Draft EU Budget 2021 - Questions and Answers - Main contents
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1.What are the priorities of the draft budget for 2021?
The EU budget is the centrepiece of the European Union's Recovery plan, which aims to get Europe back on its feet. The budget for 2021 seeks to address the immediate economic and social damage brought by the coronavirus pandemic, kick-start a sustainable recovery and protect and create jobs. This means tangible help for people in need, support for companies and hard-hit sectors, reinforcement of the single market and assistance for regions and Member States.
The combined EU budget and Next Generation EU €378 billion funding with approximately €133 billion additionally in loans will help rebuild and modernise our continent, in the spirit of the green and digital transitions, making sure we create a stronger and more resilient European Union and strengthening Europe's role in the world.
In parallel, the EU budget will continue to support Europe's long-standing priorities, which are even more relevant than before for a sustainable recovery. The European Commission therefore remains committed to the six headline ambitions set out by President von der Leyen: the European Green Deal; a Europe fit for the digital age; an economy that works for all; promoting our European way of life; a stronger Europe in the world and a new push for democracy. The budget for 2021 will enable the European Commission to deliver on these priorities.
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2.How does the draft budget for 2021 relate to Next Generation EU?
Next Generation EU will give the EU budget the additional firepower necessary to respond decisively to the urgent challenges ahead of the EU brought about by the coronavirus pandemic and its consequences. It is being put in place for a temporary period (up until the end of 2024) to be used exclusively for crisis response and recovery measures. The funds it will generate will be channelled through the EU budget to support investment and reform priorities, and will reinforce programmes that are key to the recovery. It will also fund actions to build resilience for the future, through, for example, a new Health programme and an enhanced EU Civil Protection Mechanism, RescEU.
To finance Next Generation EU, the Commission has proposed to borrow up to €750 billion (2018 prices) on the markets to secure additional financing for the coming years until 2024. The funds will then flow back to the EU budget as an external assigned revenue and will be used to finance the recovery.
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3.Why do the numbers for Next Generation EU in the draft budget differ from the numbers announced at the end of May 2020?
At the end of May 2020, the Commission put forward a proposal for temporary recovery instrument Next Generation EU together with a revamped long-term budget 2021-2027.
As a general rule, the ceilings of the multiannual financial framework are defined in constant 2018 prices. The Commission made its proposals both for Next Generation EU and for the next long-term budget on that basis. In parallel and for transparency, the Commission published its proposals in both 2018 and current prices.
The annual budget is always calculated and presented in current prices. In this way, beneficiaries get a better idea of the available funding in a given year. This is why the 2021 proposal, including the contribution of Next Generation EU, are being put forward in current prices.
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4.What are commitments and payments?
Commitments are the total volume of promises for future payments that can be made in a given year. Commitments must then be honoured with payments, either in the same year or, particularly in the case of multi-annual projects, over the following years.
Payments are the actual money paid in a given year from the EU budget to cover commitments of current and previous years.
For instance, when the EU decides to co-fund the building of a bridge, the total amount which the EU agrees to cover is a commitment. The bills for the work done are the payments that are spread over the coming years in line with the implementation life cycle of the project. The commitment is made in year X. The payments from the EU budget may follow in the same year X, but also in year X+1, X+2, X+3, etc.
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5.What is an external assigned revenue?
The EU budget is governed by the principle of universality. This means that there is no direct link between the source of the revenue collected and the expenditure that it finances.
There is an exception to this rule and this is assigned revenue, meaning specific revenue, which is collected to finance specific expenditure.
The types of existing external and internal assigned revenue are listed in Article 21 of the Financial Regulation, the rules according to which the EU budget is spent.
To finance the investment under Next Generation EU, the Commission has proposed to increase the headroom of the EU budget and to borrow funds on the markets. The borrowed funds will flow back to the EU budget as external assigned revenue and be used to finance the recovery through a series of predefined EU programmes.
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6.How does the Commission make a proposal for the draft budget in 2021 if there is no agreed budget for the seven-year period 2021-2027?
The Commission has a legal obligation to present a proposal for the annual budget of the following year by 30 June of every year. This obligation also holds for the first year of the next long-term financial period.
The Commission is therefore delivering on this obligation and putting forward its draft for a 2021 budget. It is based on the proposal for a revamped long-term budget and Next Generation EU as presented on 27 May 2020.
Once the European Parliament and the Council agree on the MFF 2021-2027, including Next Generation EU, the Commission will adapt its proposal accordingly through an amending letter.
It is our goal to have all programmes up and running as of 1 January. A swift and comprehensive agreement on the MFF and recovery package by the European Parliament and the Council will pave the way for a smooth adoption of the 2021 budget, so that both the long-term and the annual budgets can be in place and the new programmes can be ready to function in time.
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7.When will the funds under Next Generation EU become available?
Some key measures to be financed under Next Generation EU - such as the increased support to Member States and Regions most affected - need to start as soon as possible because citizens and companies are relying on the EU's support to get back on their feet.
To unlock €11.5 billion of investments already in 2020, the Commission has proposed an amendment to its budget for 2020, via Draft Amending Budget 6, together with targeted amendments to its current long-term budget. This Draft Amending Budget is now to be agreed by the European Parliament and the Council and then swiftly implemented.
The full proposal for a revamped EU budget and Next Generation EU should be up and running and supporting Europe's recovery on 1 January 2021. The Commission is working hard with the European Parliament and with Member States in the Council towards this objective.
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8.What happens next?
The European Commission submits the draft 2021 EU budget to the European Parliament and the Council which together take the final decision.
A specific Conciliation Committee is convened, usually in late autumn, to reconcile the positions of the Parliament and the Council. It has to agree within 21 days on a common budget, which both institutions should afterwards approve. This year, the period runs between 27 October and 16 November.
In the meantime, negotiations on the revamped long-term budget and Next Generation EU continue. The Commission will adapt its proposal for a 2021 budget following the agreement by the European Parliament and the Council.
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