The EU has put together a comprehensive financial package of €1.8 trillion in 2018 prices for the coming years to tackle the socio-economic consequences of the COVID-19 pandemic and address the EU's long-term priorities. It combines:
- €1 074.3 billion multiannual financial framework (MFF)
- €750 billion extraordinary recovery instrument, Next Generation EU (NGEU)
€1.8 trillion
combined funds of the MFF and NGEU
The package will help transform the EU by supporting the European Green Deal and the digital transformation, and enhancing resilience.
All amounts presented on this page are in 2018 prices.
Next Generation EU
The plan for European recovery needs massive public and private investment at European level to create jobs and repair the immediate damage caused by the COVID-19 pandemic, whilst supporting the EU's green and digital priorities.
To provide the EU with the means to address the challenges posed by the COVID-19 pandemic, the Commission will be authorised to borrow €750 billion on behalf of the Union on the capital markets.
€750 billion
Next Generation EU (NGEU) recovery instrument
The Next Generation EU recovery instrument will enable the transfer of these funds to EU programmes as follows:
- Recovery and Resilience Facility: €672.5 billion (loans: €360 billion, grants: €312.5 billion)
- ReactEU: €47.5 billion
- Horizon Europe: €5 billion
- InvestEU: €5.6 billion
- Rural Development: €7.5 billion
- Just Transition Fund (JTF): €10 billion
- RescEU: €1.9 billion
The multiannual financial framework
The multiannual financial framework (MFF) covers the period of 2021-2027. Under the MFF, EU funding will be geared towards new and reinforced priorities across the EU's policy areas, including green and digital transitions. Cohesion policy and the common agricultural policy will continue to receive significant funding and undergo modernisation to ensure that they best contribute to Europe's economic recovery and the EU's green and digital objectives.
€1 074.3 billion
Multiannual financial framework 2021-2027
The MFF covers the following main spending areas:
- single market, innovation and digital: €132.8 billion
- cohesion, resilience and values: €377.8 billion
- natural resources and the environment: €356.4 billion
- migration and border management: €22.7 billion
- security and defence: €13.2 billion
- neighbourhood and the world: €98.4 billion
- European public administration: €73.1 billion
Climate action
Expenses under the MFF and Next Generation EU are to be consistent with the:
- EU’s objective of climate neutrality by 2050
- EU’s 2030 climate targets
- Paris Agreement
30% of the total expenditure from the MFF and Next Generation EU is to target climate-related projects.
30%
of total EU expenditure to target climate-related projects
Flexibility
To allow the financing of specific unforeseen expenditure that could not be financed otherwise, a Single Margin Instrument (SMI) has been established. The SMI annual ceiling is set at €772 million per year (2018 prices).
Three thematic special instruments will provide additional financial means for specific unforeseen events:
- Brexit Adjustment Reserve to support the member states and economic sectors hardest hit by Brexit (€5 billion)
- European Globalisation Adjustment Fund to support workers who lose their jobs in restructuring events linked to globalisation (€186 million per year)
- Solidarity and Emergency Aid Reserve (SEAR) to respond to emergency situations resulting from major disasters in member states and accession countries, and for rapid response to specific emergency needs within the EU or in third countries (€1.2 billion per year)
EU revenue: own resources
Own resources decision
The own resources decision, which defines how the EU budget is financed, was adopted by the Council on 14 December 2020. The decision needs to be approved by all 27 EU member states in accordance with their constitutional requirements to enter into force. It will apply retroactively from 1 January 2021.
Ceilings
From 1 January 2021, the following own resources ceilings are fixed for the EU:
- for payments: 1.40% of the GNI of all member states
- for commitments: 1.46% of the GNI of all member states
These ceilings will be exceptionally and temporarily increased by a further 0.6 percentage points to cover all liabilities of the EU resulting from the borrowing foreseen to finance the NGEU recovery effort, until all the borrowed funds have been repaid.
Sources of revenue
A new non-recycled plastic packaging waste based own resource is established from 1 January 2021. This will provide member states with an incentive to reduce the consumption of single use plastics, foster recycling and boost the circular economy in line with the EU environmental policy objectives.
The new levy will be calculated on the basis of the weight of non-recycled plastic packaging waste in each member state, with a call rate of EUR 0.80 per kilogram. It includes a mechanism to avoid excessively regressive impact on national contributions.
In addition, the EU will work towards the introduction of other new own resources over the coming years.
These new sources of finance come on top of existing own resources:
- traditional own resources: mainly customs duties and sugar levies (member states will retain, by way of collection costs, 25% of the amounts collected)
- VAT-based own resource: a uniform rate of 0.3% is applied to the value added tax base of each member state, with the taxable VAT base being capped at 50% of GNI for each country (methodology will be simplified)
- GNI-based own resource: resulting from a uniform rate applied to the gross national income of member states, this rate is adjusted every year in order to balance revenue and expenditure (unchanged)
Rebates
For the period 2021-2027, lump-sum corrections will reduce the annual Gross National Income-based contribution of Denmark, Germany, the Netherlands, Austria and Sweden.
New budget conditionality mechanism
A new regulation puts in place what is called "a general regime of conditionality" to protect the EU budget. It is to apply where it is established that breaches of the principles of the rule of law in a member state affect or seriously risk affecting the sound financial management of the EU budget or the protection of the financial interests of the EU in a sufficiently direct way.
The EU budget: a blueprint for the future
The EU budget has always evolved with the needs of the Union, responding to changing political, social and economic contexts. Its history is a fascinating story of evolution and adaptation, of compromise and of a vision for a shared future. It is a story of transformation in Europe and of positive impact on the lives of millions of people. Discover the history and the stories which explain how the long-term EU budget works for Europe.
Sectoral programmes 2021-2027
The long-term budget provides the framework for the funding of almost 40 EU spending programmes over a seven-year period. Most of the sectoral EU funding programmes are expected to be adopted in early 2021 and will apply retroactively from the beginning of 2021.
Here are some examples of new and reinforced programmes under the MFF 2021-2027.
In order to support the digital transition, a new funding programme, Digital Europe, is established to promote the large-scale roll-out and uptake of key digital technologies such as artificial intelligence applications and state-of-the-art cybersecurity tools. The digital strand of the Connecting Europe Facility will also get a significant boost in funding.
A new EU4Health programme will provide a strong basis for EU action in the health field based on lessons learned during the COVID-19 pandemic.
In the field of research and innovation, the Horizon Europe programme will benefit from a significant increase once funding on the basis of the EU's recovery instrument will become available.
In the field of space, the EU is putting forward a fully integrated space programme, which brings together all EU activities. By improving efficiency, it will help roll out new space-driven services that will benefit EU citizens and businesses.
To support the most vulnerable carbon intensive regions in their transition towards a climate-neutral economy, a new Just Transition Fund is created. It will receive funding under both the next long-term budget and the EU recovery instrument.
Programmes for young people, such as Erasmus+ and the European Solidarity Corps, will also be strengthened, with the Erasmus+ programme expected to triple the number of participants in the course of the new MFF.
Support for migration and border management has also been considerably reinforced, including to fund up to 10 000 border guards at the disposal of the European Border and Coast Guard Agency by 2027.
In the field of security and defence, a new European Defence Fund will be established to promote the competitiveness, efficiency and innovation capacity of the EU's defence, technological and industrial base.