The Viewpoints | A NEW EU BUDGET FOR THE FUTURE

The

ViewPoints A NEW EU BUDGET FOR THE FUTURE

With contributions from: Margarida Marques MEP, “The Next EU Budget” Margarida Marques MEP, “The Next EU Budget”

Rasmus , ,“The RasmusAndresen AndresenMEP MEP “TheMFF MFFas asaareal real Marshall Plan, not just a lip service ” Marshall Plan, not just a lip service”

Valérie Hayer MEP, “The next MFF must ensure our prosperity, while meeting the new challenges”

Rasmus , ,“The real - a SiegfriedAndresen MuresanMEP MEP “TheMFF next as EUaBudget Marshall Plan, not just a lip service ” key tool in bringing the union back into shape”

Content CON TE NT S

Edited by: Christian Skrivervik

Let’s Talk Budget In these trying times, the European Union is expected to come up with answers for the common challenges we face. The EU’s budget is a powerful tool in the effort to mitigate the economic, financial, and social impact of the coronavirus pandemic.

In that vein, the next EU’s MFF needs to shape Europe’s resilience and make it more effective in the coming years. Inspired by the principle of solidarity, this budget should meet citizens’ expectations on what the EU should deliver on, thus making the new MFF an agent of change for a stronger EU. Furthermore, the next EU’s long-term budget must reflect an ambitious vision for Europe, a vision stemming from the challenges that lie ahead. What we need is a future-proof budget that enables the European Union to promote innovation, sustainability, inclusiveness, and equality for all citizens.

While the proposals put forward by the three main EU institutions support, to varying degrees, increased spending in different priority areas, the idea of introducing additional own sources of revenue has become increasingly popular. The European Parliament has stated it will not vote in favour of an MFF deal that does not entail an agreement on the reform of the EU’s own resources system.

The European Movement International’s recommendations call for an EU’s long-term budget which fosters a fairer, more inclusive, and more sustainable EU. We argue that the introduction of new own resources would make the EU budget more independent from the contributions of Member States. Affording the EU with its own resources would

allow it to better and objectively prioritise investment that reflects the EU’s strategic priorities and that addresses the common challenges faced by EU member states.

Within the context of the coronavirus emergency, these resources would provide the EU with adequate tools to face potential economic shocks, bringing about solutions to the structural shortcomings in the setup of the current Economic and Monetary Union (EMU). Furthermore, an increased portion of these own resources should be devoted to investments in education and skills, in fostering innovation that makes European companies thrive, and support those who are involved in labour transitions.

We believe that priority areas should include investment in new technologies and digitalisation, youth employment and education, the development of a Social Europe, the full implementation of the Paris Agreements and the Sustainable Development Goals, an overarching policy towards refugees and migrants, further investment in EU’s security and defence cooperation and more participatory democracy in Europe.

The debate around the EU budget is hugely important, one that includes difficult compromises and brave decisions. For that reason, in the spirit of the open and diverse platform that the European Movement is, we have gathered the views of leading MEPs, from across the political spectrum, to share their ideas and recommendations for the EU budget.

To join the debate share your views on Twitter using the hashtag #TheViewPoints

The next long term EU Budget - Margarida Marques MEP

We have been living the unthinkable when it comes to everyday life. An economy hibernating, people confined at home with their children without physical classes and relying on the internet for work, without shopping and even “social” contact. This Covid-19 pandemic has cost by now the lives of many thousands of people in Europe and the rest of the world, causing irreparable damage to the society and economy, thus confining billions of people to their homes.

When it comes to the EU Budget, we have been living the unprecedented. The Commission’s first response to this unforeseeable pandemic has relied largely on the current EU Budget. In extending flexibilities and entering into the margins, to answer to the unforeseen challenges that affect all member states symmetrically in asymmetrical ways, since it´s hitting some member states harder than others, at a different step. This response included measures like redirecting €48.5 million from the Horizon 2020 research programme towards the fight against the virus; providing €80 million financial support to scale up development and production of a coronavirus vaccine; mobilising €140 million of funds and projects that contribute to a more efficient clinical management of patients infected with the virus, and to the public health preparedness and response to

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the outbreak; channelling €2,7 billion to the Emergency Support Instrument for Health Care Sector and €300 million for medical equipment capacity.

Moreover, unprecedented flexibility was granted in European Structural and Investment Funds. Every available euro of the structural funds can be redirected to the response to COVID-19 by allowing transfers between funds, between categories of regions and between objectives making sure that member states can put the money where it is really needed.

Besides this, indirectly, State Aid rules changes are allowing member states to temporarily help their economies. Either through direct grants, tax advantages or advance payments for companies; or to accelerate research and productions of coronavirus relevant products, to protect jobs and to further protect the companies, namely by a deferral of tax payments and/or suspensions of social security contributions or even in the form of wage subsidies for employees. Temporary measures that should not threaten the good functioning of the internal market.

For the unthinkable crisis, the Commission has come up with unprecedented measures, exploring flexibilities and going to lengths it

Margarida Marques MEP - S&D Vice-Chair BUDG, D-CN, DMED, Substitute ECON and DMAG. Member of the EP & negotiating team for the next MFF and Own Resources reform. She is the MFF co-rapporteur.

had never gone before. The European Parliament has been a true supporter of such initiatives and has deployed innovative ways in its working methods for a fast approval of these measures.

What we demand for the next long-term EU Budget is the same: unprecedented capacity enabling the Union to continue to address the current crisis originated in the pandemic, but with a forward-looking perspective. A recovery plan for our economy and citizens which relies in part on the Budget, restoring the full functioning of the internal market and, last but not least, supporting member states to relaunch their economy, rebalance public accounts and manage public debt in consistent manner with the EU’s priorities and objectives of the European Green Deal and the Digital agenda.

That necessarily encompasses a revision by the European Commission of its 2018 Multiannual Framework Proposal, addressing supervening events, not only the pandemics crisis and its effects but also the new European Commission compromises and political program.

As a European answer to the crisis, the next MFF must play a central role in the recovery and transformation of the European Econ-

omy. Financing directly EU programs, supporting the Recovery Fund, and boosting the lending capacity of the EIB and other financial mechanisms. A powerful EU budget is needed so there can be capacity for massive investment. This new budget will necessarily be different because it must initially answer to the Covid19 crisis recovery, and in a second phase, it must fully address the Union’s political priorities.

Such a revised proposal should deserve the commitment of the European Council. Finally, with the consent of the European Parliament, taking fully into account its requests for more ambition, so we can have more Europe, more Union, and more solidarity, but also for new own resources to finance this Union Recovery and the Union Budget, like a plastic or a digital tax.

The solution for our recovery being in the next long term EU Budget also means more transparency, improved accountability and better democracy. Holding institutions democratically elected accountable for their decisions, turning these more transparent.

Overall, the aftermath of this crisis must be a positive one. The outcome for citizens must be more Europe and not less Europe. Even if it might cost more, it is still a low price.

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The next MFF must ensure our prosperity, while meeting the new challenges.

- Valérie Hayer MEP

At a time when the EU is keeping its nose to the grindstone because of the COVID-19 crisis, which is testing its strength and capacity for action, the European Parliament continues to urge the European Council to approach the issue of the 2021-2027 Multiannual Financial Framework (MFF) with a greater sense of responsibility.

The next MFF must rise to the current challenges that have been clearly defined by the new European Commission headed by Ursula von der Leyen. The initial budget proposals by the Commission (under Jean-Claude Juncker’s presidency) and by the President of the European Council deeply underestimate the EU’s financial needs to meet these challenges. Since then, the COVID-19 crisis has hit the continent. We now need an even more ambitious European budget allowing us to relaunch our economies with the establishment of a massive recovery plan, in line with the objectives already agreed.

Brexit has put a strain on the Union’s financial capacities for the next period but should in no way be passed on to traditional policies (CAP, cohesion policy). The European Parlia-

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ment is fighting to maintain the funding of these long-standing policies at the same level as today. But this financial pressure should neither limit our ambitions in other policies nor the scope of the Green Deal. The latter must be able to benefit from the funding needed to implement the necessary and ambitious European ecological transition in order to achieve the objectives of the 2015 Paris Agreement signed by the EU, i.e. to reach carbon neutrality by 2050.

Today, accounting logics prevail in budget negotiations. At the last European Summit in February 2020, whose negotiations were based on the proposal of President Charles Michel (the so-called ‘negotiating box’), a few countries known as the ‘frugals’ (the Netherlands, Austria, Sweden and Denmark) blocked the negotiations by not departing from their initial position (i.e. an EU budget amounting to 1.00% of the EU-27 GDP).

The battle between these countries and the ‘Friends of cohesion’ (the thirteen States that have joined the Union since 2004, as well as Greece, Portugal, Spain and Italy), which took this opportunity to rebrand themselves as

Valérie Hayer MEP - Renew Europe Own resources co-rapporteur and member of the European Parliament Negotiating Team on the next Multiannual Financial Framework

“Friends of an Ambitious Europe”, was hard.

For the ‘frugals’, it was no longer a question of the overall means to be allocated to the Union’s major objectives, but of the amount each State pays or receives from the EU (the so-called juste retour logic). The reason? More than 80% of the European Union budget (amounting to 1 082 billion of euros) is financed by direct contributions from the Member States. Only around 20% is financed by genuine EU’s own resources such as customs duties levied on imports of products (the so-called “traditional own resources”).

These accounting logics are very detrimental to European integration, since they are based on purely national reasoning.

Concerning the next MFF, the European Parliament has already stated that it would not adopt any proposal without real progress on the reform of the financing system, meaning the introduction of new own resources. MEPs propose the creation of new green own resources (a non-recycled plastics contribution, revenues accruing from the Emissions Trading Scheme (EU ETS), or a Carbon Border Adjustment Mechanism) as well as new own resources related to the single

market (a Financial Transaction Tax (FTT) at the EU level, a taxation of companies in the digital sector and a Common Consolidated Corporate Tax Base (CCCTB)). These new own resources should not be seen as additional constraints, but as new solutions so as not to increase the financial pressure on the Member States.

The lively debate on the EU budget is now spreading over the whole press around the continent following the coronavirus crisis. If we establish a new “Marshall Plan” for economic recovery, how to finance it? To solve this issue, I firmly believe this extraordinary event requires breaking several taboos, such as the introduction of a common debt instrument. The European Commission will soon revise its proposal; we urge it to be bold, for the sake of our prosperity and new growth model.

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The MFF as a real Marshall Plan, not just a lip service.

- Rasmus Andresen MEP

Europe is facing multiple crises.

We are dealing with a worldwide health emergency, which is expected to trigger the biggest economic crisis since WWII.

At this point we don’t know if the Commission will propose fresh money for the different programmes or new instruments like giving guarantees to the Member States through the European budget.

A huge climate crisis is still ahead of us.

We Greens believe that we need both.

We need economic common European measures fitting these crises.

We need to make sure that the new MFF is not just a copy-paste version of the last Commission’s proposal with a facelift and neither an accommodation of the last proposal of Charles Michel in order to keep the Frugals on board. We need more. For this, we need to think out of the box.

Beside strong regulations and the development of European innovations, we need economic tools fitting the challenges ahead.

Commission’s President Ursula von der Leyen has recently announced that the European Union needs a Marshall Plan in order to overcome the Corona-crisis and its economic effects.

The Vice President Valdis Dombrovskis, responsible for the economy, wants to trigger 1,5 trillion Euros in investments to boost our common European economy.

For solving the big conflict about Coronabonds the Commission is working on strengthening the new Multiannual Financial Framework (MFF).

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Here are some things to consider: 1. We are already very late in our timeline.

A political agreement between the institutions (preceded by an agreement between Member States) would have to come soon, then negotiations with the Parliament and so forth. It gets less and less likely that there will be a ready and gift-wrapped MFF for the European Union by the end of this year. We need a preliminary solution for the year 2021 in order for the programmes to be continued. The European Parliament has been asking the Commission since October 2019

Rasmus Andresen MEP - Greens/EFA BUDG, D-CA, Substitute ITRE, IMCO and D-US. Member of the EP’s negotiating team for the next MFF and Own Resources reform.

to be ready to prepare a contingency plan in case the negotiations fail until the end of 2020. Now, with the Corona-crisis things are getting more complicated and much more urgent. The Commission has to do their homework. We need a strong response to the Corona crisis.

Instead of a normal MFF starting in 2021, it makes sense to agree on a contingency/urgency response package starting with a Draft Amending Budget with fresh money already for this year and a package to follow up for 2021.

We need more spending on research programs and health care on the European level.

2. We need to combine the MFF with an adequate crisis response. Call it Marshall-Plan or recovery measures; the MFF has to include a big investment stimulus package for the next two years. It can be a prolongation of the current MFF, but with massive new investments partly from the European Budget as well as some debt instruments like giving guarantees to the Member States as some Commissioners are already testing in public.

3. We need a strengthened long-term budget. Our Marshall Plan for rebuilding our economy, fighting poverty and becoming

climate neutral is the Green Deal. It is a program for a century.

We need to make sure that the MFF is aligned with the Paris Agreement, as the European Parliament has been demanding.

We need to make the European budget more independent from the Member States. So that we can react much faster on pandemics like Corona. The tools are strong flexibility instruments, Own Resources and a strengthened European Parliament in the budgetary process.

We would like to strengthen research and public authorities like the European Disease Prevention Centre.

We want to make the Union fit for future crises.

Europe can‘t continue as it has been before Corona.

We Greens are fighting for a strong European budget and a strong Union.

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The next EU Budget - a key tool in bringing the union back into shape - Siegfried Muresan MEP Amidst uncertainty and instability brought about by the coronavirus crisis, we must not hesitate to act to save lives and help our economies bounce back into shape. One of the main tools to contribute to the recovery of the EU is the next Multiannual Financial Framework (MFF). The next EU Budget is part of the solution to this crisis and must be planned accordingly to support our citizens and industries.

As we currently find ourselves in the process of adopting the next MFF, the European Parliament (EP) will continue to play a constructive role during the negotiations, always keeping in mind the current situation, the promises we made to our citizens, and the political priorities the European Commission undertook at the beginning of its mandate.

The truth is that the EP has been ready for two years already to negotiate with the European Council an ambitious and suitable EU Budget. But the vision of the next MFF of these two institutions could not be more divergent. The EP built its proposal following a bottom up approach, prioritising research, innovation, digitalisation, education and cohesion policies, among others.

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Where the Council cut Erasmus scholarships, the EP added more. Where the Council reduced the amounts for EU farmers, the EP allocated enough money to ensure we can still produce quality food. Where the Council slashed cohesion funds, the EP allotted sufficient resources to reduce the gap between our regions from which benefits the whole Europe, not just a few.

All in all, the EP’s request to allocate 1.3% of GNI for the next financing period is realistic and necessary. The Council’s refusal to finance its ambitious political priorities with enough money was deceiving to our citizens and disappointing for the future of the Union.

Today, we are in a different situation that requires even more funding. On top of previous political priorities, we must ensure enough funds to help the economic recovery after the current pandemic. But until we have further predictability and an exact picture of the actual effects of this crisis, the European People’s Party is proposing to put in place an “emergency budget” for at least the year 2021. Such a budget will give us room to speed up the recovery and decide responsibly on the next 2022 MFF.

Siegfried Muresan MEP - EPP Vice-Chair EPP, BUDG, Vice-Chair D-MD, CPDE, ECON, DEPA, Substitute D-US.

An “emergency budget” would have to adapt slightly to the current programmes in order to better address the current crisis. For example, research should focus more on health-related issues, while investments in infrastructure should better address the lack of medical facilities in the EU. In addition to this, the next MFF should have sufficient margins of manoeuvre to allow us to tackle unforeseen events such as the current pandemic. We should also have at our disposal sufficient investment means to recover from the current crisis, but also to ensure that our healthcare systems will better endure the next one, whenever it will arrive.

As always, the EPP thinks ahead and included in its proposal on the coronavirus crisis an initiative to create an EU Coronavirus Solidarity Fund, of which I am happily the author.

The first pillar will provide €20 billion in grants to reimburse part of the costs incurred by the Member States, particularly by the healthcare systems and crisis management systems, during this emergency. It would be constituted outside the ceilings of the MFF. The second pillar will provide €30 billion in loans to invest in strengthening the healthcare sectors of the Member States and make them more resilient to future crises. The EU Budget would guarantee the loans.

We owe our citizens strong and modern healthcare systems across the EU capable of coping with pandemics. We also owe our citizens a modern, adequate and capable budget. Experience has taught us that when we pull our resources and act together, we are an unbeatable force. This is the time to keep in mind our successes and act again responsibly to deliver an EU budget suitable for our times.

The Fund would make available €50 billion to all member states as of the beginning of 1 January 2021, the start of the seven-year EU budget. It would be based on two pillars: €20 billion in non-reimbursable grants and €30 billion in loans available to all EU member states, all-accessible within two years.

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European Movement International The European Movement is the largest pan-European network of pro-European organisations. It is present in 34 countries and encompasses 38 International Associations, bringing together European civil society, business, trade unions, NGOs, political parties, local authorities and academia.

Founded 70 years ago, we have continuously advocated in favour of European co-operation and integration, based on the principles of peace, democracy, liberty, solidarity, equality, justice, the respect for human rights and the rule of law.

What We Do Today, the European Movement seeks to provide a platform to encourage and facilitate the active participation of citizens and stakeholders from a cross-section of sectors in the development of European solutions to our common challenges. We offer thought leadership on the issues that confront Europe; we seek to inform the debates on our Union’s future, involve citizens and stakeholders in the decisions that affect them and influence policy-makers in favour of an open, inclusive, transparent and united Europe.

The European Movement aims to be the place where civil society, business, trade unions, NGOs, political parties, local authorities and academia come together to craft a way forward for the European Union. We seek to develop new ideas to address the challenges we face, be it economic or political. We want to spark debate on the EU’s architecture and develop forward-looking proposals on how to govern our affairs at the European level.

Our members are engaged in the daily business of influencing policy-making in the areas that affect them. The European Movement is the place where they have the opportunity to discuss the bigger issues, with organisations representing other parts of society, and allow them to shape the debate on the future of Europe.

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