The deal was struck following intense mediation efforts by the German Council Presidency. The agreement resolves the previous blockade and allows the package, which consists of 40 pieces of legislation on EU programmes, to go through the final formalities. This includes the European Parliament voting on the MFF at its plenary meeting from 14 – 18 December 2020.
Multiannual Financial Framework
To carry out its tasks, the EU needs its own budget. The Multiannual Financial Framework (MFF) sets the limits for the EU’s overall expenditure for a period of several years. In addition, the MFF defines the EU’s policy priorities and areas where action needs to be taken. It also specifies total spending amounts for these priority policy areas. The EU’s annual budgets must stay within the limits of this framework.
Totalling around €1.1 trillion, the MFF provides the basis for the EU annual budgets of the next seven years. This includes a recovery instrument of €750 billion which will be financed via European Commission bonds and which will be disbursed partly as EU budget expenditure, and partly as loans to the member states. The new package of measures will now make it possible to disburse financial assistance to facilitate EU-wide economic recovery in the aftermath of the severe economic downturn caused by the Covid-19 pandemic. In addition, the package will lay the groundwork for green and digital transitions that will boost the growth and competitiveness of European economies. Achieving these objectives will also require support for urgently needed reforms in the member states – not least in order to make them better equipped to cope with future crises.
Next Generation EUTo help the European economy recover and grow in the aftermath of the coronavirus crisis, the EU member states have agreed on the Next Generation EU recovery plan, with a volume of €750 billion. Under this plan, the European Commission will be able to borrow on the financial markets, allowing it to support the hardest-hit countries and regions with grants and loans from EU budgetary programmes.
The financing of the package, including the authorisation for the European Commission to issue bonds, is based on the Own Resources Decision. The Council can now definitively accept this Decision and the member states can then begin the ratification process. The German Finance Ministry will be initiating a corresponding legislative procedure to ensure democratic control by the Bundestag and by the Bundesrat.