EU budget & funds Flashcards
For the RRF as a whole, which % was every MS required to allocate into initiatives that contribute to climate objectives?
37%. The investments of MS have surpassed those targets, estimated expenditure: approximately 40%
Budgetary principles included in the financial regulation
- Unity and budget accuracy
- Annuality
- Equilibrium
- Unit of account
- Universality
- Specification
- Sound financial management and performance
- Transparency
What is the duration of the MFF?
According to article 314 of the TFEU, the MFF is established for a period “of at least 5 years”.
In practice it is agreed most of the time for 7 years, but could be shorter.
Name the headings of the MFF
1 single market, innovation and digital
2 cohesion, resilience and values
3 natural resources and environment
4 migration and border management
5 security and defence
6 neighbourhood and the world
7 European public administration
From when until when does the EU plan to pay back next generation EU?
2028- 2058.
Budget under heading 1, 2018 prices, including NextGenEU, entire MFF
143 billion
Budget under heading 2, 2018 prices, including NextGenEU, entire MFF
1 010 billion
Budget under heading 3, 2018 prices, including NextGenEU, entire MFF
374 billion
Budget under heading 4, 2018 prices, including NextGenEU, entire MFF
23 billion
Budget under heading 5, 2018 prices, including NextGenEU, entire MFF
13 billion
Budget under heading 6, 2018 prices, including NextGenEU, entire MFF
98 billion
Budget under heading 7, 2018 prices, including NextGenEU, entire MFF
73 billion
Total MFF, 2018 prices, including NextGenEU
1 924 billion
NextGenEU, 2018 prices, share of overall budget
750 billion, 41%
When is the RRF operating
2021- 2026
Giacomo to author: I changed 2027 to 2026, as in this page, under “how does the RF work”. If you agree, pls delete this section :)
What are the EU’s own resources?
1) Customs duties: 13%
Value-added tax: 12%
National contributions (GNI): largest revenue source for EU budget: 70%
Own resources based on non-recycled plastic packaging waste plastics ( since 2021)
Next generation of EU own resources: in progress - ETS - CBAM - Financial transactions etc.
Horizontal climate target MFF
30%
Horizontal climate target MFF
30%
Biodiversity ambition MFF
7.5% in 2024
10% in 2026-2027
Since when are correction mechanisms in place? which countries does it affect?
Since Fontainebleau 1984; DE (3.6bn discount), AT (565 million), NL, DK, Sweden
Funds outside of the EU Budget
Innovation Fund (previously: NER300)
Modernisation Fund
possibly in the future: Social Climate Fund (adopted May 2023)
How are the EU’s own resources distributed? (based on 2021 budget)
73% GNI
11% VAT
11% Customs duties
5% Other
Common principles of grants and procurement implementation
Transparency, equal treatment, non-discrimination
Sound financial management
Article 33 of Financial Regulation:
Economy
Efficiency
Effectiveness
What is EDES?
Early Detection & Exclusion system
= database of persons or entities excluded from contracts financed by EU budget (e.g., due to deficiencies)
2 types of commitments - which comes first?
Budgetary commitment always before legal commitment (can only pay when there is money)
exception: framework contract
Co-financing rates
the higher the co-financing, the more costs the EU takes over
Annual Activity Report (AAR)
1 AAR by DG; achievement of key policy objectives and core activities;
Management report of the Director-General (AOD)
Reasonable assurance
will be checked by EP; hearings
How is the MFF Regulation adopted?
Special legislative procedure set out in article 312 TFEU (Council acts unanimously after obtaining EP consent); expenditure in EU’s annual budgets must comply with MFF ceilings
EP has to consent by majority
Council adopts regulation unanimously, except if European council adopts unanimously a decision that council can adopt MFF by QM
What is the EU’s LT budget - 2021-2027 (without NextGen EU)
1.211 trillion (1.074 trillion in 2018 prices)
Flexibility and special instruments
- Solidarity and Emergency Aid Reserve (SEAR)
- European Globalisation Adjustment Fund (EGF)
- Brexit Adjustment Reserve
- Flexibility instrument
- Single Margin Instrument (SMI)
EU budget for 2024
€189.4 billion in commitments and €142.6 billion in payments
biggest factors:
- €53.7 billion for the Common Agricultural Policy
- €47.9 billion for regional development and cohesion
- €13.6 billion for research and innovation, of which €12.9 billion for Horizon Europe
MFF review of 2023, important elements in the Commission proposal:
- creation of a Ukraine facility, based on grants, loans and guarantees, with an overall capacity of €50 billion in the period 2024-2027. The funds for the grants and guarantees will be mobilised annually via a new proposed Special Instrument (Ukraine Reserve) that can finance all pillars of the instrument: Pillar I (Ukrainian plan), Pillar II (guarantees), Pillar III (technical assistance).
- Strategic Technologies for Europe Platform (STEP) to promote the EU’s long-term competitiveness on critical technologies, in the fields of digital and deep tech, clean tech and biotech. Builds on on existing programmes such as InvestEU, Innovation Fund, Horizon Europe’s European Innovation Council, European Defence Fund, EU4Health, Digital Europe, while incentivising further funding from the Recovery and Resilience Facility (RRF), and cohesion policy funds.
- An efficient mechanism to cater for the higher NextGenerationEU funding costs due to the unprecedented surge in interest rates. A new special ‘EURI Instrument’ will cover exclusively the costs that come on top of the original projections that were made in 2020.
- increase of heading 4 (mirgration and border management) by 2 billion
- increase of heading 6 (neighbourhood and the world) by 10.5 billion
- increase Solidarity and Emergency Aid Reserve (SEAR) by €2.5 billion.
- raise the ceiling of Heading 7 by €1.9 billion.
- increase the flexibility Instrument by €3 billion
Digital Europe programme
7.5bn
Five areas:
- high-performance computing: €2.2 billion
- artificial intelligence: €2 billion
- cybersecurity and trust: €1.6 billion
- advanced digital skills: €577 million
- deployment, best use of digital capacities, and interoperability: €1 billion
Budget article of the euratom treaty?
Article 106a
Budget Legal basis
Article 314 TEFU
Article 106a Euratom Treaty
Articles 36 to 52 of the Financial Rules
(Regulation (EU, Euratom) No 966/2012 of 25 October 2012 on the financial rules
applicable to the general budget of the Union
Interinstitutional Agreement (IIA) between
the European Parliament, the Council and
the Commission on budgetary discipline, on
cooperation in budgetary matters and on sound
financial management approved by Parliament
on 19 November 2013 and by the Council on
2 December 2013
entered into force on 23rd December 2013
Increase of Parliament say over budget
1970 - Parliament gained the right to have a say over ‘non-compulsory
expenditure’, which initially amounted to 8% of
the budget (it amounted more than 60% in the 2010 budget)
1975 - gave Parliament the right to reject the budget as a whole
Budget procedure
1) Draft budget established by COM based on guidelines for budget priorities laid down by Parliament & Council forwards it to the Council and Parliament by 1 September at the latest (under Article 314(2) TFEU), but by the end of April or beginning of May according to the pragmatic
timetable
2) Establishment of Council position on draft budget forwards it to Parliament by 1 October at the
latest (under Article 314(3) TFEU),
but by the end of July according to the pragmatic timetable
3) Establishment of Parliament position on draft budget Parliament has 42 days in which to react to Council
Within that period, it may either approve the Council’s position or
decline to take a decision > budget adopted
otherwise parliament can
adopt amendments by a majority of its component members, in which case the amended draft is
referred back to the Council and to the Commission
4) President of Council & Parliament must convene conciliation committee
From the day on which it is convened, the Conciliation Committee (composed of the representatives of the members of the Council and an equal number of
representatives of Parliament) has 21 days to agree on a joint text.
Must take its decision by a qualified majority of the members of the Council or their representatives and by a majority of the representatives of Parliament.
Commission part of reconciliation committee for moderation
If failure of compromise after 21 days: new draft budget must be produced by COM
If the Conciliation Committee
does agree on a joint text within the deadline, then Parliament and the Council have 14 days from the
date of that agreement in which to approve the joint text.
What happens if no agreement on a budget is reached before the start of a new year?
In the event that no
agreement has been reached by the beginning of a financial year, a system of provisional twelfths is put
in place until an agreement can be reached.
In this
case, a sum equivalent to no more than one twelfth
of the budget appropriations for the preceding
financial year may be spent each month in respect
of any chapter of the budget.
That sum must not,
however, exceed one twelfth of the appropriations
provided for in the same chapter of the draft
budget.
However, under Article 315 of the TFEU, the
Council may, on a proposal from the Commission,
authorise expenditure in excess of one twelfth (in
accordance with Article 16 of the Financial Rules)
unless Parliament decides within 30 days to reduce
the expenditure authorised by the Council.
Can Council impose a budget against the will of Parliament?
What about the other way round?
No
Yes
How many times has Parliament rejected the budget?
Parliament has rejected the budget as a whole on two occasions (in December 1979 and December 1984) since acquiring the power to do so
in 1975.
Under the Lisbon rules, the Conciliation Committee has thrice failed to reach agreement (on the 2011, 2013 and 2015
budgets).
In all three cases, the new draft budget presented by the Commission, reflecting the near-
compromise in conciliation, was finally adopted.
Special instruments outside the MFF
Emergency Aid Reserve,
the European Union Solidarity Fund,
the Flexibility
Instrument,
the European Globalisation Adjustment
Fund
Contingency Margin
How many sections does the EU budget have & why?
The European Council and
the Council of the European Union (hereinafter ‘the
Council’) have agreed to share section II of the EU
Budget (Article 43(b) of the Financial Regulation),
which is why the general budget only has ten
sections and not eleven, although the European
Council and the Council are separate institutions.
European Council composition
Convened by its president, the European Council brings together the heads of state or government
of the 28 Member States and the President of the Commission (Article 15(2) TEU).
The High Representative of the Union for Foreign Affairs and Security Policy takes part in its work.
The President of the European Parliament is usually invited to speak
at the beginning of the meeting (Article 235(2) TFEU)
European Council President
elected by the European Council
for a once-renewable two-and-a-half-year term
Presidents so far: van Rompoy, Tusk, Michel
European Council procedures
- usually decides issues by
consensus - a number of important appointments
are made by qualified majority: - appointment of European Council president
- choice of the candidate to be elected President of the European Commission
- appointment of the High Representative of the
Union for Foreign Affairs and Security Policy - appointment of the
President of the European Central Bank
Financial regulation
Adopted in 2018
Commission made a proposal for targeted adjustments in May 2022 establishing theunified funding approachas the main approach to markets for all borrowing
Adopted in Sept 2024 (ensure readiness in times of crises and better protected and more transparent EU budget)
Latest annual budgets
2025: 191 commitments - 146 payments
2024: 189 (commitments) - 142 (payments)
2023: 186 - 168
2022: 169 - 170
2021: 164 - 166
Headings of the 2021-2027 MFF
Heading 1: Single Market, Innovation and Digital - 151.3 bn
Heading 2: Cohesion, Resilience and Values - 429.4bn
Heading 3: Natural Resources and Environment - 401bn
Heading 4: Migration and Border Management - 26.2bn
Heading 5: Security and Defence - 14.9bn
Heading 6: Neighbourhood and the World - 110.6bn
Heading 7: European Public Administration - 82.5bn
Single Market Programme
4bn
Heading I: Single Market, Innovation & Digital
1) Research & Innovation
- Horizon Europe 95bn
(out of which 5.4 bn are
NGEU)
- Euratom Research and
Training Programme
1.98bn
- ITER 5.61 bn
2) European Strategic Investments
- InvestEU 10.28bn (out of which 6.7bn are NGEU) - aim of triggering a new wave of over €372 billion in investment in the period 2021-27
- Connecting Europe Facility 20.73bn
- Digital Europe Programme 7.59bn
3) Single Market
- Single Market Programme 4.21bn
- EU Anti-Fraud Programme 0.18bn
- Cooperation in the field of taxation (FISCALIS) 0.26bn
- Cooperation in the field of customs (CUSTOMS) 0.95bn
4) Space
- European Space Programme 14.88bn
Heading II: Cohesion & Values
1) Regional Development & Cohesion
- European Regional Development Fund (ERDF) 226.05bn
- Cohesion Fund (CF) 48.03bn out of which 11.29bn are transferred to the Connecting Europe facility
- REACT-EU 50.62bn under NGEU
- Support to the Turkish Cypriot community 0.24bn
2) Recovery and Resilience
- Recovery and Resilience Facility 723.82bn
- Technical Support Instrument 0.86bn
- Protection of the Euro Against Counterfeiting 0.006bn
- Union Civil Protection Mechanism (rescEU) 3.32bn (out of which 2.06 are NGEU)
- EU4Health 5.75bn
3) Investing in People, Social Cohesion & Values
- European Social Fund+ 99.26bn
- Erasmus+ 26.51bn
- European Solidarity Corps 1.01bn
- Justice Programme 0.30bn
- Citizens, Equality, Rights and Values Programme 1.56bn
- Creative Europe 2.53bn
Heading III: Natural Resources & Environment
1) Agriculture & Maritime Policy
- European Agricultural Guarantee Fund (EAGF) - 291.09bn
- European Agricultural Fund for Rural Development (EAFRD) 95.51bn (out of which 8.07 NGEU)
- European Maritime, Fisheries and Aquaculture Fund ( EMFAF) - 6.11bn
2) Environment & Climate Action
- Programme for the Environment and Climate Action (LIFE) - 5.43bn
- Just Transition Fund 19.32bn (out of which 10.87 are NGEU)
Heading IV: Migration & Border Management
1) Migration
- Asylum, Migration and Integration Fund 9.88bn
2) Border Management
- Integrated Border Management Fund 7.39bn
Heading V: Security & Defense
1) Security
- Internal Security Fund 1.93bn
- Nuclear Decommissioning (Lithuania) 0.55bn
- Nuclear Safety and Decommissioning 0.62bn
2) Defense
- European Defense Fund 7.95bn
Heading VI: Neighbourhood and the World
1) External Action
- Global Europe: Neighbourhood, Development and International Cooperation Instrument (NDICI) - 80.59bn of which € 1.13 billion of reflows from the European Development Fund (indicative amount)
- Humanitarian Aid - 11.57bn
- Common Foreign and Security Policy - 2.68bn
- Overseas Countries and Territories 0.5bn
2) Pre-Accession Assistance
- Pre-Accession Assistance 14.16bn
Heading VII: European Public Administration
82.5bn
