MFF in numbers: How the EU would spend €2 trillion

The European Commission proposed the largest long-term EU budget in the bloc's history Wednesday, merging historically separate farming and regional spending programmes into country-specific national plans and creating a €451 billion fund to boost ailing industry.

Brussels' proposed post-2027 Multiannual Financial Framework (MFF) will amount to €1.98 trillion, or 1.26% of the bloc's gross national income (GNI), Ursula von der Leyen told reporters. This is well above the current budget, which was pitched at 1.11% and negotiated to 1.05% GNI.

"The next MFF will be the most ambitious ever proposed. It is more strategic, more flexible, more transparent, and we're investing more in our capacity to respond and more in our independence," von der Leyen said.

In reality, €165 billion of the total is dedicated to debt repayments for the bloc's pandemic recovery fund, meaning the budget amounts to just €1.82 trillion, or 1.15% of GNI.

CAP and the EU’s Cohesion Policy, which promotes development in poorer regions, have historically each consumed a third of the EU budget. In a radical overhaul, 27 “national and regional partnership plans” would replace more than 500 current programmes, EU Budget Commissioner Piotr Serafin said. The plans collectively amount to €865 billion, or less than half of the total budget.

Yet more controversial, the Commission proposed a 30% cut to support for farmers via the Common Agricultural Policy (CAP).

Already, farmers are protesting in Brussels, threatening escalating demonstrations if the EU moves ahead.

"The goal of the next MFF is a modern, more flexible budget," Serafin said. 

"You will see that reflected in overall figures, in new spending categories, and in the changes we have made to the structure and principles of the budget."

A much-vaunted Competitiveness Fund (ECF), which would “crowd in” hundreds of billions of euros of private investments in strategic sectors, will also merge as many as twelve distinct initiatives to bolster the EU’s beleaguered industry and prevent the bloc from falling further behind China and the US, he added. 

The ECF would receive €410 billion from the budget, and €41 billion from the Innovation Fund, which uses carbon levies (EU ETS) to pay for clean tech investments.

Von der Leyen`s industrial policy fund will subsume the EU’s flagship research programme, Horizon Europe, despite von der Leyen promising that it will remain outside. It is valued at €175 billion.

The third pillar of the Commission’s proposed budget centres on a new €200 billion “Global Europe Fund”, which will combine previously separate programmes and allocate funds across six regional envelopes, including enlargement and foreign policy initiatives.

Outside the budget, the Commission will propose a €100 billion Ukraine fund to cement long-term backing for Kyiv, and with large loan mechanisms for added flexibility.

Breaking it down

Competitiveness: The €589 billion for competitiveness is a whopping effective increase of €411 billion. Of this, the Connecting Europe Facility, which funds energy and transport infrastructure, is effectively increased by €60 billion and the ECF soaks up the rest, including a €79 billion effective increase of Horizon.

Foreign Policy: The €215 billion is an effective increase of €94 billion.

CAP: The proposed €302 billion (including a €6 billion buffer from the Europe Facility) for CAP is an effective cut of €119 billion, or 28%, compared to the current budget.

Cohesion: The proposed €453 billion budget is €28 billion higher than the adjusted cohesion budget in the current MFF, but is likely a big cut in practice, given that the cash pot could also be used to replace the scrapped regional part of CAP, support fishermen, and more. Only €218 is ring-fenced to support poor regions.

Alexandra Brzozowski contributed to reporting.

UPDATE: This article has been updated to reflect the new numbers.

(mm, cp)