Negotiations relating to the EU’s Multiannual Financial Framework (MFF 2021-2027) and the Recovery Plan for Europe

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Publication Date 2018-
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Summary:

Overview of the negotiating positions of the European Commission, the European Parliament and the Council of the European Union (+ European Council) on the EU's Multiannual Financial Framework (MFF) for the period 2021-2027 - and later on a Recovery Plan for Europe - as well as related political discussion in search of an agreement.

Further information:

The Multiannual Financial Framework (MFF) sets the maximum level of resources for each of the seven major headings of EU spending for a period of seven years. In addition to a financial plan, it sets the EU’s long-term priorities.

The European Commission presented its position on the MFF 2021-2027 on 2 May 2018, which proposes a multiannual budget amounting to 1.11% EU27 Gross National Income (GNI). In response to this position, a Resolution from the European Parliament adopted in November 2018 argues that such proposal is insufficient and in turn estimates a ceiling amounting to 1.3% EU27 GNI.

The Council of the European Union took time to agree on a common position due to disagreements between Member States on size and other aspects of the MFF. While the European Council regularly touched upon the matter ever since a first discussion took place in February 2018, no specific effort to reach an agreement was developed until late 2019. Ahead of a seemingly important meeting on 17-18 October, the European Commission adopted a Communication highlighting the need for further work to be done by the co-legislators; the European Parliament also adopted a Resolution urging the Council to engage in negotiations to find an interinsitutional agreement.

On 5 December, the presidency of the Council of the European Union presented a so-called 'Negotiating Box' with a proposal amounting to 1.07% of EU27 GNI. The European Council meeting held later in the month did not produce an agreement between national leaders. Member States appeared generally divided between those vowing to shrink the overall multiannual budget, and those who fear such decision would affect provisions on agriculture and cohesion policy.

On 14 February 2020, the President of the European Council presented a revised proposal for discussion, setting the ceiling at 1.074% EU27 GNI.  A special European Council meeting later that month highlighted yet again the cleavage between Member States. Media reported on the difficulties in finding a compromise between those rejecting substantial cuts in certain areas and the so-called 'Frugal Four' defending a stricter line which would not go beyond 1% GNI.

The discussion was substantially affected by the COVID-19 (coronavirus) pandemic. On 27 May 2020, the European Commission tabled a revamped proposal for the MFF 2021-2027 in the framework of its Recovery Plan for Europe. The revised proposal incorporates the impact of an instrument (or fund) for economic recovery denominated Next Generation EU, which would be financed by money borrowed from the markets by the European Commission. The allocation and potential repayment of such funds reinforced the cleavage previously registered between Member States.

Under this new framework, the first round of negotiations between Member States was held at a video conference on 19 June 2020. Ahead of a special European Council summit, national leaders held a series of bilateral meetings to informally assert positions. On 10 July, the President of the European Council tabled a new Negotiation Box concerning the overall Recovery Plan for Europe. Media outlets reported increasing tension over adding rule of law as conditionality for access to budget funds.

An overall agreement concerning the elements of the Recovery Plan (MFF + recovery instrument) was eventually reached in the early hours of 21 July 2020, after national leaders extended the duration of the special summit. The deal includes the Next Generation EU - €390bn in grants and €360bn in loans - which is attached to a revamped MFF for 2021-2027 amounting to €1.074 trillion. The agreement was welcomed by the Commission and Parliament, despite warnings and regret shown over cuts proposed for some programmes and initiatives. A Resolution adopted by the plenary of the European Parliament on 23 July underlined the need for improvement before ratification of the compromise agreed by the European Council.

A phone call was held between the President of the European Commission, the President of the European Parliament and the chair of rotating Council President on 29 July. The aim was to prepare the next steps in the adoption of the Recovery Plan for Europe, namely the interinstitutional negotiations based on the political agreement reached by the European Council and the Resolution subsequently adopted by the Parliament.

Related Link(s)
Commentary and Analysis
Politico, 04/11/2019: The EU’s budget tribes explained https://www.politico.eu/article/the-eus-budget-tribes-explained/
Politico, 02/12/2019: EU budget fight heats up https://www.politico.eu/article/eu-budget-fight-heats-up-council-of-the-eu-finnish-presidency-european-commission/
Politico, 06/12/2019: What rich countries get wrong about the EU budget https://www.politico.eu/article/what-rich-countries-get-wrong-about-the-eu-budget-east-west-euroskeptic-cohesion-policy/
Politico, 12/12/2019: EU budget: Value for money https://www.politico.eu/sponsored-content/eu-budget-value-for-money/
ECFR: Commentary, 13/12/2019: Table scrap: Budget talks in a fragmented Europe https://www.ecfr.eu/article/commentary_table_scrap_budget_talks_in_a_fragmented_europe
EPRS: Briefing, January 2020: The 2021-2027 Multiannual Financial Framework in figures https://www.europarl.europa.eu/thinktank/en/document.html?reference=EPRS_BRI(2020)646131
Politico, 02/02/2020: Costa grabs role as regions’ champion in EU budget fight https://www.politico.eu/article/antonio-costa-portugal-regions-champion-eu-budget-fight/
Politico, 14/02/2020: 8 takeaways from the new EU budget proposal https://www.politico.eu/article/8-takeaways-from-the-new-eu-budget-proposal/
The Guardian, 16/02/2020: ‘Fighting like ferrets in a bag’ as EU tries to plug Brexit cash hole https://www.theguardian.com/world/2020/feb/16/stressed-heads-to-start-brussels-budget-talks-post-brexit
EPRS: Briefing, February 2020: The European Council and the 2021-27 Multiannual Financial Framework https://www.europarl.europa.eu/thinktank/en/document.html?reference=EPRS_BRI(2020)631732
EUObserver, 18/02/2020: What the Dutch don't get about the EU budget https://euobserver.com/opinion/147439
EurActiv, 19/02/2020: EU faces tough post-Brexit test with 2021-2027 budget https://www.euractiv.com/section/economy-jobs/linksdossier/eu-faces-tough-post-brexit-test-with-2021-2027-budget/
Politico, 19/02/2020: 4 big fights in Europe’s budget battle https://www.politico.eu/article/eu-budget-battle-big-fights-cohesion-funding-agriculture/
Forbes, 20/02/2020: Is The EU Budget Ready To Back The Green Deal? https://www.forbes.com/sites/emanuelabarbiroglio/2020/02/20/is-the-eu-budget-ready-to-back-the-green-deal/#377ed3992366
CEPS: In Brief, 20/02/2020: Towards a new MFF https://www.ceps.eu/ceps-publications/towards-a-new-mff/
Politico, 20/02/2020: Mario Monti: Don’t let the ‘frugals’ rule the budget https://www.politico.eu/article/mario-monti-dont-let-the-frugals-rule-the-budget/
Politico, 20/02/2020: Parliament’s EU budget strategy: Go big, then go home https://www.politico.eu/article/european-parliament-david-sassoli-eu-budget-strategy-go-big-then-go-home/
Politico, 21/02/2020: The EU budget in 7 charts https://www.politico.eu/article/the-eu-budget-in-7-charts-mff/
Reuters, 20/02/2020: Frugal Four vs Friends of Cohesion: The EU's baffling budget battle https://uk.reuters.com/article/idUKKBN20E1NC
The Guardian, 16/07/2020: Angela Merkel set for central role in talks on EU recovery plan https://www.theguardian.com/world/2020/jul/16/angela-merkel-set-for-central-role-in-talks-on-eu-recovery-plan
EUObserver, 22/07/2020: EU recovery fund and budget negotiations aren't over yet https://euobserver.com/opinion/149004

News
Politico, 30/10/2019: Commission gives up on EU budget deal in 2019 https://www.politico.eu/article/commission-gives-up-on-eu-budget-deal-in-2019/
EurActiv, 30/10/2019: Oettinger fires at ‘misleading’ EU budget figures https://www.euractiv.com/section/eu-priorities-2020/news/oettinger-fires-at-misleading-eu-budget-figures/
EurActiv, 06/11/2019: EU faces budget deadlock as national positions drift further away https://www.euractiv.com/section/economy-jobs/news/eu-faces-budget-deadlock-as-national-positions-drift-further-away/
EurActiv, 04/12/2019: Finland aims to put €10bn more in CAP’s second pillar https://www.euractiv.com/section/agriculture-food/news/finland-aims-to-put-e10bn-more-in-caps-second-pillar/
EurActiv, 04/12/2019: Von der Leyen criticises Finnish presidency’s EU budget proposal https://www.euractiv.com/section/future-eu/news/von-der-leyen-criticises-finnish-presidencys-eu-budget-proposal/
Politico, 04/12/2019: Von der Leyen hits out at ’severe cuts’ in EU budget plan https://www.politico.eu/article/von-der-leyen-hits-out-at-severe-cuts-in-eu-budget-plan/
Politico, 01/02/2020: 15 countries fight to protect EU cohesion funding https://www.politico.eu/article/eu-budget-cohesion-funding-summit-portugal/
Deutsche Welle, 01/02/2020: Austria: Sebastian Kurz threatens to veto EU post-Brexit budget https://p.dw.com/p/3X8G0
EurActiv, 03/02/2020: In Portugal, 15 ‘cohesion countries’ call for stronger EU budget https://www.euractiv.com/section/economy-jobs/news/in-portugal-15-cohesion-countries-call-for-stronger-eu-budget/
NL Times, 06/02/2020: Netherlands will not contribute more to EU budget, Dutch PM says https://nltimes.nl/2020/02/06/netherlands-will-contribute-eu-budget-dutch-pm-says
Reuters, 07/02/2020: EU goes into meeting frenzy ahead of Feb. 20 summit on next seven-year budget https://uk.reuters.com/article/idUKKBN20125J
EurActiv, 14/02/2020: Michel offers flexible EU budget to convince sceptics https://www.euractiv.com/section/economy-jobs/news/michel-offers-flexible-eu-budget-to-convince-sceptics/
The Irish Times, 14/02/2020: Charles Michel proposes EU budget compromise ahead of summit https://www.irishtimes.com/news/world/europe/charles-michel-proposes-eu-budget-compromise-ahead-of-summit-1.4174226
EurActiv, 17/02/2020: CAP spending faces further €5bn cut in bloc’s budget blueprint https://www.euractiv.com/section/agriculture-food/news/cap-spending-faces-further-e5bn-cut-in-blocs-budget-blueprint/
EUObserver, 17/02/2020: Net payer countries push back on EU budget plans https://euobserver.com/economic/147464
Agriland, 17/02/2020: Inside EU budget documents: Proposal to slash CAP by between 14% and 19% https://www.agriland.ie/farming-news/inside-leaked-eu-budget-documents-proposal-to-slash-cap-by-between-14-and-19/
EurActiv, 17/02/2020: Poland’s just transition bonus cut 50% under latest EU budget proposal https://www.euractiv.com/section/climate-environment/news/polands-just-transition-bonus-cut-50-under-latest-eu-budget-proposal/
Bloomberg, 17/02/2020: Germany Demands Compromise From All Sides in EU Budget Talks https://www.bloomberg.com/news/articles/2020-02-17/germany-demands-compromise-from-all-sides-in-eu-budget-talks
Reuters, 18/02/2020: French farmers sweat over subsidies in post-Brexit EU budget talks https://uk.reuters.com/article/idUKKBN20C2BK
Agriland, 18/02/2020: MFF proposal ‘disappointing’ – EU Parliament budget committee https://www.agriland.ie/farming-news/mff-proposal-disappointing-eu-parliament-budget-committee/
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EUObserver, 20/02/2020: Unhappy EU leaders begin budget haggle https://euobserver.com/economic/147513
Deutsche Welle, 20/02/2020: Leaders roll up for the EU budget circus https://p.dw.com/p/3Y5cn
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Reuters, 21/02/2020: Macron to farmers: France stood firm on EU farm budget https://www.reuters.com/article/idUSL5N2AM056
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Reuters, 07/07/2020: Italy PM Conte says he will not accept 'weak compromise' on EU recovery fund https://uk.reuters.com/article/idUKKBN2482VV
Jornal Económico, 08/07/2020: Costa argues that European Union countries should come out of the coronavirus crisis "all together" https://jornaleconomico.sapo.pt/en/news/Costa-argues-that-European-Union-countries-should-come-out-of-the-coronavirus-crisis-all-together-611151
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Deutsche Welle, 09/07/2020: Angela Merkel meets with Mark Rutte to discuss EU recovery https://p.dw.com/p/3f4h4
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LRT News, 10/07/2020: Lithuania to be compensated for emigration in EU's budget proposal https://www.lrt.lt/en/news-in-english/19/1196494/lithuania-to-be-compensated-for-emigration-in-eu-s-budget-proposal
EUObserver, 10/07/2020: Michel lays out compromise budget plan for summit https://euobserver.com/economic/148917
RTÉ News, 10/07/2020: EU's Michel proposes €5bn Brexit emergency fund https://www.rte.ie/news/business/2020/0710/1152546-eus-michel-proposes-5bn-brexit-fund/
Reuters, 10/07/2020: EU's Michel proposes five billion euros Brexit emergency fund https://uk.reuters.com/article/idUKKBN24B16P
Politico, 10/07/2020: Charles Michel’s small cuts set stage for big EU budget fight https://www.politico.eu/article/charles-michel-eu-budget-fight/
Reuters, 10/07/2020: Dutch will seek guarantees on budget reforms at EU recovery fund talks, Rutte says https://uk.reuters.com/article/idUKKBN24B253
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AP News, 14/07/2020: Hungary lawmakers back Orban’s position on EU recovery plan https://apnews.com/ca1c77efef40cf1a48626609639a7f07
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Politico, 21/07/2020: European Parliament ‘cannot accept’ aspects of EU budget deal, say negotiators https://www.politico.eu/article/european-parliament-cannot-accept-aspects-of-eu-budget-deal-say-negotiators/
Politico, 21/07/2020: Von der Leyen laments ‘regrettable’ cuts in budget accord https://www.politico.eu/article/von-der-leyen-laments-regrettable-cuts-in-budget-accord/
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EurActiv, 24/07/2020: MEPs warn of insufficient control over EU climate spending https://www.euractiv.com/section/energy-environment/news/meps-warn-of-insufficient-control-over-eu-climate-spending/

Official
General Secretariat of the Council: Multiannual financial framework for 2021-2027: negotiations https://www.consilium.europa.eu/en/policies/eu-budgetary-system/multiannual-financial-framework/mff-negotiations/
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European Parliament: Priorities: The EU's long-term budget https://www.europarl.europa.eu/news/en/headlines/priorities/eu-s-long-term-budget
European Parliament: Legislative Train Schedule: 2021-2027 MFF https://www.europarl.europa.eu/legislative-train/theme-budgets-budg/file-mff-2021-2027-mff
EPRS: Briefing, June 2019: Multiannual financial framework for the years 2021 to 2027: The future of EU finances https://www.europarl.europa.eu/thinktank/en/document.html?reference=EPRS_BRI(2019)637979
Finnish Council Presidency: Press Release, 05/12/2019: Finnish Presidency proposes greater EU investment in building a sustainable future https://eu2019.fi/en/article/-/asset_publisher/suomi-esittaa-puheenjohtajamaana-eu-lle-lisapanostusta-kestavan-tulevaisuuden-rakentamiseen
European Parliament: Press Release, 19/02/2020: President Michel’s MFF proposal not acceptable for Parliament https://www.europarl.europa.eu/news/en/press-room/20200218IPR72822/
European Parliament: Press Release, 11/03/2020: Long-term EU budget: It is not possible to do more with less, say MEPs https://www.europarl.europa.eu/news/en/press-room/20200305IPR74186/
European Council: Statement, 10/07/2020: President Charles Michel presents his proposal for the MFF and the recovery package https://www.consilium.europa.eu/en/press/press-releases/2020/07/10/president-charles-michel-presents-his-proposal-for-the-mff-and-the-recovery-package/
Spain: La Moncloa (Government Presidency): News, 15/07/2020: Pedro Sánchez and Emmanuel Macron agree on need to reach agreement in July on financial package to speed up recovery following COVID-19 crisis https://www.lamoncloa.gob.es/lang/en/presidente/news/Paginas/2020/20200715_macron.aspx
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European Parliament: Press Release, 23/07/2020: EU long-term budget deal must be improved for Parliament to accept it https://www.europarl.europa.eu/news/en/press-room/20200722IPR83804/
European Commission: Readout of the meeting between European Commission President von der Leyen, European Parliament President Sassoli and German Chancellor Merkel (29 July 2020) https://ec.europa.eu/commission/presscorner/detail/en/read_20_1428

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