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EU multiannual financial framework (MFF) negotiations

Multiannual Financial Framework Regulation

The MFF Regulation sets out annual maximum amounts - ceilings - which the EU is allowed to spend on policy areas - headings - over a period of no less than 5 years. It also sets out an annual global ceiling for total expenditure.

The budget cycle of the current MFF is 2007-2013. The proposed new MFF would run from 2014-2020.

 

1. What is the purpose of the MFF Regulation?

The purpose of the MFF Regulation is to:

  1. translate political priorities into figures for the budget cycle 2014-2020;
  2. ensure budgetary discipline for the EU;
  3. facilitates the adoption of the annual EU budget through a multiannual framework. 


The MFF Regulation broadly defines the expenditure side of the more detailed, annual EU budget. In an annual budget procedure the EU budget is agreed within the expenditure limits of the MFF, by the Council and the European Parliament on the basis of a proposal of the European Commission. Since the MFF ceilings are not expenditure objectives the annual EU budget is usually lower than the expenditure ceilings in the MFF Regulation. The only exception is cohesion policy where the MFF ceiling is actually considered as an expenditure objective.

A number of budget instruments are currently placed outside the MFF

The MFF is not the same as the EU annual budget.
The annual EU budget must always remain lower than the expenditure ceilings set out in the MFF Regulation.

 

2. What are expenditure ceilings and headings in the MFF Regulation?

The MFF Regulation sets ceilings for 2 types of annual expenditure:

  • commitments - legal promises to spend money which must not necessarily be paid out in the same year but may be paid out over several financial years;
  • payments – actual amounts to be paid in a given year.


There are 2 types of expenditure ceilings:

  • a ceiling for each heading in commitments;
  • an overall ceiling for total expenditure in commitments and in payments. The overall ceiling in commitments is equivalent to the sum of the ceilings for the individual headings.

The margin available under one heading may not be used for expenditure under a different heading unless the MFF is revised.

ceilings

In addition, the current MFF contains sub-headings and sub-ceilings.

 

3. What is the impact of the Lisbon Treaty on the MFF Regulation?

The Lisbon Treaty introduced a requirement that the multiannual financial framework be set out in a regulation. The four previous multiannual financial frameworks (since 1988) were part of inter-institutional agreements between the Council, the Parliament and the Commission.

A regulation is a law that is applicable and binding in all Member States directly, whereas inter-institutional agreements are binding only for the contracting parties.

 

Read more:
The MFF expenditure ceilings proposed by the Commission for 2014-2020