The EU adopted the 7-year plan for the 2014-2020 period in December 2013. The multiannual financial framework (MFF) amounts to €960 billion in commitments (legal promise to provide finance, assuming certain conditions are met) and €908.4 billion in payments (actual transfers to beneficiaries) over the 7-year period, expressed in constant prices of the year 2011.
The MFF regulation lays down ceilings (maximum amounts) for each category of EU spending over the period. These must be respected when agreeing the EU’s annual budgets.
The 2014-2020 MFF is broken down into headings, as follows.
- Heading 1 – Smart and inclusive growth: €450.763 billion (of which €325.149 billion for economic, social and territorial cohesion).
- Heading 2 – Sustainable growth: natural resources: €373.179 billion.
- Heading 3 – Security and citizenship: €15.686 billion.
- Heading 4 – Global Europe: €58.704 billion.
- Heading 5 – Administration: €61.629 billion.
A central focus of the 2014-2020 MFF is on growth and employment. Subheading 1a on ‘competitiveness’ has increased by over 37% compared with the previous 2007-2013 MFF, reflecting the importance of this political priority. However, the new MFF is smaller than its predecessor, given that many EU countries face budgetary pressures on the home front.
The MFF regulation also provides for special instruments that allow the EU to react to specified, unforeseen circumstances. It can also allow the financing of clearly identified expenditure that cannot be financed within the limits of the ceilings that are available for one or more headings, notably:
- the Emergency Aid Reserve (used to finance, for example, humanitarian aid and civilian crisis management);
- the European Union Solidarity Fund;
- the Flexibility Instrument;
- the European Globalisation Adjustment Fund;
- the Contingency Margin (a last-resort instrument to react to unforeseen circumstances).
An inter-institutional agreement on budgetary discipline, cooperation in budgetary matters and sound financial management was also agreed between the European Parliament, the Council and the European Commission. This should rationalise the annual budgetary procedure and complement the MFF regulation.
Reallocation of 2014 unused commitments
The MFF regulation provides that in the event of the adoption of programmes under shared management for the Structural and Investment Funds, the European Agricultural Fund for Rural Development, the European Maritime and Fisheries Fund, the Asylum, Migration and Integration Fund and the Internal Security Fund after 1 January 2014, the MFF should be revised to reallocate the amounts not used in 2014 to subsequent years.
As a result, the MFF regulation has been revised so as to allow the transfer of 2014’s unused commitments: €16.5 billion to 2015, €4.5 billion to 2016 and €0.1 billion to 2017. This was due to the late adoption of 300 out of the 645 EU programmes in areas covered by the abovementioned EU funds.
The revision of the EU’s MFF keeps the total expenditure ceilings unchanged and involves no additional money.
The MFF had to be reviewed no later than in 2016 to allow the European Parliament (elected in 2014), the Council and the Commission (appointed in 2014) to reassess the priorities for the remaining years of the framework. This assessment was undertaken in light of the economic situation at the time as well as of the latest macroeconomic projections.
Following the mid-term review, Regulation (EU, Euratom) No 1311/2013 was amended by Regulation (EU, Euratom) 2017/1123 in 2017. The revised MFF increases the resources earmarked for the EU’s main priorities by €6.01 billion for the years 2017-2020, as follows:
- €2.08 billion for boosting growth and creating jobs through programmes such as the youth employment initiative (+ €1.2 billion), Horizon 2020 (+ €200 million), and Erasmus+ (+ €100 million);
- €2.55 billion for addressing migration, enhancing security and strengthening external border control;
- €1.39 billion for tackling the root causes of migration.
Each year, ahead of the budgetary procedure for the following year, the Commission makes a technical adjustment to the MFF in line with movements in the EU’s gross national income and prices. The results of this adjustment for 2018 were first communicated to the European Parliament and the Council in May 2017. However, these results were subsequently revised to take into account the 2017 amendment to Regulation (EU, Euratom) No 1311/2013 and were communicated to the European Parliament and the Council in September 2017.