Vulcan Insight

EU Budget fight enters the European Parliament

31 July 2020

Following EU leaders’ marathon summit and agreement on the EU’s €1.8 trillion multiannual financial framework and Recovery Fund, negotiations have now moved from the European Council’s Europa headquarters, to the European Parliament’s committee rooms and hemicycle.

It took EU leaders two in-person summits, regular video-conferences over weeks, and eventually a marathon five days of continued negotiations and compromises in the Europa building’s largest meeting room to reach an agreement on the EU’s next seven-year budget, worth €1.074 trillion.

While the objections of the so-called “Frugal Four”, or the rule of law concerns regarding Hungary and Poland may have been obstacles to overcome within the close circle of EU Heads of State and Government, the biggest fight may still be ahead: getting the European Parliament to ratify the MFF.

While the European Parliament is notorious for being a collection of 705 loosely aligned individuals who rarely speak with one voice, MEPs have been strongly consistent on their positions, recommendations and demands on what should, and should not, be in the EU’s next MFF.

The Parliament’s key demands on this are long-standing: a reform of the EU’s own-resources system, a strong tie between the distribution of EU funds and the upholding of the rule of law and climate commitments, as well as substantial increases in the funding resources allocated to the European Commission’s Green Deal, the digital transformation, as well as social and R&D investment programs.

As such, the Parliament’s rejection of the Council’s compromise agreement was both swift and strong, with MEPs overwhelmingly adopting a Resolution by 465 votes against 150, with 67 abstentions, welcoming the Recovery Fund, but calling for substantial improvements to the MFF over the proposed cuts to core future-orientated programmes. Members particularly disapproved of the leaders’ cuts to flagship EU programmes for climate protection, the digital transformation, health, youth, culture, research and border management, which “are at risk of an immediate drop in funding from 2020 to 2021″, while adding that, as of 2024, the “EU budget, as a whole, will be below 2020 levels, jeopardising the EU’s commitments and priorities.”

The Resolution also further adds that the Parliament is “prepared to withhold their consent” for the MFF until a satisfactory agreement is reached in its upcoming negotiations with the Council. Preferably such an agreement should be reached by the end of October, at the latest, to ensure full ratification by the end of the year.

Recognising the Parliament’s strong veto threat and in order to facilitate a “swift adoption of the [Recovery and MFF] package” by MEPs, Commission President Ursula von der Leyen, Parliament President David Sassoli, and German Chancellor Angela Merkel, on behalf of the Council’s rotating Presidency, this week came together to discuss the upcoming interinstitutional negotiations.

While all parties agreed that “there was no time to waste” to ensure an agreement by late October, they reaffirmed that an inter-institutional deal would have to be based on both the European Council’s deal and the Parliament’s demands set out in its Resolution. In order to facilitate a high-level political dynamic to the technical negotiations which are set to take place once MEPs return from the summer recess in September.