What is the Multiannual Financial Framework (MFF)?
The European Union is financed primarily by member states’ contributions. The Multiannual Financial Framework (MFF) allows all parties to plan EU spending in the long term. The MFF generally covers seven budget years and specifies a ceiling for EU spending.
The current MFF runs from 2014 to 2020 and is worth about 1,868 billion euros. Because Germany holds the Presidency of the Council of the European Union in the second half of 2020, the adoption of the next MFF, covering the period 2021 to 2027, falls within Germany’s Presidency.
The preparatory process was launched at the start of 2018. The COVID-19 pandemic and its impacts, however, have meant that existing plans have had to be modified. On 27 May, the European Commission presented a revised proposal for the MFF, including the emergency recovery instrument “Next Generation EU”, which is worth 750 billion euros over the next seven years.
What does the Multiannual Financial Framework (MFF) regulate?
The Multiannual Financial Framework (MFF) regulates the maximum sums that the EU may spend within a certain time period. It is not then a detailed budget plan, but merely lays down ceilings for annual budget spending. The ceilings refer to the annual funds that may be used for payments and EU financial commitments. The MFF should also contain all provisions that would guarantee the budget procedure runs smoothly.
Since the 2007 Treaty of Lisbon, the MFF has been a binding agreement on maximum EU expenditures. Before the reform of the EU, it was only an agreement between the European Council, the European Commission and the European Parliament.
What does the Multiannual Financial Framework (MFF) not regulate?
The Multiannual Financial Framework (MFF) is a ceiling on spending. It specifies which EU budget is available over a specific period. Financial ceilings are set for certain priority areas, but the MFF does not contain any specific investment or payment plans.
It is also important to note that the MFF does not regulate the contributions paid by member states. The Own Resources Decision lays out where EU revenues come from. Currently, however, the MFF and the Own Resources Decision are adopted at the same intervals for the same periods of time.
What priorities does it set?
When a Multiannual Financial Framework (MFF) is negotiated, the priority issues are also debated. For these categories, the financial ceiling is then determined. Although the overarching political goals of the EU do not shift significantly, the priority categories can be modified. The current MFF, for instance, lists the constant cost “Administration”. “Europe in the world” and “Intelligent and integrative growth” are also overarching spending categories in the current MFF.
How long does it run?
Every Multiannual Financial Framework (MFF) has a minimum term of five years. However, only the first MFF had a five-year term (1988-1992). All subsequent frameworks since 1993 have run for a period of seven years. The next MFF will also cover a seven-year period, from 2021 to 2027. If no new MFF has been adopted when the previous MFF expires, the provisions of the last year of the expired framework apply.
What form does the consultation process take?
It takes several years before a new MFF is adopted. The process begins when the European Commission presents the package for the MFF. For the period 2021-2027, the Commission originally presented a proposal in May 2018. Alongside the MFF, the package included the draft Own Resources Decision.
The second step is for the General Affairs Council to consider the package. This body is made up of the European affairs ministers of the EU member states. Together they establish which political guidelines the EU should pursue over the term of the next MFF. The priorities identified are then passed on to the European Council as a basis for negotiation. In the European Council, the heads of state and government deliberate on the contents of the MFF Regulation, which must then be adopted unanimously.
The next step is for the European Parliament to address the Regulation. It may accept or reject the Regulation, with majority voting, but it may not alter it. The final step is for member states to ratify the MFF, i.e. accept the Regulation in a binding manner.
Why does the EU need a Multiannual Financial Framework (MFF)?
The first Multiannual Financial Framework (MFF) was adopted in 1988. At that time there were increasingly frequent conflicts over available resources and actual needs. Every year the budget was the subject of heated debate. The MFF was intended to defuse the situation by making the spending of the European Union predictable. At the same time, stricter compliance with the budget could be ensured. This benefits the budgetary authorities of member states, which are able to plan for the long term. And the recipients of EU funding can also plan ahead more effectively.
Where we go from here
On 19 June, EU member states discussed the future of the Multiannual Financial Framework (MFF) . This initial videoconference will now be followed by a physical meeting of heads of state and government on 17 and 18 July in Brussels, where participants will consider how the MFF can reasonably be adapted. Discussions will be based on the Commission’s proposal and on the recently published proposal of the President of the European Council regarding the recovery fund. Clear priorities in the re-planning of the MFF are the scope of the recovery fund and the type of financial support to be accorded. One issue that is currently subject to debate, for instance, is whether member states will receive funds as a non-repayable EU grant or in the form of a loan.
You can find more information about the Special Meeting of the European Council below: