No progress on EU’s long-term budget negotiations

Chancellor Angela Merkel, during the presentation of the German EU Presidency in the European Parliament in July. [EPA-EFE | Yves Herman/Pool]

EU member states and the European Parliament continued to disagree on Friday (18 September) on whether to increase the Union’s long-term budget, complicating attempts to reach a quick agreement on the badly needed recovery fund for the member states.

The Council, which brings together the member states, and the Parliament are negotiating against the clock to finalise the details of the multiannual financial framework [MFF], the EU’s long-term budget for 2021-2027, and Next Generation EU, the €750 billion recovery fund to overcome the crisis inflicted by the COVID-19.

European Commission President Ursula von der Leyen, European Parliament chief David Sassoli, and German Chancellor Angela Merkel, who leads the Council this semester, will meet on Monday (21 September) to try to give a fresh push to the talks.

Top-ups

The main bone of contention is the additional spending that the Parliament is seeking for the MFF in 15 flagship programmes, mentioned in a resolution approved in July.

Some of the programmes are Horizon Europe, InvestEU, Erasmus+, the Child Guarantee, the Just Transition Fund, Digital Europe and Connecting Europe Facility the European Defense Fund or Neighbourhood.

But the Council believes that the room for manoeuvre is “very limited”, a Council official said. The Council considers that the recovery fund combined with the MFF, around €1.8 trillion, represents an extraordinarily high volume of resources to relaunch the European economy.

Accepting the Parliament’s demands would represent around €110 billion in additional spending, according to Council estimates.

Parliament wants to top up EU budget with €110 billion

The European Parliament on Monday (7 September) requested a €110 billion increase to the EU’s seven-year budget and legally binding commitments on the introduction of new levies to finance the bloc’s €750 billion stimulus against the COVID-19 crisis, EURACTIV has learnt.

From the Parliament side, sources explained that they are not talking about figures yet, but instead about priorities and content. 

The Parliament’s negotiating team blamed the German presidency of the Council for not bringing “any viable or more detailed proposal” to the table on Friday to narrow the differences on the MFF.

Given the big gap on the EU’s long-term budget, the Parliament wanted to push for a quick agreement at least on the recovery fund, as coronavirus-hit member states badly need a fresh stimulus.

But the Council insisted on agreeing on the MFF and the recovery fund as a package, as EU leaders had done in July. Otherwise, MEPs will gain manoeuvring space to negotiate higher top-ups for the MFF or even cut some of the ‘rebates’ for net contributors.

“German Ambassador Clauß pointed out during the negotiations that whoever tries to delay the MFF, delays the recovery fund,” said a person close to the talks.

“Whoever opens up the discussion on the MFF again, opens up the discussion on the recovery Fund. The MFF and Recovery Fund form one inseperable package,” Clauß said, according to the same source.

Council brokers historic stimulus pact as budget cuts, rule of law retreat plague deal

Leaders of the 27 EU countries finally compromised on a €1,074 billion long-term budget and recovery fund instrument early on Tuesday (21 July) morning, but it took one of the longest-lasting summits in European Council history and the final deal cut funding for some of the bloc’s key priorities.

Own resources

Both sides however made some progress in the discussions to create new taxes to repay the €750 billion that the EU will borrow from the markets.

“Substantial progress has been achieved on the legally binding commitment to introduce new own resources,” said the MEPs.

A Council representative said there was “good spirit” on this issue, and experts will try to work out a compromise acceptable for both sides.

The format could be an institutional agreement that would commit the three institutions, together with the European Commission, while respecting the budgetary sovereignty of national parliaments. 

Parliament threatens to withhold consent on budget cuts, potentially delaying recovery plans

The European Parliament will adopt a critical stance against the European Council’s recovery plans on Thursday (23 July), opposing cuts to EU-funded programmes in the bloc’s long-term budget while also hitting out at the alleged ‘weak’ nature of rule of law conditionality.

Rule of Law

Another outstanding controversial issue is the ‘Rule of Law’ conditionality to access the EU funds. The Parliament still insists on toughening up the wording agreed by the EU leaders in July. But Hungary warned that its national parliament would block the new budgetary ceiling needed to borrow the €750 billion if that happens. 

Sources close to the talks explained that both sides did not enter into details on the ‘rule of law’ given that the Council has yet to take a position.

Meanwhile, technical talks continued on other topics, including how to give a bigger say to the Parliament in the governance of Next Generation EU, and how to ensure that one-third of the recovery fund is spent on ‘Green’ goals.

Despite the outstanding differences, both sides appear willing to reach an agreement as quickly as possible.

“It is still possible, and very much in the interest of EU citizens, to make every effort to come to an agreement as soon as possible, but the conditions are not there yet,” said the Parliament’s negotiating team.

It is optimistic to expect recovery funds by mid-2021, says EU official

The approval process for the EU’s €750 billion recovery funds may take longer than foreseen, and it would be optimistic to expect the first disbursements by mid-2021, an EU official said on Thursday (17 September).

[Edited by Zoran Radosavljevic]

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