1 Lars Jorgen MAGNUSSON Senior Administrator External Actions DG Budget EU budgetandFinancial ProgrammingLars Jorgen MAGNUSSONSenior AdministratorExternal ActionsDG Budget
2 EU: 28 Member States with nearly 500 million inhabitants
3 European Court of Auditors EU InstitutionsEuropean CommissionCouncil of theEuropean UnionEuropean ParliamentEuropean Court of AuditorsCourt of Justice of theEuropean Communities33
4 EU Budget Section I – Parliament Section II – Council Section III – CommissionSection IV – Court of JusticeSection V – Court of AuditorsSection VI – Economic and Social CommitteeSection VII – Committee of the RegionsSection VIII – European OmbudsmanSection IX – European Data Protection SupervisorSection X – European External Action Service (EEAS)– 95% of the EU budget – goes to fund concrete activities ("operating appropriations") is paid out by the Commission (Section III).
6 Legal framework and regulations EU Treaties set out basic principles, budget procedure, general goals of policiesMultiannual financial framework regulation with a duration of at least five years establishes annual upper limits (known as ‘ceilings’) per headingOwn resource decision determines what and how much to collect - financing mechanisms and revenue limit (‘own resource ceilings’)Financial Regulation specifies the rules of spending and financial management
7 Multiannual Financial Programming Multiannual Financial Frameworks (MFF), , 2014–2020The MFF translates into financial terms the Union’s political priorities for a given periodDivides the expenditure to categories (headings) and provides the general framework (ceilings) to be respected in annual budgetsDefines the maximum amounts of money to be spent during the period and in each budgetary year in:commitment appropriations: legal pledges to provide finance, provided that certain conditions are fulfilledpayments: cash or bank transfers to the beneficiaries
8 Annual budgetary procedure In the Treaty of Lisbon, the budgetary procedure has been improvedThe "Multiannual Financial Framework" becomes legally bindingThe European Parliament decides on an equal footing with the Council
10 Who manages the EU budget? Executive agenciesCentralisedJointInternational OrganisationsSharedMember StatesDirectIndirectDecentralisedThird CountriesCommunity agenciesSpecialised Community bodiesEIB & EIFNational agencies
11 Who manages the EU budget? The bulk of EU expenditure is managed jointly betweenthe Commission and the Member Statesunder the so calledshared management22%76%2%
12 Accountability and external control Transparency in the use of funds: recipients of all EU funds disclosed, e.g. Through Financial Transparency SystemReporting: Commission publishes annual accounts of the EUExternal control: European Court of Auditors annual reportPolitical accountability: EP gives discharge
14 EU Budget 2013 For 500 million Europeans For growth and employment
15 EU budget 2013 in figures Budget headings Sustainable growth 67.5 2013*Change from 2011Sustainable growth67.54.7 %a) Competitiveness for growth and employment14.89.1%b) Cohesion for growth and employment52.83.5 %Preservation and management of natural resources60.02.2 %Citizenship, freedom, security and justice**2.110.9%The EU as a global player***9.47.4 %Administration8.31.3 %Total147.2(*)Expenditure estimates for EU policies in commitment appropriations (billion EUR)(**) Excluding the European Union Solidarity Fund.(***) Including the Emergency Aid Reserve.
16 Reflecting Europe 2020 priorities Balancing austerity and growth-boosting measuresThe 2013 EU budget looks to the futureInnovation UnionEUR 23.0 billionYouth on the moveEUR 1.4 billionA digital agenda for EuropeEUR 2.4 billionA resource-eficient EuropeEUR 22.1 billionAn industrial policy for the globalisation eraEUR billionAn agenda for new skills and jobsEUR 9.5 billionEuropean platform against povertyEUR billion
17 Sustainable growth2nd column: Budget 2013, expenditure estimates for EU policies in commitment appropriations (billion EUR)3rd column: Change from 2011
18 Natural resources2nd column: Budget 2013, expenditure estimates for EU policies in commitment appropriations (billion EUR)3rd column: Change from 2011
20 The EU as a global player (2) Including the Emergency Aid Reserve
21 Administration5.6 % of the EU budget is planned to cover the functioning of all the EU institutions, compared to 5.7 % in 2011Major reform of administration which saved the EU taxpayers EUR 3 billion.The Commission has maintained the policy of 0 % staff growth.The rest of the 2013 budget (94.4 %), is directed to Union programmes and operations in favour of Europe’s regions and towns, business, scientists, citizens and the EU’s actions in the world
25 MFF ChallengesExceptional Lisbon Treaty: more responsibilitiesAusterity climateFinancial crisis interventionsEnsure synergies to prove EU Value-addedSocial, economic and territorial disparitiesConnect Europe better to strengthen the internal marketUnstable neighborhoodMORE EUROPE FOR THE SAME MONEY!
26 Responses European logic fully geared to Europe 2020 strategy Modernised budget, output oriented, simplification, conditionality, leveraging investment:Connecting Europe Facility and innovative financial instrumentsKey changes in research, cohesion, agriculture, external actionLimited in size, but redesignedBudgetary rigour, administrative limitsSavings in some areas and more for areas that matterMulti-purpose expenditureNew legitimacy of traditional policiesReformed financing system:New Own Resources linked to EU policiesRelief on Member States budget (via reduced contributions)Simplification of existing correction mechanisms
31 Commission’s proposal* Outside the Multiannual Financial Framework (EU 28)EUR million – 2011 prices*29/06/ COM(2011)500 final, page 5
32 Despite restraint – significant re-distribution in key policy areas EUR billioncommitment appropriations
33 Ambitious, but realistic… EUR billioncommitment appropriations
34 Development of the Common Agricultural Policy and Cohesion policy share in the EU budget
35 Cohesion policy Common strategic framework for all structural funds Investment partnership contracts with Member StatesStronger conditionalityConcentration on poorer and weakest regionsThematic concentration
36 Connecting Europe Connecting Europe Facility 40 EUR billion Energy, transport and digital networksCross-border multi-country investments to the benefit of internal marketStrong co-ordination with cohesion policyProposed use of EU project bonds
37 Cohesion policy proposal Multiannual Financial FrameworkEUR billion pricesCohesion Fund*68.7Less developed regions162.6Transition regions39.0More developed regions53.1Cooperation11.7Extra allocation for outermost and northern regions0.9Total **336.0*Cohesion Fund will earmark 10 billion EUR for the new Connecting Europe Facility** ESF minimum share: 25%
38 New architecture of cohesion policy Three categories of regionsLess developed regions (GDP per capita < 75% of EU average)Transition regions (GDP per capita between 75% and 90%)More developed regions (GDP per capita > 90%)Cohesion Fund for Member States with GNI per capita <90%Territorial cooperation (3 strands: Cross-border Cooperation, transnational, interregional)
39 Agriculture Declining share in the EU budget until 2020 Greening of CAP - direct aid 30 % linked to environment measuresProgressive convergence of direct support towards EU average:Close 33% of the gap with 90% of EU averageFinanced by all Member States above the averageMarket measures: Emergency MechanismEuropean Globalisation Fund to help farmers adapt to globalisation
40 Administrative expenditure Budget under restraintStaff reduction up to 5%Efficiency gains (increase working hours to 40 a week)Reviewing certain benefits in line with similar trends in Member StatesAdministrative expenditure discipline for all EU institutions
42 … in other words considerable evolutions in EU financing OR now mainly based on 'statistical aggregates' (GNI and VAT-based OR = 85%)contributions seen as “expenditures” to be minimized by Member Statespermanent tension on EU financingdevelopment of corrections and focus on "allocated" expendituresown resources disconnected from EU policiesin times of budgetary consolidation, necessity to find new ways to finance the budget
43 A new own resources system Commission proposalEnd current statistical VAT own resource as of 2014Introduce 2 new own resourcesFinancial Transaction TaxNew VAT resourceRadically simplify the system of corrections
44 EU taxation of financial sector Commission proposalIntroduce Financial transaction tax (FTT) from 1/1/2018 at the latest.Applicable tax rates to be set at the moment of legislative proposal (Autumn 2011)AdvantagesContributes to budgetary consolidation of Member States by reducing their contributions to the EU budgetSupport in European Parliament, national parliaments, NGOs and public at large (Eurobarometer: 61% in favour and 50% or more in 20 Member States)FTT more efficient at EU than at national level
45 New VAT resource Commission proposal Advantages New VAT resource from 1/1/2018 at the latest.Proposed rate: 1 %AdvantagesLink EU VAT policy and EU budgetPart of wider revision of VAT systems: fight against VAT fraud and reinforce harmonisation of VAT systems
47 Correction mechanisms Commission proposalReplace all corrections mechanisms by a system of fixed annual lump sums forBased on Fontainebleau principle:"any member State sustaining a budgetary burden which is excessive in relation to its relative prosperity may benefit from a correction at the appropriate time."AdvantagesFairness – lump sums based on relative prosperitySimplicity and transparencyLump-sum corrections aligned with expenditures (same duration as MFF)
48 Corrections lumpsum GROSS AMOUNT DE 2500 NL 1050 SE 350 UK 3600 TOTAL AnnuallumpsumGROSS AMOUNTDE2500NL1050SE350UK3600TOTAL7500(in million of euro/ in currentprices)LUMPSUMS ADJUSTED FOR RELATIVEPROSPERITY
49 The EU Budget is unique, not comparable to any other government or federal budget. Financed by the Traditional Own Resources (customs duties; Value added tax (VAT) and a MS contribution based on the size of their Gross National Income (GNI).Revenues are used to finance activities of common interest to all MS, as specified in the Treaties.The overall amount of the EU Budget is limited by a ceiling, currently 1.23% of the Union's GNI.The Budget can not run a deficit, i.e. payments must match revenues in any budget year.Commitments are programmed in advance in the Multi-annual Financial Framework (MFF).Result - Little room to manoeuvre and a budget relatively well "protected" against fiscal disruptions.
50 Further information on: Financial Programming and Budget website:MFF website:Thank you !