The difficulties to reach consensus on the EU’s multiannual financial framework for 2021-2027 risk delaying research, innovation and education programmes.
The heads of state or government of the EU member states hoped to find a compromise on the next multiannual financial framework (MFF) when they met in Brussels on 20 and 21 February. The special meeting of the European Council lasted 48 hours but a solution on the MFF for 2021 to 2027 remained nevertheless a distant goal. Charles Michel, the President of the European Council, explained the challenging situation and put it in the post-Brexit context, since the UK – until recently the second largest net contributor to the EU budget – has left the bloc: “This European budget is a very difficult negotiation, especially after Brexit and the gap between EUR 60 and 75 billion.” To put this into perspective, the original MMF 2021-2027 proposal of the European Commission (EC) was EUR 1134,5 billion. This included EUR 83,5 billion for Horizon Europe (2018 prices, excluding the part dedicated to the InvestEU R&I window).
Michel nevertheless welcomed the effort of the European Council meeting as a first step that helped to clarify positions and could serve as a basis for a future consensus – but it also became clear that the member states need more time. However, there is currently no next meeting of the European Council scheduled. EC President Ursula von der Leyen, who was also present during the negotiations, stated that it is important that the member states soon find a solution as the European Parliament (EP) would also have to agree on the MFF and only then can the approved programmes be prepared for implementation so that they can begin on 1 January 2021. Von der Leyen underscored that the stakes are high: If the EU would fail to complete all the necessary steps towards a budget in time, then “there will be no budget in 2021, that means no Erasmus programme, no money for research.” In addition, the ambitious priorities of the von der Leyen Commission may not be fully funded. Funding the green transition towards a 55% reduction of carbon emissions by 2030 will be costly. The EC hopes to unlock extensive cofunding and investments by public and private stakeholders in the range of EUR 1 trillion via a Just Transition Fund and other mechanisms. The array of proposals laying out the EU’s future digital strategy that the EC presented on 19 February (cf. SwissCore article) shows another important area of ambition that will not see progress without the appropriate funding. In fact, as the EU’s Director General for budget, Gert Jan Koopman, made clear, the EU would not be able to fund new programmes, and would only be able to spend money on agriculture and foreign policy activities, if the MFF and the regular budget were to come in late. In addition, he also mentioned that, historically, it is normal that member states initially fail to reach a compromise on the MFF. Thus, the current delay does not yet constitute an exceptional situation.
Adding to the challenge of finding a compromise is the fact that every member state has a veto power – the decision on the MFF requires consensus. The member states disagree not only on the overall level of funding, but also on the priorities. Should the money go to existing programmes that focus for instance on cohesion? Alternatively, should the EU refocus on future-oriented investments like the EC’s priorities, such as the European Green Deal and the digital transformation? This would also mean a focus on research, innovation and education. The friends of cohesion, a group of 17 eastern and southern member states advocate that “the funding for Cohesion Policy for the 2021-2027 period should maintain the level of the 2014-2020 MFF in real terms”. Furthermore, they call for eliminating all rebates that are granted to some of the wealthier member states. On the opposite side are the “frugal 4”, Austria, Denmark, the Netherlands and Sweden, who want to limit the MFF spending level to 1% of the EU’s gross national income (GNI) and ask to refocus on new priorities. A compromise appears difficult at this time: While the EC initially had proposed a MFF of 1.11 % of the GNI, the member states that have publicly specified their preference envisage a budget between 1.0 % and 1.3 %. In addition to building a consensus among themselves, the member states will also need the EP to agree on a final deal – and the EU’s legislative body is currently asking for a spending level of 1.3 %.
The President of the EP, David Sassoli, unsurprisingly voiced the EP’s disappointment about the failure of the member states to find a compromise on the next MFF. He stated that “Europe is facing unprecedented challenges such as climate change, digitalisation and a new geopolitical order” and warned that “lowering our ambitions could only have a negative impact on years of progress and integration.” The EP’s position on the overall financial envelope for Horizon Europe is EUR 120 billion (in 2018 prices). Last autumn, over 90 organisations in the field of research and innovation urged the Council of the EU to raise the budget for Horizon Europe 2021-2027 to at least EUR 120 billion.