On 10 November, negotiators for the Council of the European Union, under the German Presidency, and the European Parliament reached agreement on a comprehensive recovery fund to fight the effects of the COVID‑19 pandemic as well as on the Multiannual Financial Framework (MFF) 2021‑2027.

What has been decided?

The volume of the negotiated package is unprecedented in the history of the EU, at 1.8 trillion euro, with 1.074 trillion for the MFF and 750 billion for the COVID‑19 recovery fund. The package sets clear priorities for spending on climate change mitigation and digitisation.

What does the agreement with the European Parliament mean?

The agreement between negotiators of the Council and European Parliament on 10 November removed a major hurdle on the way to the adoption of the package. German Foreign Minister Maas commented: “Getting Europe’s economic recovery underway is a mammoth task which we assumed along with our Council Presidency. Today we took a huge step towards achieving this goal. This is a ray of hope for the economy and society in Europe.”

Upon the request of the European Parliament, an array of expenditure areas are to be increased with an additional 15 billion euros, including the innovation and research programme “Horizon Europe” and the exchange programme “Erasmus+”, as well as programmes for health and humanitarian aid.

What happens next?

Quick adoption of the entire package, which includes the Multiannual Financial Framework, the recovery instrument “Next Generation EU” and the conditionality mechanism, remains a central goal of Germany's Presidency of the Council of the EU. As such, in-depth talks are currently underway with all concerned parties. 

A final agreement has to take the form of various legislative acts. Both the European Parliament and subsequently the Council, by way of a unanimous vote of all represented member states, have to explicitly approve the so-called MFF Regulation. The Own Resources Decision, which, among other things, forms the legal foundation for the recovery instrument “Next Generation EU”, also needs to be ratified in all member states. In most member states, this involves the national parliaments.

What is the Multiannual Financial Framework (MFF)?

The Multiannual Financial Framework (MFF) lays down the maximum amount the EU can spend on its political priorities over a seven-year period, or how much the EU wants to invest in particular areas. The EU’s annual budget is adopted each year in line with requirements set forth in the Multiannual Financial Framework.

Why does the EU need a Multiannual Financial Framework?

The Multiannual Financial Framework ensures that the EU’s expenditures are predictable. Moreover, long-term planning is useful for large-scale, multiyear projects. The MFF is also intended to help maintain budgetary discipline. A long-term perspective is also important for potential recipients of EU funding. EU member states’ budgetary authorities, too, depend on long-term planning.