EU institutions strike deal on bloc’s long term budget

Johan VAN OVERTVELDT (ECR, BE), Chair of the Committee on Budgets, Jan OLBRYCHT (EPP, PL) and Margarida MARQUES (S&D, PT), MFF co-rapporteurs, José Manuel FERNANDES (EPP, PT), and Valérie HAYER (Renew Europe, FR), Own Resources co-rapporteurs, and Rasmus ANDRESEN (Greens/EFA, DE), speak to the press on the next MFF and Own Resources, in the European Parliament in Brussels. [European Parliament audiovisual service]

The European Parliament and Council reached a final deal on the EU’s next seven-year budget, worth €1.0743 trillion, on Tuesday (10 November), agreeing to add an additional €16 billion, mostly for health and education, and introduce a roadmap for new European levies and biodiversity targets.

The deal still needs to be formally endorsed by EU governments and the European Parliament.

While the final deal respected the maximum spending targets, called ‘ceilings’, set by EU leaders in the summer, lawmakers and the Council agreed to keep some of the competition law fines proposed by the Commission in the EU budget instead of returning them to member states, which will result in an additional €13.5 billion kept in the EU’s coffers.

Together with €2.5 billion in reallocation within the budget, this will form a €15 billion boost for EU programmes.

Often touted as one of the EU’s most successful projects, ERASMUS+ youth education exchange programme will be given €2.2 billion in addition to the €21.2 billion decided by the Council in July, representing an equivalent to an additional year of financing in the seven year-budget.

The health programme will be tripled to €5.1 billion, compared to the €1.7 billion agreed by EU heads of state in the summer, while the Horizon research program received an additional four billion to total €84.9 billion, almost a 5% increase compared to the July figures.

The European research programme Horizon will receive an additional €4 billion for a total of €84.9 billion, while the rights and values programme focusing on support for democracy, equality and human rights projects will be doubled to €1.6 billion.

Agreement on interest repayments 

The lawmakers failed to persuade member states to agree to exclude from the budget interest payments on the €750 billion, which will have to be borrowed from the markets.

However, the co-legislators agreed to the principle that repaying the money cannot be achieved by cutting funding for EU programmes in the future or through significantly higher payments into the common pot by member states.

Instead, the Parliament, the Council and the Commission agreed on the introduction of new sources of EU revenue in the form of a legally binding “interinstitutional agreement” that sets what the Council in its press release called “an indicative roadmap.”

“This is crucial to ensure the debt burden will not be supported by the taxpayers and will not reduce in the future, Union grants,” said Belgian MEP Johan Van Overtveldt (ECR), chair of the Parliament’s budget committee.

The timetable foresees the introduction of a plastics tax in 2021, a carbon border and digital taxes and some additional income from the Union’s emissions trading scheme in 2023, as well as a potential financial transaction tax and a common corporate tax base in 2026.

Climate and biodiversity

The negotiators also confirmed that a third of the EU budget will have to be invested in fighting climate change, while EU countries would commit to spend 7.5% of the received funding on the conservation of species and ecosystems from 2024, increasing to 10% from 2026.

Though no common rulebook that would quantify spending on this target is agreed yet, the co-legislators pledged to develop one by 2024.

“Climate justice and species protection are finally given a high priority in the new multi-year budget. We agreed on the ‘do no harm principle’ with the goal of kicking climate harming projects out of the budget,” Green MEP Rasmus Andresen said in emailed comments.

Veto: for us, “it’s over”

Last week, the Parliament and the Council representing EU27 reached a preliminary deal on linking the disbursement of EU funds to the rule of law. Since then, the Polish and Hungarian prime ministers have threatened to veto the budget and the recovery fund over the deal.

EU institutions strike budget deal on rule of law mechanism

The European Parliament and the Council representing the EU27 reached a preliminary deal on linking the disbursement of EU funds to rule of law after five rounds of talks, clearing a major hurdle in the wider negotiations on the bloc’s budget.

Olbrycht said that the German ambassador, whose country is currently at the helm of the Council, had indicated that the vote on the rule of law mechanism may take place next week. It will have to muster a qualified majority of the member states, which would prevent Poland and Hungary from unilaterally blocking it.

“We made our political agreement with the Council. So for us, it’s over,” Olbrycht said.

Poland and Hungary, the two member states currently in the Article 7 procedure for allegedly violating Union values, still have the ability to veto both the seven-year budget and the €750 billion recovery fund.

However, the strategy foreseen by the lawmakers seems to be to pass the new rule of law mechanism into law before any votes on the long-term budget or recovery fund take place in the Council, putting pressure on the Polish and Hungarian governments to fold.

“As a Polish member of the Parliament, I can say I cannot imagine [the veto happening]. I cannot imagine that it can happen because this is the money for the whole of Europe,” Olbrycht added.

[Edited by Zoran Radosavljevic]

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