At the end of November, European Parliament gave favourable vote to the multiannual financial framework of the EU for 2014-2020. On 2 December, the EU Council adopted Regulation 11791/7/2013 which sets the multiannual financial framework for 2014-2020. Thus, the period of intense negotiations, which lasted two years since the Commission presented its proposals (June 2011), ended. The total budget for the next 7 years is of EUR 960 Billion in commitments and EUR 908 Billion in payments (according to 2011 prices).
The European Parliament approved the EU budget for 2014-2020 after all conditions set by the resolution in July have been met. EP wanted to remedy the payment deficit, which made almost impossible for EC to meet the legal commitments of the past years, in order to avoid entering the new year with arrears and member states agreed to grant another EUR 3.9 Billion. Also, EP insisted that the legal basis for different programs would be finalised based on the co-decision between the Council and the Parliament. In order to complete “own resources”, the EP insisted on setting up a high-level working group responsible with reforming the income regime, as the currently operating system is not profitable. The idea was approved by member states which agreed on setting up the group as soon as possible. A success of the EP during this summer’s negotiations was the introduction of the review clause which will give the future Parliament and the future Commission the possibility of a viewpoint on a budget. The review will begin in 2016. Special attention will be paid to aligning the future multiannual budget (currently of 7 years) with the political cycles on changing the EU institutions (5 years). The review will be accompanied by a law proposal.
“The European Parliament has given its final blessing to the European budget from 2014 until 2020, thus successfully an ending long negotiations. The European Union will invest almost EUR 1 Trillion in growth and jobs between 2014 and 2020. The budget will consolidate and support economic recovery in the EU”, declared the European Commission President, Jose Manuel Barroso.
The multiannual financial framework for the next 7 years permits the EU to invest up to EUR 960 Billion in commitment credits, representing 1% of EU’s gross national income and EUR 908.4 Billion in payment credits (0.95% of the EU’s GNI). The budget framework defines cost priorities which are oriented to sustainable economic growth, jobs and competitiveness, in conformity with EU’s strategy, “Europe 2020”.
“After the vote, we can provide predictability of funding to some 20 million European small and medium enterprises, millions of the poorest people in the world, some 100,000 towns and regions as well as thousands of laboratories and universities”, declared Commissioner Janusz Lewandowski, in charge of budget and financial programming.
Main aspects
The future budget will answer to the challenges launched by the present economic situation and there is a series of important innovations which prove the added value of projects and their importance for the sustainable growth of the EU.
The SMSs are the central element of the European economy, representing 99% of total European undertakings and ensuring two of three jobs in the private sector. Due to the new COSME programme, SMEs can expect EUR 2.3 Billion as support to sti-
mulate their competitiveness and economic growth. COSME is EU’s first programme on SMEs which will facilitate their access to EU and non-EU markets and will provide easy access to financing through guarantees for loans and risk capital.
Research and innovation is another priority for the EU, the activities in this segment will benefit from EUR 80 Billion through “Horizon 2020”. The programme will offer a stimulus for economic development, will consolidate its position of industrial leader in innovation, including through investments in technologies, will supply better access to capital and support for SMEs and will contribute to tackling the main societal challenges, such as climate change, transport and sustainable mobility development and increasing accessibility from the point of view of prices and renewable energy.
Also, economic growth and creating jobs in Europe depend a lot on infrastructure investments. The transport, energy and IT infrastructure networks across Europe are still confronted with obstacles and are often incomplete, inefficient and even non-existent. With EUR 33.3 Billion (EUR 26.3 Billion for transport, EUR 5.9 Billion for energy and EUR 1.1 Billion for IT), the Connecting Europe Facility (CEF) will be the main instrument for strategic infrastructure investments. In the transport infrastructure segment, MCE will contribute to completing the new policy based on which nine major corridors will be the central element of transport in the European single market, revolutionizing the east-west connections. Regarding the energy infrastructure, the instrument is essential to meet the main objectives of the policy – energy at accessible prices for all consumers, delivery safety and sustainability. Also, CEF is the first investment programme in the EU for broad band networks and digital services infrastructures aimed to create a single digital market.
Limited public funds accentuate the need to unblock other financing resources, generating a leverage effect for the EU budget, compared to financing through direct grant. This is the goal of financial instruments, such as loans, guarantees, own capitals and other risk division instruments which can be used on a broader scale in the EU budget for 2014-2020. These will be implemented in cooperation with the European Investment Bank (EIB), European Investment Fund (FEI) and national promotion banks.
Financial instruments will be used in programmes such as COSME (SMEs financing), Horizon 2020 (research and innovation), Erasmus+ (credit guarantees) and the Connecting Europe Facility (infrastructure).
EU’s multiannual budget is an important step to transforming Europe into an economy with low carbon emissions, eco-friendly and competitive. At least 20% of the entire budget will be spent on climate-related projects and policies. The 20% commitment triples the current share of 6-8% and could generate up to EUR 180 Billion representing financing for climate in all main cost areas, including structural funds, research, agriculture, maritime and fishing policy, as well as development.
Financing rules will be simpler and easier to understand especially for beneficiaries thus reducing error risk. Overall, around 120 simplification measures will be introduced. For example, as part of cohesion policy, EU investments will be simplified through a common norms for all these European investment and structural funds, as well as simpler accounting norms, through better defined reporting requirements and by frequently using digital technologies (e-cohesion). The programme Horizon 2020 will enable a major simplification through a single set of norms for the entire financing for research and innovation previously granted through different programmes.
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