This policy paper aims at presenting the general position of the S&D Group on the next Multiannual Financial Framework post 2020. It is neither intended to define the budgetary dimension nor the framework of sectorial policies. It does not concern the capacity of the euro area, as this is outlined in the S&D position paper on the Economic and Monetary Union (EMU). It refers to, but does not define our guidelines on the reform of the own resources system which is being addressed in the S&D position paper on the reform of the Own Resources system.
Where do we stand?
In two years' time, a new Financial Framework will shape the budget of the Union. A debate on the future financing is impossible without taking into account the balance sheet of the Multiannual Financial Framework (MFF) for 2014-2020. The fragile state of the EU's finances today reflects its current political shortfalls. The Union's finances are characterised by several structural failings and weaknesses, such as the €25bn of unpaid bills in 2 014 or the multiplication of external funds, as well as underfunding due to the lack of resources.
The S&D Group has been raising these issues for years, but the situation has dramatically deteriorated since the onset of the economic and financial crisis in 2009, the year in which a series of challenges, transformations and crises emerged and could not be resolved due to the EU’s lack of resources and its dramatic underfunding. In order to tackle this severe underinvestment, Europe had to settle for a guarantee fund and accept that the funding of flagship programmes, including in the area of research and innovation, had to be reduced in order to finance it. The growing socioeconomic cleavage between the EU’s political centre and its peripheral regions, the high level of youth unemployment, the refugee and migration challenges, the need for development aid, the fight against terrorism and increased border controls - all these issues were not foreseeable when the current MFF was negotiated in 2013. They all required new funding, budgetary cuts or new financial instruments, and the midterm-revision of the MFF was acutely necessary to cope with these challenges.
Besides the lessons learnt from the stock-taking exercise, the future MFF should build upon an agreed common strategy at the European level in line with the UN sustainable development goals and the Paris Agreement. The next MFF must be reoriented towards the obligation to align the EU’s budgetary framework with the SDGs and the Paris agreement.
The discussion on the MFF post-2020 must be led firstly by political priorities and only secondly by a discussion on the overall level of financing. The fight against youth unemployment, climate change and its consequences for the energy policy, as well as transformations in numerous sectors, such as digitalisation, the food industry, work patterns, geopolitics and its consequences for the defense policy, a deteriorating socioeconomic situation in the EU’s peripheral regions, the budgetary impact of Brexit - all these issues are enormous challenges that cannot be addressed with the current level of EU funding. Those Group’s priorities should be reflected in the EU budget. Thus, the S&D Group is committed to fight for an ambitious EU budget with a higher Multiannual Financial Framework. The current 1% of the EU’s Gross National Income (GNI) ceiling for expenditure of the EU budget, which is far too low, must be broken and has to be significantly increased to at least 1.3% of the EU GNI. This percentage is the logical consequence and a moderate and reasonable calculation of future EU priorities.
Furthermore, the introduction of new EU own resources remains the only option for adequately financing and to reach an ambitious next MFF. The higher the revenues through real own resources are, the less dependent the EU is on contributions by the Member States such as the GNI own resource. Therefore, the next MFF and the introduction of new EU own resources need to be negotiated and agreed in parallel.