1. The Multiannual Financial Framework 2014-2020
Tamás Deutsch
Member of the European Parliament
Területfejlesztési konferencia és tematikus műhelymunka
25 April 2013

2. The views of EU institutions
July 2010: SURE, the EP’s special committee on policy challenges was set up to prepare the EP’s view on MFF;
8 June 2011: SURE accepts its report on MFF;
The very 1st time that the EP came up with its proposal on the MFF sooner than the Commission on 29 June (the Lisbon Treaty reinforced the role of the EP in budgetary fields).

3. 8-9 February 2013: Member States agree on the MFF at the European Council meeting (after more that 1,5 ys of negotiations)
13 March 2013: the EP rejected the Council’s agreement in a resolution.

4. The view of the European Parliament
All EU interventions must represent clear European Added Value;
Result-oriented, efficient use of EU funds becomes even more important with the crisis.
The EU budget must serve the EU2020 Strategy in order to avoid the failure of the Lisbon Strategy.

5. The value added nature of cohesion policy is evident, it is one of the most transparent, most important and most successful policy areas of the EU → its budget cannot decrease during the next MFF;
On the revenue side, the system of own resources needs to be improved without further increasing the financial burden on citizens and national budgets.

6. The view of the European Commission
Does not propose significant change in expenditures → sufficient but not too ambitious budget (MFF : EUR 993,619 billion, MFF according to the Commission: EUR 1025 billion) BUT the budget of cohesion and agricultural policy would decrease by 5,3% (EUR 354,8 billion → EUR 336 billion on 2011 prices)

7. „Capping”: fixing the maximum allocation of EU funds at 2
„Capping”: fixing the maximum allocation of EU funds at 2.5% of the Member State’s GDP → Hungary would receive EUR 20.4 billion from 2014 instead of the 26 bn of the current programming period.
CEF (Connecting Europe Facility): EUR 10billion from the Cohesion Fund to finance infrastructure projects
Transition regions as of 2014: regions where GDP is 75-90% of EU (approx. 50 regions out of which 30 is French, British or German) → around 12% of regional funds would go to these regions.

8. Marco-conditionality: links aid from Structural Funds to good economic governance, BUT “there is no direct relation between the regional policy performance and the macroeconomic performance of a member state,” and “the regions should not be punished for the failure of the national level to comply with procedures related to economic governance”.
The eligibility of non-recoverable VAT linked to conditions.
Performance reserve: 5% of MSs’ allocations would be kept in reserve and used for making bonus payments in 2020 to those member states and regions that have been most successful in reaching and surpassing their pre-agreed targets.

9. The agreement at the Council
This is the 1st time that the overall expenditure limit of a MFF has been reduced compared to the previous MFF. The maximum possible expenditure is set at EUR billion in commitments (1.0% of the EU’s GNI) and the ceiling for overall payments has been set at EUR billion, compared to EUR billion in MFF → this huge gap can create problems in the execution of yearly budgets in the 2nd half of the programming period.

10. The total Cohesion policy envelope is EUR 325,1 billion, less than that of (EUR 354,8 billion) and than the proposal of the Commission (EUR 338,9 billion).
The new category of transition regions was accepted (no Hungarian regions).
Capping: in the case of Hungary and the Baltic states the ceiling is 2,59% instead of the general level of capping (2,35%) → this itself increased the Hungarian cohesion policy envelope by EUR 700 million + 1,56 bn as other special allocation.

11. Youth employment initiative: increased by EUR 48 million the cohesion allocations of four Hungarian regions (aim: lowering the youth unemployment rate);
Co-financing rate: the 85% was preserved for the least developed regions, but: in the Central Region co-financing dropped to 50% (developed region with a GDP/capita which is 105,4% of EU average) → it will receive the same support in as it received in (EUR 60 million/year);

12. VAT amounts shall be eligible for support where they are not recoverable under national VAT legislation → + HUF 100bn yearly for the Hungarian national budget;
The Hungarian cohesion policy envelope is expected to be around EUR 20,56bn, which is a 12% increase compared to the Commission’s proposal (EUR 18,3bn);
Macro-conditionality, performance reserve: no changes, performance reserve even increased from 5% to 7% (EP strongly disagrees).

13. Hungary’s overall net balance: Payments in : EUR 9,3 billion; : EUR 7,2 billion. Hungary’s net balance between will be EUR 25 billion (1. Romania, 2. Poland, 3. Hungary); Net balance per capita: increased from EUR 2333 per capita ( HUF) to EUR 2513 per capita ( HUF) (1. Lithuania, 2. Hungary).
PM Viktor Orbán: Hungary succeeded in getting more from the cake, which became smaller.

14. Next steps
The agreement of the EiT on 8 February 2013 is a political compromise which should be endorsed by the Parliament and the Council in a legal act.
The EP rejected at its plenary on 13 March 2013 the Council’s position. The Parliament wants
More flexibility;
Review clause;
Reform of own resources.

15. Flexibility for the re-allocation of unspent funds from one budget heading to another and from one year to the next.
Review clause, which would allow the Commission and the Parliament to assess halfway through the next budget period whether adjustments to the spending plan are required.
Increasing own revenues, decreasing GNI-based payments from 70% to 40%; roadmap on how the new own resources are introduced.

16. The EP resolution „strongly opposes the current accumulation and rollover of outstanding payment claims in the EU budget, and expresses its firm opposition to a financial framework that might lead the EU budget into a structural deficit”.
The EP will not start negotiations on the MFF until the Commission comes forward with an Amending Budget covering all unpaid payment claims for 2012.

17. The EP links the MFF to the unsolved problems of the 2013 budget → this may delay the agreement on the MFF;
In case no decision is reached until the end of the year, the EU will have to rely on yearly budget (reference year: 2013 budget);
The EP wants to make a real contribution to the next MFF.

18. Thank you for your attention!