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EU agrees deal on long-term budget for post-COVID recovery

EU agrees deal on long-term budget for post-COVID recovery

Hahn - von-der-Leyen - Photo EC

(BRUSSELS) - The EU Parliament and Member States agreed Tuesday on Europe's long-term budget and extra funding to rebuild a post-COVID-19 Europe centred on jobs, competitiveness, and better climate protection.

The agreement followed intensive consultations between the EU institutions underway since the end of August. It complements the comprehensive financial package of EUR 1,824.3 billion negotiated by EU leaders in July, which combines the next multiannual financial framework - EUR 1 074.3 billion – and a EUR 750 billion temporary recovery instrument, Next Generation EU (in 2018 prices).

Commission president Ursula von der Leyen welcomed the deal. Help is needed for citizens and business badly hit by the coronavirus crisis," she said: "Our recovery plan will help us turn the challenge of the pandemic into an opportunity for a recovery led by the green and digital transition".

The political package agreed with the Parliament includes:

Main elements of today's compromise include:

  • More than 50% of the amount will support modernisation through policies that include research and innovation, via Horizon Europe; fair climate and digital transitions, via the Just Transition Fund and the Digital Europe Programme; preparedness, recovery and resilience, via the Recovery and Resilience Facility, rescEU and a new health programme, EU4Health.
  • Traditional policies such as cohesion and common agricultural policy also continue to receive significant financial support, so much necessary to ensure stability in times of crisis and their modernisation that should contribute to the recovery and the green and digital transitions.
  • 30% of the EU funds will be spent to fight climate change, the highest share ever of the largest European budget ever. The package also pays a specific attention to biodiversity protection and gender equality.
  • The budget will have strengthened flexibility mechanisms to guarantee it has the capacity to address unforeseen needs. This is making it a budget fit not only for today's realities but also for tomorrow's uncertainties.
  • As proposed in May 2020 and agreed by EU leaders on 21 July 2020, to finance the recovery, the EU will borrow on the markets at more favourable costs than many Member States and redistribute the amounts.
  • A clear roadmap towards new own resources to help repay the borrowing. The Commission has committed to put forward proposals on a carbon border adjustment mechanism and on a digital levy by June 2021, with a view to their introduction at the latest by 1 January 2023. The Commission will also review the EU Emissions Trading System in spring 2021, including its possible extension to aviation and maritime. It will propose an own resource based on the Emissions Trading System by June 2021. In addition, the Commission will propose additional new own resources, which could include a Financial Transaction Tax and a financial contribution linked to the corporate sector or a new common corporate tax base. The Commission will work to make a proposal by June 2024.
  • In terms of EU budget protection, now, for the first time, the EU will have a specific mechanism to protect its budget against breaches of the rule of law as agreed on 5 November. At the same time, final beneficiaries of EU funding in the Member State concerned will not be negatively affected by this mechanism.

The deal will now be submitted to member states for endorsement together with the other elements of the next multiannual financial framework and recovery package, including the general regime of conditionality for the protection of the Union budget, on which the Council presidency and the Parliament's negotiators reached a provisional agreement on 5 November.

2021-2027 long-term EU budget & Next 
Generation EU - background guide

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