EU Commission Outlines Spending, Policy Priorities for Post-2020 Period

3 May 2018
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The EU’s executive arm unveiled on Wednesday 2 May its proposed multi-annual budget for the bloc, calling for greater spending on climate action, cuts to agricultural domestic support, and funds for supporting the EU’s Economic and Monetary Union, in a plan that is meant to be indicative of the EU Commission’s policy priorities for the post-2020 period. 

The proposed budget would be in effect from 2021 through 2027, and calls for setting the bloc’s expenditures to €1.279 billion at current prices, when also considering inflation. Also notable in this budget is that it would apply after Brexit takes effect, and also after the planned post-Brexit transition period draws to a close on 31 December 2020 – meaning that the bloc will not have the UK as a budgetary contributor. 

“With today’s proposal we have put forward a pragmatic plan for how to do more with less. The economic wind in our sails gives us some breathing space but does not shelter us from having to make savings in some areas,” said EU Commission President Jean-Claude Juncker. 

The Commission’s proposal is just one step in a much larger process, as EU member states jockey for position and resources in a negotiation that has historically been challenging. Commission officials have called for wrapping up these talks, which occur under the Council, by May 2019, warning that prolonging the process could hurt the implementation of important policies and programmes. 

In the meantime, the Commission is due to release a series of proposals that would outline in more detail how this “multi-annual financial framework” will affect different sectors. For example, proposals on the bloc’s Regional Development Fund and Cohesion Fund are due by 29 May, while those for the Common Agricultural Policy, European Maritime and Fisheries Fund, and the Single Market Programme are all due in early June, to name a few. 

Commission officials have dubbed it an “EU Budget for the Future,” with Juncker and others flagging the intended alignment with the executive branch’s “thematic priorities.” They have also stressed the budget’s potential to meet the specific needs of a post-Brexit EU bloc, and the importance of preparing for future financial crises, should they arise. 

For example, the budget makes reference to some of the bloc’s economic priorities, such as its single market as well as its Economic and Monetary Union. For the latter, the Commission aims to set up a funding mechanism that would help make sure that investment flows do not take a hit during periods of economic “shock,” among other measures aimed at making it easier for member states who do not use the euro to adopt it. 

Climate budget

Among the proposals is an increase in how much of its spending goes towards meeting climate-specific goals, such as putting into action the UN’s Paris Agreement on climate change. The EU’s executive arm is suggesting that 25 percent of the budget go towards “climate mainstreaming across all EU programmes,” up from the current 20 percent. 

“At least 25 percent of the EU budget should be devoted to climate action,” said Maroš Šefčovič, the EU Commission Vice-President for the Energy Union. “By strengthening this link, we’re taking a strategic approach – to live up to our commitments under the Paris Agreement and to accelerate an unprecedented modernisation of the entire EU economy.” 

While the Commission says that climate considerations will feature throughout EU programmes, including on farming, details on how this spending might be allocated or counted in practice were not immediately clear. The EU’s executive branch will also outline towards the end of the year how they intend to ensure that the bloc is doing its utmost to meet the UN’s Sustainable Development Goals (SDGs), given that the new proposed budget would apply through 2027 – three years before the overall deadline of the 2030 Agenda for Sustainable Development. 

Along with pledging to boost climate-related expenditures, the Commission also indicated some plans specific to the EU’s Emissions Trading System (EU ETS), the bloc’s flagship carbon emissions reduction policy. Specifically, they have factored in the revenues of the EU ETS as a source of resources for the bloc’s long-term budget. They suggest using 20 percent of the money generated under the ETS for doing so, and have also suggested that additional revenue could come from member state contributions tied to un-recycled plastic packaging waste, with countries paying a fee per kilo. 

Agricultural spending cuts

The budget also foresees cuts in spending to the bloc’s Common Agricultural Policy (CAP) to the tune of five percent. The news comes as the EU institutions prepare for negotiations on setting out the terms of a new CAP, which is also due to take effect from 2021 onward. 

The Commission has already laid out some markers of what a post-2020 CAP could look like, along with holding a consultation on the subject. The current version of the bloc’s CAP is in place through 2020, having taken effect from 2014. The CAP governs the bloc’s agricultural spending. 

According to the Commission, current CAP spending should hit €408.31 billion for the 2014-2020 period, making up a hefty portion of the bloc’s budget at just under 40 percent. 

The budget proposal released on Wednesday indicated that the Commission would like to see some specific changes in the structure of agricultural spending, namely in terms of better incorporating climate and environmental considerations, as well as making it easier for member states to transfer funds from different priorities as needed. 

“Under the new rules, member states will be given more responsibility for making the best use of the agriculture budget. They will have more flexibility than today to shift funds between direct payments and rural development, in line with national needs and targets,” the Commission said in a budget fact sheet

EU Agriculture Commissioner Phil Hogan credited part of the CAP cuts to Brexit, given that the UK will no longer be paying into the European budget at that stage. 

“I have been honest and direct with farmers, making it clear to them that the combination of Brexit and the €12 billion hole it is blowing in the overall European budget, combined with the growing priority of other issues such as security, migration and defence, meant a cut to the CAP was going to be very hard to avoid,” Hogan said on Wednesday. 

“I regard this as a very fair outcome for our farmers, given the very challenging circumstances in which the budget has been framed. Moreover, it vindicates the argument I have been making that the CAP needs to be adequately funded to support farmers and the wider agri-food sector,” he added, devoting much of his statement to what the new budget will mean in terms of direct payments for farmers and rural development efforts. 

ICTSD reporting.

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