The term of the European Parliament elected in 2024 has been fractious, with the pro-European majority under strain. Fringe parties and some MEPs have attempted censure motions against European Commission President Ursula von der Leyen. Willingness to find compromise has been in short supply. In this context, the fact that the Parliament’s four main pro-European groups were able to unite to write on 30 October to the Commission about its proposals for the 2028-2034 European Union budget (the Multiannual Financial Framework, MFF) should in itself be welcomed.
Unfortunately, however, on most issues, the Parliament makes the wrong suggestions for the budget. It concludes that, in its current form, the Commission’s proposal “cannot serve as a basis for negotiations”, and calls for a new version as a precondition to finalise the MFF. The main demands of the four groups are:
The Commission should abandon a plan to include funds for cohesion (or the catching up of poorer European Union countries) and agriculture under single, per-country National and Regional Partnership (NRP) plans. Instead, cohesion and agriculture should each retain a dedicated budget line, and funding in these areas should be at least maintained in real terms.
Rejection overall of the proposal’s plan to pool various funds under single national envelopes, managed at member-state level, which the four groups see as increasing fragmentation, nationalising funds, reducing solidarity and opening up a democratic deficit.
For the Parliament to have a role in approving and modifying national and regional partnership plans, to avoid a shift of power towards the Commission and national authorities.
But these aspects of the MFF are among the most innovative in the Commission’s proposal. The Commission wants to reorient EU spending towards EU economic and security priorities, either directly, through what have been dubbed ‘genuine’ European public goods (EPGs), or indirectly, through EPGs ‘by aggregation’. In the first case, delivery and financing would happen at central level; in the second, financing would remain at EU level, while delivery would be national.
The Commission’s objective is to establish from the outset NRP plans that are coherent between the EU and national levels, rather than an ex-post compilation of numerous sectoral and regional plans. It proposes to build on the performance-based method of the Recovery and Resilience Facility (RRF), the EU’s post-pandemic recovery fund. In this, NRP plans would couple investments and reforms in pursuit of shared priorities.
Unified national-regional partnership programmes, instead of separate instruments would lead to a reduction in the number of programmes, entailing a simpler budgetary structure, less dispersion of limited resources and more flexibility to reallocate funds in response to changing circumstances. The new approach need not reduce the focus on cohesion because this goal would be enshrined in the design of NRP plans. In addition, regional authorities will be involved their design and implementation, and the Commission has adequate monitoring and enforcement powers.
Clearly, the Commission’s proposal is not perfect. Though it scores high on composition of programmes and flexibility, the budget would not be large enough, remaining roughly at the level of the current MFF as a share of EU income. The European Parliament groups could instead have demanded a budget to meet the EU’s expanding ambitions, financed partly by joint debt. They could also have called for safeguards to prevent dilution of funding for competitiveness and external action, and clear powers for the EU to prevent governments from using EU transfers to fill national budgetary gaps. It could have required the Commission to carry out a thorough post mortem of the RRF to learn lessons about how to ensure the consistency of national-regional partnership plans with EU priorities. It could have suggested a reform of the Commission services to align it with the new budgetary approach.
Based on past experience, the Commission’s proposals will likely emerge reduced in size (as Germany and other northern countries are likely to pursue the symbolic goal of bringing the EU budget below the €2 trillion threshold), worse in composition (with spending favouring powerful vested interests rather than EPGs) and less flexible (limiting the Commission’s discretion in the management of funds). Unfortunately, the MEPs’ letter seems the first step in that direction.