What was proposed?

The Commission is proposing to increase the budget to €1.82 trillion covering the 7 year period. The budget is funded by Member States and the budget proposed is equivalent to 1.26% of the EU’s Gross National Income (GNI). The current budget is €1.2 trillion, equivalent to approximately 1.0 % of GNI.

Commission President, Ursula Von Der Leyen, argues that the increased budget is needed “to confront Europe’s challenges and that strengthens our independence”. However, fiscally prudent countries can be expected to oppose the level of increase sought, with the Dutch government first to say the proposal is unacceptable.

What about agriculture?

In the lead-up to the budget proposal, Copa Cogeca and other agrifood sector organisations had been lobbying about two main issues:

1. An increase in the CAP budget that recognises the future challenges facing farmers
2. Maintaining a ring fenced CAP budget.

The Commission proposal for agriculture includes the following:

1. A budget of €300 billion for the 7 year period. The current budget is circa €387 billion, so a cut of around 20%, and much higher if adjusted for inflation.
2. The CAP budget will be included within a broad heading of the budget National and Regional Partnership Fund (NRPF) that includes cohesion funding, fish and other regional policies administered by EU countries. The CAP fund is ring fenced within that heading and Member States can choose to allocate additional funds to agriculture from within the NRPF or to top-up with national money.

Overall reaction has been extremely negative from the agricultural sector regarding the budget cut, and there are serious concerns that the nature of the ringfence arrangement will lead to disparities in the resources made available to farmers depending on ability/willingness to pay more.

What does the CAP budget cover?

We understand that the €300 billion is intended to include degressive area-based income support, coupled support, crop specific payment for cotton, payment for natural and other area specific constraints, support for disadvantages resulting from certain mandatory requirements, agri-environmental and climate actions, support for small farmers, support for risk management tools, support for investments for farmers and forest holders, support for young farmers/new farmers etc. It also includes a doubled agricultural crisis reserve of €900 million a year (€6.3bn over the 7-year period). The two pillar structure for the CAP will be dismantled.

What is the structure of the overall budget?

The Commission has proposed a “simplified” structure for the future budget with resources allocated across three main activity headings with a fourth heading covering expenditure for European public administration. The headings are

• Heading 1: National Regional Partnership Fund - €865 billion (including €300 for CAP)
• Heading 2: European Competitiveness Fund and Horizon Europe - €589 billion
• Heading 3: Global Europe - €215 billion
• Heading 4: European Public Administration.

Next steps

The decision on the future long-term EU budget and revenue system will be discussed by Member States in the Council. Adoption of the MFF Regulation requires unanimity, following the consent of the European Parliament. This will likely be a long and hard negotiation with EU countries balancing national spending with the wish to extract the maximum level of EU resources for their own priority areas.

Further information about the MFF can be found here.