Tuesday, October 19

Community budget and recovery plan overcome institutional bottleneck

“The EU demonstrated its ability to act by ensuring the vital and urgent support needed for businesses, citizens and regions in this unprecedented crisis.” With these words, the Budget Commissioner, Johannes Hahn, celebrated the preliminary agreement reached this Tuesday by the Council (the institution that groups the countries) and the negotiators of the European Parliament that will allow unlock multi-year budget 2021-2027 and with it, the post-pandemic recovery package of 750,000 million euros, of which at least 140,000 million (between loans and direct grants) will correspond to Spain.

The announcement was made at around 3:30 p.m. by a spokesman for the German Government through his Twitter account. Accompanied by the image of a white smoke, he spoke of »an agreement for Europe. Council and European Parliament negotiators achieve a political agreement on the European budget and the recovery package. The country that will hold the presidency of the EU until December 31, thus welcomed the success of a negotiation that has required several rounds of contacts (some especially tense) since the end of August.

The agreed commitment complements the global financial package of more than 1.8 trillion euros (1,824.3 million euros to be exact) that EU leaders agreed last July after five intense days of negotiations. A package that combines the seven-year budget (the Multiannual Financial Framework or MFF for its acronym in English) of 1,074.3 trillion with the aforementioned recovery instrument known as ‘Next Generation EU’.

That package changes partially with the demands of the European Parliament that have derived in the essential inter-institutional commitment. This will reinforce some of the games that last summer were sacrificed by heads of state and government at that summit that lasted from July 17 to 21. Programs such as Horizon Europe, EU4Health and Erasmus +, would receive € 15 billion through additional means (€ 12.5 billion and reallocation of other items worth an additional € 2.5 billion) over the next financial period “respecting the “ceilings of expenditure” established in the conclusions of the European Council.

The unforeseen

Likewise, a “Greater flexibility” In order for the EU to respond to unforeseen events (with an additional € 1 billion in reserve), a greater involvement of the budgetary authority in the supervision of the Next Generation EU revenue is envisaged. And “higher ambition” is assumed in spending related to biodiversity, climate and gender equality. In addition to establishing a roadmap to obtain its own resources that are key to financing the recovery plan, it is specified that in addition to plastic, effective as of 2021, the activation of another aimed at the trade of emissions from 2023, a digital rate, from 2024, and another for 2026.

The agreement will now be presented to the Member States for approval together with the other elements of the next Multiannual Financial Framework and recovery package, including the conditionality of transfers to respect the rule of law, the great political obstacle (more than two years negotiating a clause of these characteristics) that the Council and Parliament negotiators they managed to save last week. The question now is whether countries referred to by that clause, such as Hungary and Poland, would block other aspects of the agreement in protest.

It is the only movement that could complicate the path that has been cleared with the agreement reached this Tuesday. Because it would enable the processing procedure (in European institutions and national parliaments) for the European Commission to request loans in the capital markets to finance the recovery plan. A debt on behalf of the EU with the commitment to complete the repayments of the borrowed capital before December 31, 2058. The step for the money to start flowing to the capitals, something that would happen late next year.


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