LEAK: Finland’s EU budget proposal limits expenditure to 1.06% of GNI

(L-R) European Central Bank (ECB) President Christine Lagarde, European Commission President Ursula von der Leyen, President of the European Council Charles Michel and European Parliament President David Sassoli attend a ceremony for the 10th anniversary of the Lisbon Treaty and the start of new EU Institutional Cycle in Brussels, Belgium, 1 December 2019. [Julien Warnand/EPA/EFE]

Finland’s EU presidency has proposed a budget equal to 1.06% of the bloc’s gross national income (GNI) for 2021-2027, below the ambition of the European Commission and Parliament, according to the negotiating box seen by EURACTIV.com.

The negotiating box drafted by Finland, which chairs the member states until January, has proposed an overall ceiling of 1.07% of EU GNI (€1,087 billion), and payment appropriations (the money that can be actually spent during the period) of 1.06% of EU GNI, representing €1.080 billion.

Both figures are given in 2018 constant prices.

The Multiannual Financial Framework (MFF), the EU’s seven-year budget, will be discussed by the European Council on 12-13 December. So far, the differences between the EU institutions and among EU countries have impeded progress towards achieving an agreement by the end of this year, as was initially planned.

Summit concludes with no progress on EU’s long-term budget

EU leaders failed to narrow their differences over the EU’s seven-year budget for 2021-27,  the Multiannual Financial Framework, as member states maintained their entrenched positions on the EU’s spending volume and priorities. 

An EU official said that the document represents “a balanced compromised” between the views of the various groups within the Council but admitted that it is “very difficult” to satisfy all positions.

The Parliament had proposed 1.30% of EU GNI for the 2021-27 financial period, while the Commission’s original proposal included a ceiling equivalent to around 1.11%, which translates into €1,105 billion (or 1.08% of GNI) in payments (expressed in 2018 prices).

Back in June, the Finns proposed a range of overall spending between 1.03% and 1.08%, but the proposal was strongly criticised by a large group of countries, in particular those defending funding for farmers and less developed regions.

The critics said that Finland did not make an effort to strike a fair balance between the net contributors and the other countries.

The Common Agricultural Policy and cohesion funds represent currently around two-thirds of the EU’s trillion-euro budget.

Germany, the Netherlands, Denmark, Sweden, and Austria want to limit the overall expenditure to around 1% of GNI. They argue that the budget has to shrink given that the EU will be smaller after the UK’s planned departure.

Finland’s so-called Negotiating Box said that the proposal would allow the EU to respond to new challenges and priorities, “as well as safeguards funding for the modernised Common Agricultural Policy and future oriented Cohesion Policy.

Headings

Spending under the Cohesion and values heading would not exceed €374 billion, of which €323 billion will be allocated to “economic, social and territorial cohesion”.

The Finnish proposal represents a 12% reduction compared with the current MFF, Helsinki said.

The bulk of the money will go to less developed regions (€194 billion), while €43.2 billion will still go to transition regions and €34.2 billion to more developed regions.

At the same time, member states with purchasing power standards of less than 90% of the average EU GNI will share €39.7 billion.

In regards to CAP and environment funding, the total level of commitments is set at €346 billion, of which €254.247 billion will go mostly to farmers (market related expenditure and direct payments).

Compared with the current MFF, CAP and the environment spending will fall around 13%, the Finnish government said.

The Finnish presidency highlights that this heading must play an important role in ensuring that at least of 25% of the EU budget is dedicated to the fight against climate breakdown.

In regard to the new rule of law conditionality, another controversial issue to be included in the new long-term budget, the draft says that conditionality will be “genuine”, and the goal will be to address deficiencies “which affect or risk affecting the sound implementation of the EU budget or the financial interests of the Union in a sufficiently direct way”.

These deficiencies will be identified “with a clear and sufficiently precise criteria”. The Commission will propose “appropriate and proportionate measures” that would be approved by the Council, although it remains to be agreed whether it would be by reversed majority.

MEPs ready to fight against member states on EU budget

The European Parliament will not accept a “take it or leave it” agreement on the EU’s next long term budget (2021-2027), co-rapporteurs Jan Olbrytch and Margarida Marques have told EURACTIV. 

As for the rest of the headings, the presidency proposes €151 billion for Single Market, Innovation and Digital, of which €84 billion will go to the Horizon Programme, the EU’s innovation envelope. The current Horizon programme is funded with almost €80 billion.

The negotiating box allocates €12.9 billion for the new budgetary instrument for convergence and competitiveness, the watered-down version of the eurozone budget member states are finalising in order to support reforms and investment of national economies facing turbulences.

For migration, the draft negotiating box proposes €23 billion, of which the large amount will go the the Asylum and Migration Fund (€9.2 billion). The new European Border and Coast Guard Agency will receive €6.1 billion,

The EU’s Security and Defence spending will be limited to €14.6 billion. Meanwhile, the funds for foreign relations will sum €103 billion.

Under the Finnish proposal, most of the money will go to geographical programmes, of which Sub-Saharan Africa will receive the largest amount (around €27 billion).

The funds for Administration will total €73 billion.

The proposal will be discussed by EU ambassadors this Wednesday, and by ministers in the General Affairs Council on 10 December, before it arrives at the EU leaders’ table later the same week.

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