27 / 05 / 2020

EC unveils proposal for the 2021-2027 EU budget and the EU recovery instrument

The first European Commission (EC) proposal for the next Multiannual Financial Framework (MFF) 2021-2027 had been presented in 2018. Since then, the EU institutions and Member States were trying to find a political agreement on the overall budget and sectorial budgets (Innovation, Cohesion, Digital, etc). Negotiations have been complicated by the COVID-19 outbreak, as March Council meetings were postponed. The efforts focused naturally on solving the health emergency and mitigating its direct economic consequences.   On 27 May, the EC put forward its proposal for a major EU recovery package of €1.85 trillion made of:
  • An updated MFF proposal reaching €1.1 trillion,
  • Complemented by a recovery instrument called Next Generation EU aiming to raise money by temporarily lifting the own resources ceiling to 2% of EU GNI, allowing the EC to borrow €750 bn on the financial markets (€500bn would be distributed in the form grants and €250bn in the form of loans).
  In a press release, European Council President Charles Michel stated his hopes to reach an agreement before the summer.   The EC published many background documents on 27 May, such as the EC Communication on the Budget, the EC Communication on the Recovery Plan, the EC Staff Working Document on Identifying Recovery Needs and the EC Adjusted Work Programme for 2020.