EU multiannual financial framework (2021-2027)

SUMMARY OF:

Regulation (EU, Euratom) 2020/2093 laying down the multiannual financial framework for the years 2021 to 2027

WHAT IS THE AIM OF THE REGULATION?

It sets out the maximum annual amounts that can be spent on EU policies during the 2021-2027 period. Annual budgets adopted during that period must comply with this overall framework.

KEY POINTS

The multiannual financial framework (MFF) regulation sets, for the 2021-2027 period, annual maximum amounts (‘MFF ceilings’) for EU expenditure as a whole and for the main categories of expenditure reflecting major policy areas (‘MFF headings’).

The MFF regulation is adopted under a special legislative procedure, with the Council acting unanimously after obtaining the consent of the European Parliament.

The three main EU budgetary institutions (European Parliament, Council and European Commission) must ensure that expenditure in the EU’s annual budgets complies with the MFF ceilings.

For the 2021-2027 period, the MFF sets a maximum level of spending of €1,074 billion (all amounts in 2018 prices), covering seven major areas, broken down as follows.

Single market, innovation and digital: €132.8 billion.
Cohesion, resilience and values: €377.8 billion.
Natural resources and environment: €356.4 billion.
Migration and border management: €22.7 billion.
Security and defence: €13.2 billion.
Neighbourhood and the world: €98.4 billion.
European public administration: €73.1 billion.

In particular, the MFF also earmarks maximum levels of commitments payments over the period to two large-scale projects:

EU space programme (€13.202 billion),
International Thermonuclear Experimental Reactor (ITER) (€5 billion).

The MFF also sets out maximum amounts that may be spent in addition to the MFF ceilings for emergency response or unforeseen needs, making use of ‘special instruments’, as follows:

European Globalisation Adjustment Fund (€186 million annually);
Solidarity and Emergency Aid Reserve (€1.2 billion annually);
Brexit adjustment reserve for areas and sectors worst affected by the United Kingdom leaving the EU (€5 billion over the period);
Single Margin Instrument allowing the shifting of margins available between financial years and in some cases also between MFF headings;
Flexibility Instrument to cover unforeseen expenditure that cannot be financed within the MFF ceilings (€915 million annually).

Various adjustments are made to the MFF’s ceilings during its lifetime. These are:

annual technical adjustments in current prices when the Commission is drafting the following year’s draft annual budget;
programme-specific adjustments whereby an extra amount, equivalent to the annual income the EU receives from fines it levies for breaking EU rules, will be allocated to specific EU programmes/policies — this totals €11 billion between 2022 and 2027.

Other adjustments to the MFF may be:

re-entering budgetary commitments that have been suspended to ensure sound economic governance or to protect the EU budget — once the suspension is lifted, the amounts may be used in a following year;
re-programming over time of budgetary commitments and payments related to new rules or programmes adopted after 1 January 2021.

The MFF may be revised — in accordance with the same special legislative procedure for its adoption — due to:

unforeseen circumstances;
revision of the EU’s treaties with budgetary consequences;
countries becoming new EU members;
the reunification of Cyprus.

The European Parliament, Council and Commission must take measures to facilitate the annual budgetary procedure, cooperate in good faith and work in a coherent manner under the Interinstitutional Agreement on budgetary discipline, cooperation and sound financial management (see summary).

The MFF requires the Commission to present a proposal for a new MFF before 1 July 2025.

FROM WHEN DOES THE REGULATION APPLY?

It has applied since 1 January 2021.

BACKGROUND

The MFF’s €1,074.3 billion and the exceptional and temporary additional €750 billion of the European Union Recovery Instrument Regulation (EU) 2020/2094 (see summary) provide an unprecedented €1.8 trillion to support the EU’s recovery from the COVID-19 pandemic with a special focus on modernising the EU’s economy and the transition to a green and digital future.

The start of the new MFF coincides with changes to the EU’s own-resources system of financing EU expenditure, Decision (EU, Euratom) 2020/2053 (see summary).

MAIN DOCUMENT

Council Regulation (EU, Euratom) 2020/2093 of 17 December 2020 laying down the multiannual financial framework for the years 2021 to 2027 (OJ L 433I, 22.12.2020, pp. 11-22)