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Financial Perspectives: the Multiannual Finance Framework (MFF)
The multiannual financial framework (MFF) lays down the maximum annual amounts ('ceilings') which the EU may spend in different political fields ('headings') over a period of at least 5 years. The upcoming MFF covers seven years: from 2014 to 2020.
The MFF is not the budget of the EU. It provides a framework for financial programming and budgetary discipline by ensuring that EU spending is predictable and stays within the agreed limits. It also allows the EU to carry out common policies over a period that is long enough to make them effective. This long term vision is important for potential beneficiaries of EU funds, co-financing authorities as well as national treasuries.
By defining in which areas the EU should invest more or less over the seven years, the MFF is an expression of political priorities as much as a budgetary planning tool. The annual budget is adopted within this framework and usually remains below the MFF expenditure ceilings in order to retain some flexibility to cope with unforeseen needs.
Proposed by the European Commission, the regulation laying down the MFF must be adopted by the Council by unanimity after obtaining the consent of the European Parliament.
The MFF is part of a comprehensive package which also comprises the EU own resources and a set of sector-specific legislations defining the conditions of eligibility and the criteria for the allocation of funds for each EU spending programme.
The functioning of the MFF 2014-20 has been reviewed by the Commission in 2016.
The MFF is not the budget of the EU. It provides a framework for financial programming and budgetary discipline by ensuring that EU spending is predictable and stays within the agreed limits. It also allows the EU to carry out common policies over a period that is long enough to make them effective. This long term vision is important for potential beneficiaries of EU funds, co-financing authorities as well as national treasuries.
By defining in which areas the EU should invest more or less over the seven years, the MFF is an expression of political priorities as much as a budgetary planning tool. The annual budget is adopted within this framework and usually remains below the MFF expenditure ceilings in order to retain some flexibility to cope with unforeseen needs.
Proposed by the European Commission, the regulation laying down the MFF must be adopted by the Council by unanimity after obtaining the consent of the European Parliament.
The MFF is part of a comprehensive package which also comprises the EU own resources and a set of sector-specific legislations defining the conditions of eligibility and the criteria for the allocation of funds for each EU spending programme.
The functioning of the MFF 2014-20 has been reviewed by the Commission in 2016.
The Multiannual Financial Framework 2014-2020
For the period 2014-2020, the MFF sets a maximum amount of EUR 963.5 billion for commitment appropriations and EUR 910 billion for payment appropriations.
The MFF 2014-20 is divided into 5 categories of expense ('headings') corresponding to different areas of EU activities:
In addition, there is an Heading 6 for "compensations", foreseen for Croatia accession, for 2014.
The MFF 2014-20 is divided into 5 categories of expense ('headings') corresponding to different areas of EU activities:
- Heading 1 - Smart and inclusive growth: €450.763 billion (of which €325.149 billion for economic, social and territorial cohesion).
- Heading 2 - Sustainable growth: natural resources: €373.179 billion.
- Heading 3 - Security and citizenship: €15.686 billion.
- Heading 4 - Global Europe: €58.704 billion.
- Heading 5 - Administration: €61.629 billion.
In addition, there is an Heading 6 for "compensations", foreseen for Croatia accession, for 2014.
How is the annual Budget decided?
Based on the multiannual financial framework Regulation in force and the budget guidelines for the coming year, the European Commission prepares the draft budget and submits it by 1 September to the Council and the European Parliament. The Council first adopts its position on the draft budget by 1 October (including amendments).
The position of the Parliament follows within 42 days (also including eventual amendments).
In case of divergent positions of the Council and the Parliament, a Conciliation Committee is convened with the task of reaching agreement on a joint text within a period of 21 days following the adoption of the European Parliament's position. This joint text is then subject to the approval of the Council and the Parliament within 14 days of the agreement.
The position of the Parliament follows within 42 days (also including eventual amendments).
In case of divergent positions of the Council and the Parliament, a Conciliation Committee is convened with the task of reaching agreement on a joint text within a period of 21 days following the adoption of the European Parliament's position. This joint text is then subject to the approval of the Council and the Parliament within 14 days of the agreement.
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