Policy Briefs

C. De Vincenti: The Impact of Next Generation EU on the 2021-27 Multiannual Financial Framework

The adoption of the Next Generation EU (NG-EU) strategy is a significant breakthrough with respect to the confrontation that took place between the Member States on the 2021-27 Multiannual Financial Framework (MFF) before the Covid-19 outbreak.

With the Communication of January 14 on the Sustainable Europe Investment Plan, the European Commission translated the programmatic indications of President Von der Leyen on the Green Deal into demanding proposals regarding the allocation of resources necessary to trigger the new development strategy. This was followed by the Negotiating Box presented on February 14 by President of the European Council Charles Michel, which corrected the previous restrictive MFF proposal formulated on December 2 by the then Finnish Presidency and opened more budgetary spaces to take into account the Commission Communication. On that Negotiating Box a tough confrontation began between the Member Countries with Austria, Denmark, Holland and Sweden opposing the budget increase proposed by the President and most of the remaining Member States, with Italy, France and Spain in the lead, in favor of an even more ambitious budget.

It is this framework that, in the aftermath of the pandemic explosion, underwent substantial acceleration, leading in just over four months to the launch of Next Generation EU by the European Council on July 17-21. In addition to the MFF, the Council allocated 750 billion euro of resources to strengthen the structural foundations necessary to support a strong and lasting recovery of the economies of the Member States once the health situation is brought under control. The extraordinary allocation approved by the Council in July, and accompanied by some limited changes to February’s Negotiating Box, constitutes a new structure of the EU’s multiannual budget aimed at supporting both the exit from the economic crisis induced by the Coronavirus and the start of the new growth strategy based on green economy and digital innovation.

This brief aims to clarify the allocation of funds which, according to the Commission documents, derives from the integration of the Next Generation EU resources in the 2021-27 Multiannual Financial Framework and the resulting new budget approach.

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