Recovery Planning through EU budget held hostage by Hungary and Poland

The Multiannual Financial Framework or MFF is the EU’s take on the budget. The current MFF expires this month while the one planned to cover 2021-2027 has yet to be approved. In a media webinar organised by the European Parliament, details on the pending issues were given by top EU Experts.

Current Situation

  • The next budget will cover the period 2021-2027, but has not yet been approved;
  • Unlike national budgets, which are used in large part to provide public services and fund social security systems, the EU budget is primarily an investment budget;
  • The EU budget funds real activities on the ground in EU countries and beyond. It goes to citizens, regions, cities, farmers, researchers, students, NGOs, businesses, aid etc;
  • An absolute majority of Europeans continues to call for a larger EU budget to fight COVID-19: 54% of Europeans (and among this 69% of the Maltese) believe the EU should have greater financial means to be able to overcome the consequences of the Coronavirus pandemic, a recent EU-wide survey says;
  • Public health should be the key spending priority for 54% of Europeans (and for 58% of the Maltese), followed by economic recovery and new opportunities for businesses (42%), climate change and environmental protection (37%) as well as employment and social affairs (35%);
  • More than three-quarters of respondents (77% overall and 79% of the Maltese) agree that the EU should only provide funds to the Member States conditional upon their government’s implementation of the rule of law and of democratic principles;
  • Hungary and Poland are resisting rule of law conditionality on the MFF and the RF in Council;
  • Council’s unanimity is needed for Parliament’s consent vote before the MFF can be deployed.

Planning for Covid recovery

Lourdes Acedo Montoya said that migration, coupled with defence and security, has been a great challenge and while in the budget it may not be mentioned a lot, it has been a recurring theme. Acedo Montoya is the head of unit for the MFF at the EU.

“We never witnessed something like Covid and al countries in Europe are reacting differently however all are seeing a slump in the economy,” said Acedo Montoya. In the forthcoming months a slow recovery is projected and the MFF is planning on which sectors need to be helped. Investment needs were analysed particularly in the health sector and in areas which had been a priority before Covid, particularly those which countries were targeting to transform their economies.

“Recovery and resilience funds were considered as most important since these will enable economies to become stronger. Malta has also a substantial reaction fund which gives the country some elbow room to be able to react to new challenges. Another fund which is most important is that related to investment. In the last crisis 10 years ago, we learnt the importance of setting aside budgets to keep investment going” said Acedo Montoya.

Richard Crowe from the EP legal office warned that if the budget is not approved, an emergency provision will kick in but no new projects will be able to be implemented. Acedo Montoya added that the needs which have been forecast and provided for in the proposed MFF, would not be able to be implemented. A further complication may be that some payments may not be able to be defrayed.