coming seven years. The annexed declarations on the key outstanding issues - own resources, flexibility and a budget review - are non-binding and aspirational. As such, there is little or no guarantee of them actually yielding any concrete outcome. This is no 'compensation' for the Parliament accepting the massively scaled-down ambition of the overall MFF."
Richard Ashworth MEP, Conservative negotiator, said: "We have been four square Behind David Cameron's deal from day one and we have made it stick. It is the first ever cut in the EU's long-term budget and we have protected the British rebate, worth £3 billion a year.
"We have also seen off attempts for the EU to give itself new tax-raising powers, including the menace of the Financial Transactions Tax.
"We have secured greater focus on important research and development budgets which will drive recovery.
"Attempts by some MEPs renegotiate the Cameron deal have failed.
"This is a major step forward, but the need remains for wholesale reform of the budget process, to deliver truly forward-looking investment budgets in future."
Conservative MEP and former European Commission Chief Accountant Marta Andreasen said: "Whilst this MFF represents a cut, the manner in which MEPs finally agreed was tantamount to blackmail.
"This is a bad start. What really concerns me is that they will try the same thing on the Long Term budget in the years ahead.
"If the EU spends too much, which they nearly always do, what is to stop them coming back and asking for more cash top-ups, supported by MEPs?"
UKIP MEP Paul Nuttall said UKIP strongly opposed signing over such a huge amount of money to the EU.
“It is disgraceful that the Tories, Labour and LibDems all voted to give the EU a license to squander a trillion euro. The question we need to ask is why we are giving the EU any money at all?" he said, noting that the USA, China and Korea do huge trade with the EU but none of them pay it massive sums of money or are members of its political union.
“This is a bad deal for the UK taxpayer and nothing to be proud of," he added.
CONCORD, the European NGO confederation for Relief and Development, which represents over 1,800 NGOs, regrets that the external action budget will see a 16% or €11.3bn cut compared to the original proposal presented by the European Commission.
Commenting on the new budget deal was CONCORD’s MFF working group’s chair Karine Sohet: “EU lawmakers have taken further austerity measures today that will weaken Europe’s role on the world stage, especially efforts to tackle global poverty. The lower future budget means that EU member states will have to double national efforts if they remain serious in reaching their development aid commitments due in 2015.”
“CONCORD is now looking forward to an agreement on the different regulations for development cooperation.”
- 2 Dec.: EU ministers are set to approve the MFF as an A point (without discussions) at the Competitiveness Council.