The European Commission proposed on 7 June an annual EU budget of EUR 189.3 billion for 2024. The budget will be complemented by an estimated EUR 113 billion in payments for grants under NextGenerationEU, the EU’s post-pandemic recovery instrument.
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1. What are the priorities of the draft budget for 2024?
The Commission has today proposed an annual EU budget of 189.3 billion in commitments for 2024. The budget will be complemented by an estimated 113 billion in payments for grants under NextGenerationEU, the EU’s post-pandemic recovery instrument. The EU budget for 2024 provides key funding to the Union’s political priorities, notably to boost the recovery from the coronavirus pandemic, to put Europe on the path towards a sustainable future, to protect and create jobs.
The EU budget 2024, topped up by NextGenerationEU funding, contributes to the recovery and modernisation of our continent, fostering the green and digital transitions for a secure and more resilient Europe, which plays a strong role in the world.
In this context, the EU budget will continue to support the six headline ambitions set out by President von der Leyen: the European Green Deal; a Europe fit for the digital age; an economy that works for all; promoting our European way of life; a stronger Europe in the world and a new push for democracy. The budget for 2024 will enable the Commission to deliver on all these priorities.
2. How does the draft budget for 2024 relate to NextGenerationEU?
NextGenerationEU provides the EU budget with the additional means necessary to respond decisively to the urgent challenges caused by the coronavirus pandemic. The funds can be used to support investment and reform priorities under the Recovery and Resilience Facility and reinforce programmes that are key to the recovery. It also funds actions to build resilience for the future, for example, through an enhanced RescEU as part of the EU Civil Protection Mechanism.
To finance NextGenerationEU, the Commission is borrowing up to 807 billion on the capital markets until end 2026. To obtain the necessary funding under optimal financial terms, the Commission uses a unified funding approach. The funds are disbursed via grants or loans, either through the Recovery and Resilience Facility or through several EU budget programmes which have received top-ups from NextGenerationEU. As of today, the Commission has disbursed 153.36 billion to EU countries under the RRF, on top of further support to other EU programmes benefitting from NextGenerationEU funding (23.9 billion as of end-December 2022).
3. What are commitments and payments?
Commitments are the total volume of contractual obligations for future payments that can be made in a given year. Commitments must then be honoured with payments, either in the same year or, particularly in the case of multi-annual projects, over the following years.
Payments are the actual money paid in a given year from the EU budget to cover commitments of current and previous years.
When the EU decides to co-fund the building of a bridge, the total amount which the EU agrees to cover is a commitment. The bills for the work done are the payments that are paid over the coming years in line with the implementation life cycle of the project. The commitment is made in year N. The payments from the EU budget may follow in the same year N, but also in following years, depending on the financial rules on when the invoices are reimbursed.
4. What happens next?
Following adoption by the College, the European Commission submits the draft 2024 EU budget to the European Parliament and the Council, which take the final decision together.
The Council usually adopts its opinion on the budget by the end of July, and the European Parliament announces its official position in the autumn.
A specific conciliation committee is convened, usually in late autumn, to reconcile the positions of the Parliament and the Council. It has to agree within 21 days on a common budget, which both institutions should afterwards approve. This year, the period runs between 24 October and 13 November.
The Commission intends to present a mid-term review of the long-term budget to the European Parliament and the Council in the coming weeks.
5. The Commission is due to present an MFF review/revision on 20 June. How will this impact the draft budget for 2024?
Over the past years, the EU budget has been instrumental to enable the EU response to challenges from the post-pandemic recovery through support for Ukraine following Russia’s war of aggression and investments in the EU’s strategic autonomy.
This has put the EU budget under strain and stretched EU budget flexibilities to the maximum.
The Commission committed in 2020 when the EU long-term budget was agreed to undertake and present a review of the functioning of the EU long term budget in relation to its implementation and remaining availabilities, against the background of the many additional challenges that the EU budget is confronted with since 2020, and the prospects looking forward.
The outcome of this analysis will be presented on 20 June 2023. Any possible implications for the 2024 budget may subsequently be considered as part of the budgetary procedure.
6. What is the Commission’s proposal for Ukraine?
The Commission will continue to stand by Ukraine for as long as it takes. Following Russia’s war of aggression against the country, all EU budget flexibilities have been mobilised to support Ukraine and EU Member States welcoming refugees. The Commission will assess future support to Ukraine in the context of the forthcoming review of its long-term budget 2021-2027.
7. Borrowing costs for the grant component of NGEU have increased compared to the initial forecasts. How is this reflected in the DB for 2024?
The borrowing costs for the NGEU disbursements are financed under the long-term budget ceilings. Due to rising interest rates on the markets, the funding costs for NextGenerationEU borrowing operations are significantly higher than originally planned, as is the case for other issuers. This will require use of the flexibilities in the long-term budget.
This is exactly what the proposal for a draft budget 2024 entails making best use of existing flexibilities to address the borrowing costs. This has also been the case until now.
2021-2027 long-term EU budget & NextGenerationEU
Source: European Commission
