Vulcan Insight

EU set for budget showdown

7 February 2020

EU leaders will gather in Brussels in two week’s time to decide the size and scope of the next EU budget (multi-annual financial framework) for 2021 – 2027. Discussions have been tense with member states deeply divided. The UK’s departure from the EU has left a 12 billion EUR sized-hole in the annual budget while the EU has decided to undertake an ambitious and costly Green deal.

President of the European Council, Charles Michael, has been meeting with EU leaders ahead of the special summit which will begin on 20 February in Brussels. Ascertaining key priorities from the member states and identifying wiggle room will be a baptism of fire for Michel, in what can be seen as his first real test since taking office on 1 December.

Member states can be largely placed into two camps: those who do not want to contribute more, seeing themselves as net contributors already; and the so-called ‘Friends of Cohesion’ group – a group of 16 member states who want to preserve current levels of agricultural and regional spending.

The ‘Friends of Cohesion’ group convened in Beja, Portugal last weekend to establish their position. “Cohesion policy funding for 2021-2027 should maintain the level of the 2014-2020 Multiannual Financial Framework in real terms. No member state should suffer a sharp and disproportionate reduction in its cohesion budget,” reads the joint declaration by the leaders of the affected nations. Fighting back, the Dutch Prime Minister said the Netherlands, Germany, Austria, Sweden and Denmark – dubbed the “frugal five” – should not contribute more, retorting; “We also held a summit. Only the frugal countries did not fly throughout Europe. We held a video conference, which is much cheaper.”

The outlook for finding an agreement in two weeks remains unclear, with many believing that a second summit will need to be called. However, the discussions will not be starting from scratch. The Finnish Presidency proposed a blueprint for the budget in December. While it received widespread criticism, it could just provide the basis upon which the new budget can be agreed.