Sustainable Prosperity for Europe

The EU Budget

Analysis of the Multiannual Financial Framework (MFF) 2014-2020

30 September 2011
Elisa Molino (External authors) and Fabian Zuleeg (Chief Executive and Chief Economist)

In this paper Fabian Zuleeg and Elisa Molino analyse the European Commission’s proposals for the EU’s next Multiannual Financial Framework, investigating their potential implications for regional and local authorities.

This paper analyses and compares the European Commission’s prosposals for the next Multiannual Financial Framework with the Committee of the Regions’ (CoR) recent opinion on ‘The EU Budget Review’, highlighting potential divergences but also areas of agreement to be exploited during the negotiations. To assess the position of the CoR, the paper also takes into account its previous opinions. In addition, the paper discusses the position of the European Parliament, which appears to correspond closely to the main features of the Commission’s suggested budget.

Of all the novelties proposed by the European Commission, the changes to regional policy are the perhaps the most significant for the CoR, as they are likely to alter the way structural funds are implemented by concentrating objectives and introducing strong ex ante and ex post conditionality. The Commission’s proposal reserves a prominent role for cohesion policy in achieving the objectives of the ‘Europe 2020’ strategy, which is to be operationalised via so-called ‘Partnership Contracts’. Given the vagueness that surrounds the content and methods of such contracts, as well as their focus on the member-state level, there is a need for clarification. Indeed there is a significant risk that regional policy might be constrained by a top-down approach that offers few opportunities to develop local/regional objectives and achieve buy-in with regional partners. More concrete proposals from the Commission are needed before the negotiating position of the CoR can be finalised. However, the political message of the CoR should underline the importance of clarification and the risks associated with a top-down approach.

Given the risk of budget stalemate inherent in the upcoming budget negotiations, Zuleeg and Molino suggest that the CoR’s role should be to ensure that the original measures proposed by the Commission are not watered down, such as the total amount of resources for the EU budget (1% GNI in payments), increased investment in pan-European infrastructure and enhanced environmental criteria for direct payments in the Common Agricultural Policy. The authors also stress that the CoR needs to strongly voice its opposition to any macroeconomic conditionality, which could imply the suspension of cohesion funding. Such a suspension could well result from changes to the EU’s economic governance, and in particular from reform of the Stability and Growth Pact.

This paper was written under a Framework Contract with the Committee of the Regions on the EU budget.

To read the paper, please click here.

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