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European Commission: publication of proposals for updated MFF and European recovery instrument

29. May 2020

On 27 May 2020, the European Commission published an updated proposal for the next Multi-annual Financial Framework (MFF), the long-term EU budget for the period 2021-2027. According to this, the next MFF would have an overall size of about 1,100 billion Euro* (somewhat lower than the Commission's original proposal from May 2018 but a little higher than a failed compromise proposal put forward in February this year).

European Recovery Plan

The Commission proposes that the next MFF will be complemented by a new temporary funding instrument to support the recovery from the Covid-19 pandemic, called <b>Next Generation EU</b>, with an overall size of about 750 billion Euro (completely borrowed on the financial market, of which 500 billion Euro would be distributed as grants and 250 billion Euro through loans).

Before the Commission proposal was published, individual EU Member States (including Germany, France, Austria, Sweden, Denmark and the Netherlands) had submitted their own proposals for a recovery plan. The European Parliament (EP) has also formulated basic demands for such a plan in May: among other things, the EP calls for the recovery plan to be linked to the MFF, for the EP to be able to decide on the development plan and for the reform of the European own resources system with new income opportunities for the EU such as income from European emissions trading.

Effects on Horizon Europe (HEU)

Regarding the next EU Framework Programme for research & innovation, Horizon Europe, the new Commission proposal foresees an initial amount of 80.9 billion Euro* directly stemming from the MFF itself. In addition, Horizon Europe would be reinforced by 13.5 billion Euro from the above-mentioned Next Generation EU fund, adding up to an overall EU research budget of 94.4 billion Euro. Compared to the 83.5 billion Euro budget of Horizon Europe originally proposed by the Commission in 2018, this would result in a budgetary increase of about 10.9 billion Euro.

So far, it remains unclear how these additional funds would be distributed between the different pillars and thematic clusters of Horizon Europe. However, the Commission has already indicated that those additional funds should in particular benefit health and climate-related research and innovation activities in order to strengthen the Unions preparedness and resilience towards emergencies. In the health domain, budgetary reinforcements should increase research effort to tackle challenges such as the Coronavirus pandemic, e.g. by further supporting clinical trials, innovative protective measures, vaccines, treatments and diagnostics, and the translation of research findings into public health policy measures. It is also proposed to increase resources for research and innovation in climate-related domains, therefore linking support for the recovery and competitiveness of EU industries with the goals of the European Green Deal. Budgetary reinforcement should also provide additional funding for breakthrough innovations by small and medium-sized enterprises, start-ups, and midcaps.

Effects on other programmes

Erasmus+, the EU’s (academic) mobility programme, would receive 24.6 billion Euro (therefore suffering a modest decrease compared to the originally proposed budget of 26.4 billion Euro).

Other research-related funding programmes would, according to the Commission’s proposal, also face modifications (in comparison to its initial 2018 plans): This affects for example the fusion energy demonstration project ITER (5 billion instead of 5.4 billion Euro) the European Defence Fund (8 billion instead of 11.5 billion Euro, of which 4.1 billion was set aside for R&D purposes); and the European Space Programme (13.2 billion instead of 14.2 billion Euro). However, the Digital Europe programme would  remain at its (originally proposed) budget level of 8.2 billion Euro.

The Commission proposal also contains a new standalone health programme <b>EU4Health</b> with a budget of 9.4 billion Euro (a substantial increase compared to the 413 million Euro initially earmarked) directed mainly at non-research purposes like prevention, crisis preparedness, procurement of vital medicines and equipment, as well as improving long-term health outcomes.

Next steps

The ITRE committee of the European Parliament will vote on the opening of negotiations with the Council on Horizon Europe already on 28 May 2020.

Council President Charles Michel announced that Member States’ heads will discuss the new MFF proposal at the European Council on 19 June 2020 with the aim to reach an agreement between Member States before the summer break. Furthermore, the approval of the European Parliament is also required for the adoption of the new MFF.

However, as an agreement on the next MFF could face further delays until the end of 2020, the European Parliament has already urged the Commission to table a contingency plan to allow for the extension of EU funding programmes into 2021.

*all in 2018 prices