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Tag Archives: Multiannual Financial Framework (MFF)

An uncompromising budget

Apart from decisive European Central Bank measures, the EU-wide response to the COVID crisis had been rather weak until the Commission put on the table a drastically new proposal: the creation of a new recovery facility, ‘Next Generation EU’, that would borrow money in the name of the EU to finance EU-wide expenditures. The changes to the proposed standard seven-year budget that primarily focuses on long-term structural issues are however generally small, and funding reductions are...

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How much will the UK contribute to the next seven-year EU budget?

This post estimates the United Kingdom’s net contribution to the 2021-2027 EU multiannual budget at close to €20 billion, taking into account the most significant items of the financial settlement according to the October 2019 EU27-UK draft withdrawal agreement. By: Zsolt Darvas Date: December 16, 2019 Topic: European Macroeconomics & Governance The exit of the United Kingdom from the EU will have an impact on the EU’s next Multiannual Financial Framework (MFF) running from...

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A new look at net balances in the European Union’s next multiannual budget

Whenever the European Union’s budget is discussed, much of the political focus is on net balances – whether countries pay in more than they receive – rather than on the broader overall positive effects of EU spending. The largest net contributor countries have sought to limit their contributions, leading to the build-up of an ad-hoc, complex, opaque and regressive system of revenue corrections. By: Zsolt Darvas Date: December 12, 2019 Topic: European Macroeconomics & Governance...

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Who pays for the EU budget rebates and why?

A complex system of EU budget revenue corrections has been developed since the mid-1980s. I quantify their impacts: which countries pay and benefit from it and by how much and highlight several anomalies. The best solution would be to reform EU budget spending to provide only European public goods and eliminate all rebates. But if that’s not possible, then at least the rationale for the rebates should be spelt out clearly, and a transparent system built on clear principles should replace the...

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The EU’s Multiannual Financial Framework and some implications for CESEE countries

Bruegel scholars Zsolt Darvas and Guntram Wolff contributed to the September 2018 edition of the OeNB's Focus on European Economic Integration. The European Union’s budget – which is fundamentally different from the budgets of federal countries and amounts to only about 1% of the EU’s gross national income – continues to be heavy on agricultural and cohesion spending. The literature shows that the EU’s common agricultural policy (accounting for 38% of EU spending from the current...

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Should central European EU members join the euro zone?

Eurozone membership (or the use of a fixed exchange rate) was not a factor determining economic success in Central Europe. There were both good and bad macroeconomic performances in both the flexible and the fixed exchange rate regimes of Central European countries. The implication is that Central European “outs” could be economically successful both with and without the euro, yet the EU is not only about economic benefits. By: Zsolt Darvas Date: September 11, 2018 Topic:...

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The Commission’s proposal for the next MFF: A glass half-full

The Commission’s proposal for the next Multiannual Financial Framework provides a good basis for subsequent negotiations and includes a number of bold suggestions. But it has a number of deficiencies and some of the proposed tools are conceptually weak. We make proposals as to how to improve them. On May 2nd, the European Commission published its proposal for the broad outline of the next seven-year EU budget, the Multiannual Financial Framework (MFF) for the period 2021-27. The proposal...

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What does Europe care about? Watch where it spends

The European Union says it wants to focus on new priorities. First it will have to cut spending in sectors that have long enjoyed support. By: Guntram B. Wolff Date: May 14, 2018 Topic: European Macroeconomics & Governance This article was published first by Bloomberg, on March 21st 2018. “Don’t tell me what you value,” Joe Biden once said. “Show me your budget, and I’ll tell you what you value.” He wasn’t talking about...

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New EMU stabilisation tool within the MFF will have minimal impact without deeper EU budget reform

The European Commission’s proposal for a new stabilisation instrument inside the EU budget for the countries of the economic and monetary union is disappointing. This analysis highlights the proposed instrument’s main limitations, as well as the restrictive factors that will persist without a deeper EU budget reform. By: Grégory Claeys Date: May 9, 2018 Topic: European Macroeconomics & Governance On May 2, the European...

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How large is the proposed decline in EU agricultural and cohesion spending?

Cohesion spending is proposed by the Commission to increase by 6% in the next MFF, but inflation is expected to reduce the real value of such spending by 7%. The gradual convergence of the least developed regions to the EU average reduces the need for cohesion spending. Common agricultural spending is proposed to be cut by 4%, while if we consider inflation too, the reduction in real value is 15%. In this post we focus on a special aspect of the new proposal from the European Commission...

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