MFF 2014-20
The Multi-annual Financial
Framework 2014-2020
A budget for Europe 2020
Janusz Lewandowski Commissioner for Budget and Financial Programming of
the European Commission
© European Commission
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MFF 2014-20
EU Budget = policy in numbers
Responses
Challenges
•
Lisbon Treaty : more responsibilities
•
Connect Europe better
•
Unstable neighborhood
•
Austerity climate
•
Financial crisis interventions
•
Response to natural disasters
MORE EUROPE
FOR THE SAME MONEY!
© European Commission
•
European logic fully geared to Europe
2020 strategy
•
Modernised budget
- output oriented, simplification,
conditionality, leveraging investment
•
Limited in size, but redesigned
- savings in some areas
- more to areas that matter
- multi-purpose expenditure
•
Budgetary rigour, administrative limits
•
New legitimacy of traditional policies
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MFF 2014-20
Overview of the presentation
1. Background on financial frameworks and EU
budget
2. Overall volume
3. Overview of expenditure side
4. Own resources and corrections
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MFF 2014-20
Why do we need a multi-annual
financial framework (MFF)?
History
• The Financial Framework (previously ‘financial perspective’) was created
in 1988 to create financial stability and ensure budgetary discipline
• Currently we have the 4th MFF (2007-2013), after the 2 package proposals
DELORS I (1988-1992) and DELORS II (1993-1999), and Agenda 2000 (20002006)
• Since the Treaty of Lisbon (1-12-2009), the MFF became legally binding
through a regulation and cannot just be laid down in an Interinstitutional
Agreement (IIA).
• In the Council, the 27 Member States must unanimously adopt a
regulation on the MFF with consent of the European Parliament
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MFF 2014-20
What is the multi-annual financial
framework (MFF)?
• The MFF defines maximum amounts (‘ceilings’) by category of expenditure
(‘headings’).
• Any expenditure must have a legal basis.
• Allows predictability of EU expenditure
 The MFF provides a 7-year framework for the annual budget
 It structures the amounts outlined for each EU policy in each
legal basis (e.g. agriculture, structural funds,…)
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MFF 2014-20
EU funds’ beneficiaries 2009
In million €
In % GNI
7,5%
14.000,0
12.000,0
6,0%
10.000,0
4,5%
8.000,0
6.000,0
3,0%
4.000,0
1,5%
2.000,0
1a. Competitiveness
3a. Freedom, security, justice
5. Administration
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1b. Cohesion
3b. Citizenship
6. Compensation
MT
CY
SI
LV
EE
BG
SK
FI
DK
IE
SE
LU
LT
AT
NL
CZ
RO
HU
PT
EL
BE
UK
PL
IT
ES
DE
0,0%
FR
0,0
2. Natural resources
4. The EU as a global partner
% GNI
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MFF 2014-20
Overall figures for 2014-2020 MFF
Commitments
Payments
© European Commission
€ 1025 Billion
€ 972 Billion
1,05%
of GNI
1,00%
of GNI
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MFF 2014-20
What does constant in real terms mean?
MFF Commitments:
• Level of 2013 x 7 years
= € 1025 Billion in 2011 prices
= 1.05 % of GNI
• Outside the MFF: € 58.5 BN in 2011 prices
MFF Payments:
• € 972 Billion = 1.00 % of GNI
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MFF 2014-20
Ambitious, but realistic…
COMPARISON MFF 2007-13/2014-20
1. Smart and Inclusive Growth
Of which Competitiveness
Of which infrastructure
Of which cohesion policy
2. Sustainable Growth: natural resources
Of which Market related expenditure and direct payments
3. Security and Citizenship
of which Freedom, Security and Justice
of Citizenship
4. Global Europe
5. Administration (including pensions and European schools)
Of which administrative expenditure of EU institutions
6. Compensations
Total appropriations
In % of EU-27 GNI
© European Commission
EUR billion in 2011 prices
2007-2013
445,5
77,8
12,9
354,8
421,1
322,0
12,4
7,6
4,8
56,8
56,9
48,4
0,9
993,6
1,12%
2014-2020
490,9
114,9
40,0
336,0
382,9
281,8
18,5
11,6
6,9
70,0
62,6
50,5
1.025,0
1,05%
Difference (in %)
10,2%
47,7%
209,7%
-5,3%
-9,1%
-12,5%
49,9%
53,0%
44,9%
23,2%
10,1%
4,2%
3,2%
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MFF 2014-20
Decreasing payment share
% of EU GNI
1,25%
1.27% of GNP ≡ 1.24% of GNI excl.
FISIM
27% of GNP
from 1.20% to 1.
1,20%
1.23% of GNI incl. FISIM
'93-'99 average 1.18%
Own Resources ceiling
1,15%
Payment ceiling of
Financial Framework
('14-'20 COM proposal)
1,10%
Payments actually
executed/appropriations
1,05%
'93-'99 average
1.06%
'07-'13 average 1.06%
'00-'06 average 1.06%
1,00%
'14-'20 average 1.00%
0,95%
'00-'06 average
0.94%
0,90%
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20
20
19
20
18
20
17
20
16
20
15
20
14
20
13
20
12
20
11
20
10
20
09
20
08
20
07
20
06
20
05
20
04
20
03
20
02
20
01
20
00
19
99
19
98
19
97
19
96
19
95
19
94
19
93
0,85%
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MFF 2014-20
Development of CAP and cohesion share in
the budget between 2013 and 2020
45%
40%
35%
30%
25%
20%
2013
2014
2015
2016
2017
Common agricultural policy
© European Commission
2018
2019
2020
Cohesion policy
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MFF 2014-20
Despite restraint - significant redistribution in key policy areas
90,0
80,0
70,0
60,0
50,0
40,0
30,0
20,0
10,0
0,0
© European Commission
Research and
innovation
Education and
culture
Infrastructure
funding
Security and
citizenship
Global Europe
2007-2013
54,9
9,1
12,9
11,5
58,9
2014-2020
80,0
15,2
50,0
18,5
70,0
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MFF 2014-20
Connecting Europe
Connecting Europe Facility
40 EUR billion
( + 10 EUR billion earmarked
under Cohesion Fund)
•
Energy, transport and digital
networks
•
Cross-border multi-country
investments to the benefit of
internal market
•
Strong co-ordination with cohesion
policy
•
Proposed use of EU project bonds
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MFF 2014-20
Cohesion policy proposal
•
•
Three categories of regions
–
Less developed regions (GDP per capita
< 75% of EU average)
–
Transition regions (GDP per capita
between 75% and 90%)
–
More developed regions (GDP per capita
> 90%)
Cohesion Fund for Member States with GNI
per capita <90%
Multiannual Financial Framework 2014-2020
EUR billion
2011 prices
Cohesion Fund*
68.7
Less developed regions
162.6
Transition regions
39.0
More developed
regions
53.1
Cooperation
11.7
0.9
•
Territorial cooperation
•
Extra allocation for
outermost and
northern regions
Concentration on poorer and weakest
regions
Total **
•
Stronger conditionality
•
Thematic concentration
© European Commission
336.0
*Cohesion Fund will earmark 10 billion EUR for the new
Connecting Europe Facility
** ESF minimum share: 25%
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MFF 2014-20
Agriculture
• Declining share in the EU budget until 2020
• Greening of CAP - direct aid 30 % linked to environment
measures
• Progressive convergence towards EU average:
– Close 33% of the gap with 90% of EU average
– Financed by all Member States above the average
• Market measures: Emergency Mechanism
• European Globalisation Fund to help farmers adapt to
globalisation
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MFF 2014-20
Change of Direct Payments between
2013 and 2020
€/ha 2013
€/ha 2020
Highest increase of all
Member States
87
144
66%
Highest reduction of all
Member States
462
431
-7%
© European Commission
Change
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MFF 2014-20
Administrative expenditure
*
• Budget under restraint
– Staff reduction up to 5%
– Efficiency gains (increase working hours to 40 a week)
– Reviewing certain benefits in line with similar trends in Member
States
• Administrative expenditure discipline for all EU
institutions
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MFF 2014-20
A new own resources system
• Commission proposal :
– End statistical VAT own resource as of 2014
– Introduce 2 new own resources
• Financial Transaction Tax
• VAT resource
– Radically simplify the system of corrections
• In comparison with current system
– Simpler
– Fairer
– More transparent
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MFF 2014-20
New structure of own resources
Share of Own Resources Types in Total Own Resources Payments
100%
78%
80%
61%
60%
60%
56%
Traditional own resources + new OR
GNI resource (1978 MS Financial Contributions)
44%
VAT resource
40%
40%
29%
20%
10%
12%
10%
0%
0%
0%
1978
© European Commission
1988
2013
2020
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MFF 2014-20
EU taxation of financial sector
• Commission proposal
– Proposal for a Council Directive on FTT adopted on
27/9/2011 complemented by proposals in the
area of own resources.
– Financial transaction tax (FTT) to be introduced on
1/1/2014.
– Applicable tax rates defined in the Directive.
– The revenue arising from the FTT can be wholly or
partly used as own resource for the EU budget.
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MFF 2014-20
EU taxation of financial sector
• Advantages of the FTT
– Ensure that financial institutions make a fair contribution to covering
the costs of the recent crisis.
– Ensure even taxation of the sector vis-à-vis other sectors.
– Disincentive for overly risky transactions and complement regulatory
measures.
– Avoid fragmentation in the internal market for financial services.
– FTT more efficient at EU than at national level.
– Support in European Parliament, national parliaments, NGOs and
public at large (Eurobarometer: 61% in favour and 50% or more in 20
Member States)
As a new revenue stream the FTT will contribute to budgetary
consolidation of Member States by reducing their contributions to the
EU budget. All MS will benefit in line with their GNI.
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MFF 2014-20
VAT
• Commission proposal
– Maximum rate in OR decision: 2%
– New VAT resource from 1/1/2018 at the latest. Effective rate: 1 %
• Advantages
– Link EU VAT policy and EU budget
– Part of wider revision of VAT systems: fight against VAT fraud and
reinforce harmonisation of VAT systems
Combining the 2 new OR
– Critical mass to reduce contributions to EU budget
– Ensures fair distribution of impact on Member States
– Link to EU policies
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MFF 2014-20
Correction mechanisms
•
Commission proposal
– Replace all corrections mechanisms by a system of fixed annual lump sums for 20142020
– Based on Fontainebleau principle:
"any member State sustaining a budgetary burden which is excessive in relation to its
relative prosperity may benefit from a correction at the appropriate time."
•
Advantages
– Fairness - equal treatment of the Member States
– Simplicity and transparency
– Lump-sum correction mechanism to correspond to MFF duration
– Avoids perverse incentives for expenditure
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MFF 2014-20
Correction mechanisms
LUMPSUMS ADJUSTED FOR RELATIVE
PROSPERITY
(in million of euro
/ in current
prices)
Average annual
lumpsum
2014-2020
GROSS AMOUNT
© European Commission
DE
NL
SE
UK
2500
1050
350
3600
TOTAL
7500
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MFF 2014-20
Abolish VAT-based
own resource
Way ahead
• Timing of negotiations:
– 2011: Preparatory work under PL presidency
– June 2012 (DK pres) : Council level
– December 2012 (CY pres): Agreement on new MFF
regulation between European Parliament and Council
– 2013: Adoption by co-decision of new legal bases
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MFF 2014-20
Multiannual Financial Framework
Thank You
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