Finally, the European Solidarity Corps is promoting solidarity activities, mainly through volunteering, traineeships and jobs, to enhance the engagement of young people and organisations in accessible and high-quality solidarity activities. Young people aged between 18 and 30 undertook volunteering activities or solidarity projects managed by organisations, institutions, bodies or groups. By the end of 2019 more than 12 000 participants had been involved in volunteering actions.

In addition to promoting intra-EU linkages and exchanges, cross-border cooperation has also been shown to foster successful and impactful research. Horizon 2020 continued to support cross-border networks of researchers. Under its strand of the Marie Skłodowska-Curie actions, Horizon 2020 continued investing in European researchers to enable them to work and collaborate in other countries, at all stages of their career, supporting initiatives that break down barriers between academia, industry and business.

The Employment and Social Innovation programme backed the mobility of workers through cross-border partnerships and targeted mobility schemes. The support to mobile workers was further enhanced in 2019 with the establishment of the European Labour Authority ( ), an entity aiming to ensure that EU rules on labour mobility and social security coordination are enforced in a fair and effective way, making it easier for citizens and businesses to benefit from the internal market.

Erasmus+ offers opportunities for young people, learners and staff of all ages to study, train and volunteer within Europe and beyond. In 2019 more than 900 000 people had a chance to go abroad and experience life differently, in higher education, in vocational training and through various other exchange possibilities ( ). The sometimes life-changing effects of these experiences are making an important contribution to improving employment prospects and promoting the idea of EU citizenship.

Beyond direct investment in economic infrastructure and enterprises, the EU budget also invests in people and institutions promoting shared European values under the EU motto ‘United in diversity’.

Another important contribution from the EU budget is made by providing financing under the small and medium-sized enterprises window of the European Fund for Strategic Investments. In the area of risk financing for innovative micro, small and medium-sized and social enterprises, along with those operating in cultural and creative sectors, the fund is expected to support more than 1.1 million such enterprises.

Support for entrepreneurship is also provided in non-financial form under Erasmus for Young Entrepreneurs, which fosters exchanges between newer and more experienced entrepreneurs. In 2019, 2 100 exchanges took place, and the programme has been considered successful by over 90% of participating entrepreneurs.

More targeted start-up financing is provided to innovative start-ups from the European Innovation Council under Horizon 2020 and to micro and social enterprises from the Employment and Social Innovation Programme. The focus in this regard is to target specific segments of the market – highly innovative small and medium-sized enterprises and social enterprises – that historically have had specific difficulties in accessing financing. The numbers are encouraging, and show a significant increase in breakthrough innovations and high-growth companies. Every euro invested from the European Innovation Council triggers follow-on investments of EUR 2.4 ( ). Moreover, more than EUR 2.7 billion of financing is expected to be unlocked under the Employment and Social Innovation Programme, as a result of guarantee agreements worth EUR 236 million concluded by the Commission with financial intermediaries.

In April 2020, one of its components, the Loan Guarantee Facility, has been boosted with additional resources from the European Fund for Strategic Investments to enable banks to offer bridge financing for small and medium-sized enterprises. Through the facility, the programme had provided financing to more than 500 000 small and medium-sized enterprises operating in 32 countries ( ) by the end of 2019. It has also helped businesses hit by the economic impact of the coronavirus pandemic. The financial support is in the form of working capital loans (of 12 months or more), along with credit holidays allowing for the delayed repayment of existing loans. The Enterprise Europe Network is also helping small and medium-sized enterprises through innovation partnerships on areas linked to COVID-19 (such as protective or medical equipment) and advice on accessing dedicated European and national financial support.

Small and medium-sized enterprises are the backbone of the EU’s economy, representing 99% of all businesses. They produce 56% of economic output and provide 67% of overall employment ( ). In spite of their importance to the economy, small and medium-sized enterprises still face challenges such as finding financing in various segments of the internal market. The EU budget provides support and opportunities throughout their life cycle, from starting up, through commercialisation, to long-term investment and sustainability. The main budget programme assisting small and medium-sized enterprises is the EU programme for the competitiveness of enterprises and small and medium-sized enterprises, which promotes entrepreneurship, helping these businesses to gain access to finance and markets and improve their competitiveness.

Beyond the specific focus on the green transition, the EU budget more broadly supports the investments necessary for the EU to have a long-term sustainable economy with a focus on people. While research and development and infrastructure remain important in this area, there are other important angles such as support for small and medium-sized enterprises and for entrepreneurship and social innovation.

Many of these investments and infrastructures take time to build, and investment cycles are very long, which means it is often difficult to point to direct progress and concrete results. At the same time, such financing from the EU budget has a real impact on the lives of citizens. For instance, one third of all EU municipalities are implementing WiFi4EU under the Connecting Europe Facility, providing EU-supported Wi-Fi connectivity to citizens free of charge. Galileo-improved location services are saving lives by making the location available to emergency services when calling 112 from mobile phones.

Galileo’s three initial services (the open service, the public regulated service and the search and rescue service) were provided continuously in 2019, with the exception of a 6-day interruption in July 2019 of the Galileo initial navigation and timing services due to a technical incident. During this period, the Galileo search and rescue service was unaffected. The independent inquiry board set up by the Commission analysed the root causes of the incident and provided recommendations. The Commission has put in place a process to implement the recommendations to ensure that Galileo is a stable, robust and resilient system.

Another area is geolocation. The Galileo programme with 26 satellites in orbit ( ), helps improving the accuracy and reliability of location services in the smartphones of more than 1 billion users worldwide. In addition, the European Geostationary Navigation Overlay Service is playing a key role in safety critical services such as aviation safety. At the end of 2019, 350 airports equipped with this service were operating in 23 countries in Europe, with the number increasing for a fifth consecutive year from 129 in 2014 ( ).

The eHealth Digital Service Infrastructure facilitates continuity of care and patient safety for citizens seeking cross-border healthcare, allowing health data to be exchanged across national borders. Cross-border ePrescriptions/eDispensations (eP) allow patients abroad to receive the equivalent medication that they would receive in their home country. The Patient Summary (PS) services provide health professionals with access to the verified key health data of a patient needing unplanned cross-border healthcare. The cross-border exchanges of electronic Patient Summaries and ePrescriptions takes place since January 2019, with almost 8 000 ePrescriptions already dispensed between Finland, Portugal, Estonia and Croatia. In 2019, Czechia, Luxembourg, Croatia and Malta enabled the exchange of patient summaries and Portugal joined them in early 2020.

The Connecting Europe Facility supports the digital transition by providing necessary basic broadband infrastructure and promoting connectivity, and by integrating digital innovation into the design of supported transport and energy infrastructure projects. In the telecommunications sector, the EU budget is enabling EU-wide interoperability of specific services in areas such as health, justice, social security information, eGovernment, disinformation, digital skills, and cybersecurity. By the end of 2019, the uptake of these services in the Member States and European Economic Area participating countries reached a portfolio of 500 projects. Through the WiFi4EU initiative, CEF Telecom also supported 7 980 European municipalities to install free-of-charge Wi-Fi based connectivity in public spaces, and created an equity instrument, the Connecting Europe Broadband Fund, for the deployment of very high capacity networks.

To support the digital transition, Horizon 2020 resources were targeted at projects to build new capabilities in the area of artificial intelligence and to tackle cybercrime. Key projects in 2019 include Formobile, a complete end-to-end forensic investigation chain targeting mobile devices used by criminal offenders ( ), and Spider, a research project to investigate the security of 5G telecommunications networks.

Support for the digital transition plays a major role in investments from the EU budget. Beyond providing access to the digital realm, a key underlying consideration is the safety and the well-being of citizens and enterprises, be it to protect them from issues such as cybercrime or to directly improve the safety of citizens and the resilience and safety of essential infrastructure. The vision is to create an ecosystem of interoperable digital services available to citizens, businesses and administrations across the EU so they can fully benefit from the digital single market.

The action covered the introduction of new and innovative concepts and technology by converting two existing complex passenger ships – originally fuelled by heavy oil – to plug-in all-electric-powered operation exclusively using batteries. The action has brought a more environmentally friendly solution to a very busy maritime link, connecting the comprehensive trans-European transport network ports of Helsingør (Denmark) and Helsingborg (Sweden). Moreover, the power-provision and charging installations required in the ports/ferry terminals were put in place. The project supported the development of clean motorways of the sea by testing and deploying new technological solutions in real operational conditions.

With regard to transport infrastructure, progress has been made in the Baltic Sea region, and on rail infrastructure across the German–Polish border, leading to an estimated 95 million citizens benefiting from it.

Direct investment in infrastructure is made under the Connecting Europe Facility, which finances essential transport, energy and telecommunications infrastructure, integrating networks across the EU. The Connecting Europe Facility focuses on smart solutions, bringing together digitalisation and infrastructure to create safe and efficient integrated networks to support decarbonisation through sustainable solutions in the transport, energy and digital sectors. For instance, the facility has co-funded projects in the transport sector which will lead to the electrification of more than 2 000 km of railways, the upgrade of almost 3 000 km of inland waterways and the deployment of around 13 000 supply points for alternative fuels all over Europe, hence fostering the greening of the transport sector. The energy component of the Connecting Europe Facility has amongst other things contributed to ending the energy isolation of the Baltic States, improving the interconnectivity of the Iberian Peninsula with the rest of Europe and linking Ireland with continental Europe, all of which has helped significantly with the integration of a larger share of renewable energy in the electricity system. Moreover, in line with the goal of climate neutrality, the Commission is evaluating the existing Trans-European Network Regulations to further align its large infrastructure investments.

Another important contribution in this area is made by the EU space programmes. The Copernicus programme is the world leader in Earth observation, currently operating seven satellites with preparations for an eighth completed in 2019. It is essential to the understanding of climate systems, offering a wide range of services to all EU stakeholders free of charge. In 2019 the number of active users surpassed 300 000 ( ) for the first time – a much larger number than originally expected. Copernicus services support both accurate weather forecasting and the monitoring of climate change and pollution effects. A key component of Copernicus is its Emergency Management Service, which assists civil protection authorities in the immediate response to disasters such as the forest fires in Greece and Italy in 2019, but also the wildfires in Australia, among others.

The Flow Induced Phase Transitions project supports innovations replacing plastic with the creation of a sustainable and resistant fibre. The project allows the testing and development of a novel form of polymer processing via controlled solidification derived from natural materials with reduced use of water and energy. It takes inspiration from spiders and silkworms to create a high-performance natural fibre (sustainable, degradable and elastic) in a way that is over 1 000 times more energy efficient than industrially manufactured fibres. Thanks to the very low CO2 emissions engendered, and the use of natural resources, this new form of polymer processing will reduce energy consumption and the production of plastic. The project is now part of the Enhanced European Innovation Council pilot project.

Horizon 2020 released a cross-cutting call for proposals for ‘Building a low-carbon, climate-resilient future: next-generation batteries’, which for the first time brought together all battery-related topics into one ‘Battery alliance’ call, including seven topics addressing transport and stationary applications, materials and production. Sixteen proposals were funded, with a total EU contribution of EUR 97 million ( ).

The Horizon 2020 programme for research and innovation is one of the largest single integrated research and innovation programmes of its type in the world. It is particularly important for and emblematic of the wider drive to support innovation and technological development through the EU budget. Horizon 2020 supports the entire chain of research and development from the lab to the market. The goal is to ensure the EU produces world-class science and technology, removes barriers to innovation and makes it easier for the public and private sectors to work together in delivering solutions to major challenges facing society. By the end of 2019 the programme had supported more than 23 000 organisations in accessing risk finance, along with 5 522 high-quality research projects under the European Research Council and 44 000 innovations that include prototypes and testing activities ( ). Nonetheless, the share of climate-related expenditure under Horizon 2020 remained below the expected level, at 27%, due to the difficulty of assessing in advance the extent to which certain research projects will contribute to climate-related objectives. The Commission is addressing this situation with the launch of a call dedicated to the European Green Deal in 2020, with a budget of EUR 1 billion. This will considerably raise the level of climate-related expenditure.

In order to enable the green transition, the EU budget finances relevant infrastructure, such as for the generation of renewable energy, and focuses on smart solutions by developing innovative technologies and combining them with investment in essential infrastructure.

1.3.1. The EU budget enables the green transition by supporting innovation and investing in clean energy and transport

A significant share of the investment under this budget heading is designed to ensure that the EU retains its competitive edge in today’s global markets. Developing state-of-the-art technology and supporting its deployment in the EU are fundamental to ensuring the uptake of such technology by market participants and citizens. These programmes also provide investment in essential infrastructure, be it through providing direct financing in areas where existing financing is insufficient or through investment in the development or maintenance of infrastructure that are fundamental for the functioning of the internal market. In addition, this budget heading, together with other parts of the EU budget, invests in human capital, in particular by providing opportunities for mobility.

This heading also illustrates the power of the EU budget to mobilise investment from other sources. For example, by the end of 2019 the European Fund for Strategic Investments had triggered more than EUR 458 billion in investment and supported over 8.5 million jobs ( ). It has played an important role in supporting the economy by financing key infrastructure investments in areas such as energy and transport and supporting small and medium-sized enterprises.

In 2019, EUR 23 billion was allocated to competitiveness for growth and jobs, representing almost 15% of the EU budget. Under this budget heading significant economic investment has been triggered in infrastructure, in research and innovation and in support of small and medium-sized enterprises. This type of investment is key for the dual transitions to a climate-neutral and digital economy, and is fundamental for sustainable long-term growth in Europe.

The funding raised for Next Generation EU will be invested across three pillars: support to Member States with investments and reforms; kick-starting the EU economy by incentivising private investments; and addressing the lessons of the crisis. An example of addressing the lessons from the crisis is the proposal for the EU4Health programme 2021-2027: the overall budget of EUR 9.4 billion marks a step change in the EU’s contribution to the health sector.

Beyond this response that will bring rapid support, the Commission proposed also to harness the full potential of the EU budget to build a lasting and prosperous recovery. As part of the European Union’s Recovery Plan ( ), on 27 May 2020 the Commission proposed a reinforced multiannual financial framework for 2021-2027, together with a new European Recovery Instrument (‘Next Generation EU’) to boost and frontload funding. These proposals support crisis repair and provide a framework for long-term investment in the EU’s resilience and the green and digital transitions. Increasing the flexibility of the EU budget and investing in crisis preparedness and resilience will be priorities for the future financial framework.

·The EU, as global actor, and in collective action as Team Europe (EU, Member States, financial institutions) secured financial support to partner countries for a total of more than EUR 36 billion, focusing on addressing the immediate health crisis and resulting humanitarian needs, strengthening partner countries’ health, water and sanitation systems and their research and preparedness capacities to deal with the pandemic, as well as mitigating the socioeconomic impact. In addition, the EU promotes a Coronavirus Global Response with multilateral partners; an international pledging conference collected pledges of more than EUR 9.8 billion made by more than 40 Heads of State or Government and ministers to support the collaborative development and universal deployment of diagnostics, treatments and vaccines against coronavirus.

·Under the Horizon 2020 programme for research and innovation, the Commission launched a special call for expressions of interest to support research on COVID-19 with funding mobilised from the special fund for emergency research. Examples include a first call in January 2020 on health research on COVID-19 which targeted the development of vaccines, alternative diagnostic tests, new treatments and improving public health measures. As a result, 136 research teams will work with an overall budget of EUR 47.5 million in 17 projects. A further EUR 45 million will be made available through the Innovative Medicines Initiative Two Joint Undertaking , as well as EUR 164 million through a call launched by the European Innovation Council pilot.

·The Emergency Support Instrument was reactivated in April 2020 with a budget of EUR 2.7 billion to support Member States, and the Union Civil Protection Mechanism/rescEU budget was increased by EUR 380 million. This money is being used to help Member States rapidly procure and distribute the supplies needed to fight the coronavirus through measures that include creating a strategic rescEU stockpile of medical equipment, including ventilators and personal protective equipment such as masks.

·The scope of the EU Solidarity Fund was extended as of 1 April 2020 to encompass major public-health emergencies. Up to EUR 800 million could be made available to Member States and candidate countries that are seriously affected by the COVID-19 crisis to finance assistance to the population (medical, health-sector and civil-protection-type measures) and measures taken to contain the spread of the disease.

·The Coronavirus Response Investment Initiative mobilised all available cohesion funds to provide immediate support to Member States’ crisis response measures. This includes meeting the most pressing needs for medical supplies and equipment as well as addressing the effects of the economic crisis through short-term work schemes, financial support to SMEs and an immediate liquidity injection. The measures are accompanied by a number of flexibility arrangements, including on co-financing rules. Overall, the initiative could mobilise up to EUR 54 billion from the European Structural and Investment Funds to address immediate crisis needs in Member States.

The EU budget can be mobilised quickly and flexibly as part of a coordinated European response to crises. This has been illustrated vividly by the ongoing response to the COVID-19 pandemic. The Commission has proposed to use all of the remaining flexibility in the current financial framework to get funding quickly to where it is most needed. This has included the following examples.

Galileo’s search and rescue service allows the time required to detect emergency distress beacons to be reduced to 10 minutes.

Free, full and open data access resulting from the Copernicus international cooperation arrangements is expected to reach approximately 50% of the world's population via a local data hub.

Innovation management capacity assessments and guidance are provided to more than 4 000 SMEs per year under the competitiveness of enterprises and small and medium-sized enterprises programme.

The justice programme supported the participation of 1 358 participants in judicial training programmes in 2018, thereby fostering a common legal and judicial culture.

The European Fund for Strategic Investments has helped provide renewable energy to approximately 10 million households and save over 5 000 gigawatt hours of energy per year.

The diversifood project, financed by Horizon 2020, aims at achieving organic and low-input agriculture by enriching the diversity of cultivated plants within diverse agroecosystems.

Since 2014, over 3 million people have been provided access to high-quality drinking water and wastewater treatment under the European Regional Development Fund and the Cohesion Fund.

To date, the European Maritime and Fisheries Fund has funded nearly 15 000 projects on preserving the marine environment and ensuring better resource efficiency.

EUR 2.4 billion were committed by the European Social Fund to projects targeting gender equality by the end of 2019. For example, the ‘nidi gratis’ project in Lombardy, Italy has provided 30 000 low-income families with free access to nursery schools for their children.

Humanitarian aid provided financing to 24 countries and for six regional interventions in 2019 to strengthen the disaster preparedness of national response systems and mitigate the impact of climate-induced disasters on humanitarian needs.

In 2019, under the Africa–Europe Alliance, over 8 000 African students and staff were granted scholarships in EU universities by Erasmus+, bringing the total to over 26 000 since 2014.

With financing from the Development Cooperation Instrument, Switch Africa Green provides funding to green business projects in Africa. In its first phase, it supported 3 000 micro, small and medium-sized enterprises and contributed to creating or securing 10 000 green jobs.

27.5 million people had benefited from improved health services financed by the European Regional Development Fund by the end of 2018.

By the end of 2018 European Regional Development Fund and Cohesion Fund financing had resulted in an increase in waste-recycling capacity to 765 000 tonnes per year, compared to 48 000 tonnes per year at the end of 2017.

Food assistance reached 12.6 million people in 2018 through the Fund for European Aid to the Most Deprived.

The Spotlight Initiative’s ‘safe and fair’ programme (EUR 25 million), aims at ensuring that labour migration is safe and fair for all women in the region covered by the Association of Southeast Asian Nations.

In 2018 the Asylum, Migration and Integration Fund awarded over EUR 194 million for a cash assistance and accommodation scheme in Greece, providing approximately 25 000 places in apartments and suitable shelters to the most vulnerable migrants.

In light of the interlinked nature of these goals, most of the EU’s budgetary programmes are designed to address multiple sustainable development goals. Currently, 75% of the EU budget programmes (45 out of 60) contribute towards these goals. The following infographic illustrates, in a non-exhaustive manner, the many examples of how EU programmes contribute to the sustainable development goals. The EU’s coherent approach supports a variety of initiatives in a wide range of policy fields across the globe, with the aim of promoting sustainable development for all.

The EU has embarked on a transition towards a low-carbon, climate-neutral, resource-efficient and circular economy that goes hand in hand with increased security, prosperity, equality and inclusion. In this light, the design and implementation of EU spending programmes aims at delivering on the objectives in each policy field while promoting sustainability through the actions and interventions of the relevant programmes. Through the European consensus on development, the EU has also aligned its approach to international cooperation and development policy with the 2030 agenda, placing the sustainable development goals and the Paris Agreement at the heart of its external action.

The EU, together with its Member States, is fully committed to being at the forefront of implementing the 2030 agenda for sustainable development. The 2030 agenda is the shared roadmap adopted under the auspices of the United Nations for a peaceful and prosperous world, of paramount importance to the values of the EU and the future of Europe. The EU has committed to implementing the sustainable development goals in both its internal and its external policies. Since the adoption of the agenda in 2015 the EU has made significant progress in delivering on the sustainable development goals, and is continuing to strengthen its efforts.

Further information on how the EU budget is used to support climate and biodiversity is provided in Annex 2 to this report.

As an integral element of the European Green Deal, the new biodiversity strategy for 2030 will include a transformative plan to further protect and restore nature, with resulting benefits for both halting biodiversity loss and mitigating the effects of climate change. The EU budget will play an important role in delivering this strategy.

In 2019 the contribution from the EU budget to the fight against biodiversity loss amounted to almost 13.4 billion, or 8.3% of the budget. More than 75% of the expenditure comes from the common agricultural policy.

While the majority of expenditure on biodiversity is linked to the heading ‘Sustainable growth: natural resources’ (Heading 2), many other programmes contribute to tackling biodiversity loss.

The EU is also making a concerted effort to support biodiversity. Between 2014 and 2020 the EU budget contributed EUR 85 billion (8% of total expenditure) to support biodiversity. Throughout the period the contribution of the budget has been stable, with the exception of the first 2 years of implementation.

To fight climate change and environmental degradation and become the world’s first climate-neutral economy by 2050, the EU needs to accelerate the transition to a more sustainable economy. In line with the Paris Agreement on climate change and the United Nations sustainable development goals, for the next long-term budget the Commission has proposed an even more ambitious goal for climate mainstreaming across all EU programmes, with a target of at least 25% of EU expenditure contributing to climate objectives. This will make an important contribution to delivering the European Green Deal proposed by the Commission.

The degree to which an individual programme is climate related varies in accordance with its field of operation and the nature of the investment. In 2019, 28%, or EUR 16 billion, of the funding for the common agricultural policy and 21% of the European Regional Development Fund and Cohesion Fund contributed to climate objectives. Thanks to careful programming, the share of climate expenditure is rising in other areas: for example, the European Social Fund increased its contribution from 0% in 2014 to 12%, or EUR 1.6 billion, in 2019.

Thanks to the mainstreaming approach, all headings contribute to the achievement of this overarching priority. More than 90% of climate-related expenditure is financed under the headings ‘Sustainable growth: natural resources’ (Heading 2), ‘Economic, social and territorial cohesion’ (Heading 1b) and ‘Competitiveness for growth and jobs’ (Heading 1a).

Left: 2019 contribution of climate-related expenditure by budget heading. Right: Climate-relevant share of the main contributing programmes in 2019.

The climate mainstreaming approach entails the deep integration of climate-related expenditure throughout the long-term budget. The current overall target is to dedicate 20% of EU expenditure to climate objectives. In 2019, climate-related expenditure exceeded this target and amounted to some EUR 35 billion, or 21% of the EU budget. Cumulatively over the 2014-2020 period the EU budget will contribute EUR 211 billion, or 19.8%, to climate objectives. While this falls slightly short of the target, annual climate-related expenditure has consistently been above 20% in recent years, catching up after relatively low levels earlier in the period.

The EU budget addresses specific policy needs through one or several programmes. The horizontal nature of some policy objectives, however, requires deeper integration throughout the budget. This is particularly true for climate-related expenditure, protecting biodiversity and pursuing the sustainable development goals.

The administrative budget under Heading 5, which supports both budgetary management and the full spectrum of activities of the European Union institutions, accounts for a small share of the EU budget. Together with the other institutions, the Commission has taken steps to improve the efficiency of all of its operations and has delivered significant savings under the current financial framework, including by implementing a 5% staff reduction between 2013 and 2017 ( ). The European Court of Auditors has confirmed these savings, while noting the negative consequences they have had for staff ( ). These savings have been made at a time when there are ever-increasing expectations on the Commission to deliver in areas such as the green and digital transitions, industrial policy, economic and social recovery, migration, the rule of law and defence cooperation. These pressures have been heightened by the workload involved in developing and deploying a comprehensive EU response to the COVID-19 pandemic and its aftermath. Stability in the administrative budget under the future financial framework will therefore be essential for the EU institutions to continue to deliver for the EU in all the priority areas.

The performance of the EU budget is a responsibility shared among the many actors involved in its implementation. As the manager of the EU budget with ultimate responsibility for the implementation under the Treaty, the Commission plays a full part by working to ensure that the EU’s financial programmes are managed efficiently and effectively, and that they deliver their intended results on the ground.

As regards the performance of the EU budget, the available reporting information at the end of 2019 presented in the ‘Programme performance overview’ in Annex 1 shows that most programmes are progressing well towards the targets set at the beginning of the programming period. Despite the delays in starting up the 2014-2020 cohesion programmes, progress is now accelerating. Where there were specific issues in relation to the implementation of particular programmes, the ‘Programme performance overview’ provides further explanation on how this has affected performance and the mitigating measures that have been taken. Definitive conclusions on programme performance, however, will only be possible on the basis of detailed evaluations after the closure of the current programmes. The impact of the COVID-19 pandemic and the steps that are being taken to redirect the EU budget to support crisis repair and recovery will need to be given due consideration in any such assessment.

The total amount of commitments implemented from the EU budget in 2019 amounted to EUR 161 billion ( ). Around half of this (EUR 81 billion) was allocated to Heading 1 ‘Smart and inclusive growth’, split between Heading 1a ‘Competitiveness for growth and jobs’ (14%) and Heading 1b ‘Economic, social and territorial cohesion’ (35%). Heading 2 ‘Sustainable growth: natural resources’ was the second-largest area of the budget, with EUR 59 billion (37%). EUR 4 billion was allocated to Heading 3 ‘Security and citizenship’, including for reinforcing the external borders of the EU and addressing the refugee crisis and irregular migration. EUR 12 billion was allocated to Heading 4 ‘Global Europe’, and EUR 6 billion was spent on the ‘Commission’s administrative expenditure’ under Heading 5.

During 2019 the EU budget contributed to strengthening the economy of the European Union and making it more resilient. The budget also supported investment in the twin transitions to a greener and more digital Europe, and financed programmes promoting solidarity and security both within and beyond the EU’s borders.

2019 was also the penultimate year of implementation of the financial programmes under the 2014-2020 multiannual financial framework. These programmes are now operating at cruising speed and contributing strongly to the delivery of the EU’s priorities. There was a particular focus in 2019 on investment in growth and job creation, and on supporting the EU’s priorities in the areas of migration and security.

With the European elections in May, 2019 was a year of transition for the European Union. The focus was on completing work on the political priorities of the Juncker Commission and preparing for the arrival of a new European Parliament and a new Commission led by President Ursula von der Leyen. The strategic agenda of the European Council ( ) and the political guidelines ( ) of the von der Leyen Commission set out the political framework for the coming period.

Improvements will continue with the Commission’s proposals for the 2021-2027 Multiannual Financial Framework. Based on the findings of a comprehensive spending review, the Commission has included a smaller number of higher-quality indicators linked closely to programme objectives in the proposals for the financial programmes. The Commission is now working with the European Parliament and the Council to ensure that these improvements, together with the other changes to programme design that will contribute to improved performance, are reflected in the final versions of the future programmes.

The performance framework for the EU budget and related reporting is being strengthened over time. Audits conducted by internal and external auditors have helped in this respect. Recent recommendations from the European Court of Auditors have led to more balanced reporting on performance, with more attention given to challenges encountered, a stronger focus on the reliability and quality of data, and clearer explanations of how data on performance have been used to improve performance.

Some financial programmes have embedded performance assessment even more deeply into their design. For example, a performance reserve was created for the current European Structural and Investment Funds. This reserve was released in 2019 to programmes that had achieved their predefined milestones by the end of 2018. In the case of programmes and priorities that had not achieved their milestones, resources were reallocated.

Annex 1 to this report, the ‘Programme performance overview’, presents the latest available performance information for each programme. It provides an overview of the objectives of each programme together with the state of its budgetary implementation and the latest available performance data.

The EU budget has a robust and integrated performance framework, leading to well-managed and result-oriented EU programmes. This framework includes clear and measurable objectives for each programme, together with indicators providing the basis for monitoring, reporting and evaluation. This indicator information, combined with other sources of qualitative and quantitative performance information such as evaluations, allows programme performance and the progress towards the agreed objectives to be assessed. This allows programme managers to anticipate and address weaknesses in programme implementation and is an important input into budgetary decision-making.

The EU budget is adopted annually based on a 7-year financial framework. Structured into five headings, it brings together 60 financial programmes of varying size and scope. In some policy areas the EU budget is the main delivery tool, such as in the common agricultural policy. In other areas the EU budget is complemented by regulatory instruments that contribute to the achievement of EU policy goals.

The EU budget is primarily an investment budget. Amounting to roughly 1% of the EU’s gross national income, and representing around 2% of all public spending in the EU, it aims to complement national budgets and to implement commonly agreed priorities. Unlike national budgets, the EU budget is mainly focused on supporting strategic investments over the medium to longer term, and on using its leverage to catalyse investment from other public and private sources. The EU’s financial programmes are managed either directly by the Commission, for example in the area of research, or together with the Member States, such as in relation to cohesion policy. Some two thirds of the EU budget is managed together with Member States through shared management.

The EU budget helps turn the Union’s priorities into results that make a difference to people’s lives. It is primarily an investment budget that helps to match the EU’s shared ambitions with the resources to make them a reality. The budget focuses on areas in which pooling resources to tackle common challenges can deliver results that could not be achieved as effectively or efficiently by Member States acting alone. This is the case in areas as diverse as cross-border infrastructure, external border management, large-scale space projects and pan-European research.

Section 2, on internal control and financial management, reports on the steps the Commission took in 2019 to ensure the sound financial management of the EU budget. Based on the control results reported by the Commission departments accountable for managing the budget, it confirms that the EU budget is well protected. Through this report the Commission takes overall political responsibility for the management of the EU budget.

This reporting is supplemented by more detailed programme-by-programme performance information in the ‘Programme performance overview’ (Annex 1). The overview summarises the key performance messages from the programme statements accompanying the 2021 draft budget proposal.

Section 1 provides a high-level overview of the performance of the EU budget in 2019, focusing on the key programmes. This section presents the latest information, from a variety of sources including programme monitoring, evaluations and audits, on the results achieved with the EU budget up until the end of 2019. This section is structured according to the headings of the current multiannual financial framework.

This report is part of the broader integrated financial and accountability reporting package ( ), which also includes the annual accounts ( ), a long-term forecast of future inflows and outflows covering the next 5 years ( ), the report on internal audits ( ) and the report on the follow-up to the discharge ( ).

The Annual Management and Performance Report for the EU Budget – Financial year 2019 is the Commission’s main contribution to the annual discharge procedure ( ) by which the European Parliament and the Council scrutinise the implementation of the EU budget. The report covers both the performance of the programmes financed by the EU budget and the Commission’s management of the EU budget in the reporting year.

For the Commission, reporting consistently and improving the various control instruments are instrumental to protecting the EU budget. I can assure you that we will continue working to make sure that every euro contributed by EU taxpayers is well spent in the interests of the citizens.

The Commission carefully monitors the implementation of the EU budget on the ground. If Member States, intermediaries or final beneficiaries are found to have spent EU money incorrectly, the Commission takes immediate steps to correct these errors, and recover the funds as necessary. The Commission estimates that, after corrections and recoveries over the coming year(s), the remaining level of error for the 2019 expenditure will be under 1% – well below the materiality threshold of 2%. Through this report, the Commission takes overall political responsibility for the management of the EU budget in 2019.

The Commission attaches great importance to ensuring that the EU budget is spent responsibly and correctly, and to working with all parties involved to make sure that it delivers tangible results on the ground. This report sets out the steps that are being taken to ensure that the EU budget is managed in accordance with the highest standards of sound financial management.

The current coronavirus crisis has also shown once more how important it is for the EU to be able to rely on a well-dimensioned and flexible multiannual financial framework. Within the established limits of its capacity and its regulatory flexibility, it offers the means to act and to react quickly to unforeseen and unprecedented crises. Boosted by Next Generation EU, the EU’s long-term budget will also be at the heart of the recovery, having demonstrated its capacity to act as a catalyst for solidarity, responsibility and innovation, while ensuring sound financial management throughout the life cycle of the programmes it funds.

The EU budget will continue to play a key role in supporting the ambitious European Green Deal. At the same time, it remains on the frontline when tackling new challenges: in the current crisis, we have used all the flexibility in the budget to channel funding swiftly to where the crisis repair needs are greatest.

The EU budget contributes to strengthening the European economy and making it more resilient. Around half of the budget is allocated to smart and inclusive growth. It is also used for investing in the future, in particular in the transition to a greener and more digital Europe. In 2019 the EU budget again demonstrated that it can make a tangible difference in the life of EU citizens in many areas, be it through improved transport offers, better connectivity at home and while travelling, or improving the environment by delivering on its promise to spend at least 20% on combating climate change. The EU budget also supported the common European response in the fields of migration and security.

2019 was the final year of the 2014-2019 legislature, thus the focus was on completing work on the priorities of the Juncker Commission and preparing the transition to a new Commission led by President von der Leyen.

It is my pleasure to present the Annual Management and Performance Report for the EU Budget – Financial year 2019. The report provides an overview of the performance, management and protection of the EU budget, and is part of the Commission’s integrated financial and accountability reporting package. It fulfils the Commission’s obligations under the Treaty on the Functioning of the European Union ( ) and the financial regulation ( ), and is an essential part of a highly developed system of financial accountability.

2.2.The Commission relies on various instruments to ensure that the taxpayers’ money is well managed49

TO THE EUROPEAN PARLIAMENT, THE COUNCIL AND THE COURT OF AUDITORS 2019 Annual Management and Performance Report for the EU budget

In May 2019, the Commission published the first ex post evaluation ( ) of the EU Solidarity Fund’s interventions between 2002 and 2016, which confirmed the EU added value of the instrument. The evaluation concluded that the fund is a valuable instrument in the EU toolkit for interventions in disaster situations. At the same time, further consideration needs to be given to policy actions that increase the potential for the fund to intervene.

Support to finance emergency and recovery operations amounting to EUR 293 million was awarded in 2019 following applications from three Member States relating to natural disasters that occurred in 2018: flooding in Romania and severe weather in Italy and in Austria. In 2019 the Commission received four applications for aid: from Austria, relating to the extreme weather conditions of 2018; from Greece, relating to storms in Crete in 2019; from Portugal, relating to Hurricane Lorenzo in the Azores in 2019; and from Spain, relating to extreme weather at the end of 2019.

The EU Solidarity Fund is activated at the request of an eligible Member State when major or regional natural disasters occur, such as earthquakes, floods, droughts, forest fires, storms or major public-health emergencies. It helps to increase the resilience and preparedness of Member States and regions in addressing the adverse effects of climate change and other natural and human-made disasters.

Areas for improvement identified in the 2014-2020 midterm evaluation include the lengthy mobilisation procedure and the difficulties that Member States face in providing the extensive background analysis of the triggering event (globalisation or crises) that is required for the mobilisation of financing. These concerns are addressed in the Commission’s proposal for the next long-term budget, in accordance with which the European Globalisation Adjustment Fund will base support solely on the significant impact criterion, set at a minimum of 250 displaced workers.

According to the final reports received between 2017 and 2019, on average 61% of the workers who have been assisted have taken up new employment following an intervention from the European Globalisation Adjustment Fund. However, the reintegration rate in individual cases varied from 40% to 92%, depending on the economic sector and the area concerned, as it is influenced by the absorption capacities of local and regional labour markets.

The European Globalisation Adjustment Fund provides support to workers made redundant and persons whose activity has ceased as a result of major structural changes in world trade patterns due to globalisation, or as a result of the negative effects of the global financial and economic crisis. Between 2014 and 2019 funding from the European Globalisation Adjustment Fund supported 45 047 targeted workers and 4 099 young people not in employment, education or training in 27 different economic sectors. In 2019 only one application was submitted (but not approved), possibly because of fewer massive layoffs due to globalisation and the overall improvement of the economic situation in the Member States prior to the crisis, which facilitated the reintegration of workers into the labour market.

1.8.1. The EU budget has shown solidarity within the EU by financing disaster-relief efforts and mitigating globalisation effects

The Commission has proposed to create a new integrated Neighbourhood, Development and International Cooperation Instrument under the future multiannual financial framework. This will be the EU’s main tool to contribute to eradicating poverty and promoting sustainable development, prosperity, peace and stability. The new long-term budget will lead to the significant modernisation of the external dimension of the EU budget. Drawing on lessons from the current instruments, it will increase the effectiveness and visibility of the EU’s external policies, strengthen coordination with internal policies and give the EU the flexibility to respond more quickly to new crises and challenges.

The European Neighbourhood Instrument is the main financial instrument for implementing the European neighbourhood policy ( ), which supports political and economic reforms with the aim to promote stability, security and prosperity in the EU’s direct neighbourhood. There are notably positive developments in the eastern neighbourhood, with strong achievements in the priority areas of economy, connectivity and stronger society. Progress is nevertheless still needed in the areas of rule of law, fighting corruption, spaces for civil society and media independence. In the southern neighbourhood, external factors such as political instability and the security situation are hampering progress. Cooperation with the partner countries in North Africa is challenging, and depends on evolving parameters, particularly in Libya. Nevertheless, efforts in Tunisia for democratic and economic reforms and the resumption of cooperation with Morocco make continued support relevant and promising. Across the Middle East region, the impact of ongoing conflicts, insecurity and poor governance destabilises the EU’s partners, disrupts trade and investment and limits opportunities for the population. The large number of refugees and displaced persons exacerbates these structural deficiencies.

The rule of law will become even more central to accession negotiations, for example by anti-corruption work being mainstreamed and by applying a stronger focus on the fundamentals of functioning democratic institutions, public administration reform and supporting economic reforms. There have been improvements in the fulfilment of these fundamental areas of the political criteria for enlargement countries. At the end of 2019 only Turkey was experiencing backsliding in the areas of the rule of law and fundamental rights, public administration reform and the functioning market economy. This led to the adoption of a revised indicative strategy paper in August 2018. Initial indicative allocations for pre-accession funds in Turkey for the 2018-2020 period were reduced by 40%. The emphasis in the selection of projects under the new Instrument for Pre-Accession Assistance will be put on the fundamental areas of the acquis, notably the rule of law, while only technically mature projects will be selected for support.

In North Macedonia, the quality of both surface waters and ground waters is deteriorating as a result of the discharge of untreated or inadequately treated sewage. With the waste-water treatment plant that has been constructed in the Eastern part of the country, the whole population of that region, totalling 54 676 people, is benefiting directly from properly treated waste water. All agricultural holdings also benefit from better environmental conditions for their products. The health of both citizens and nature is improved. The volume of untreated municipal waste water discharged into the Strumica River has been reduced, minimising negative impacts on the quality of water resources, nature and health in Strumica region.

The Instrument for Pre-Accession Assistance supports candidate and potential candidate countries in adopting and implementing the political, institutional, legal, administrative, social and economic reforms required to comply with EU values. It also helps them to progressively align themselves with EU rules, standards, policies and practices with a view to EU membership. Financial assistance is provided to the beneficiary countries ( ) in five policy areas: (a) reforms in preparation for EU membership and related institution and capacity building; (b) socioeconomic and regional development; (c) employment, social policies, education, promotion of gender equality and human-resources development; (d) agriculture and rural development; and (e) regional and territorial cooperation. The box below provides a specific example of this instrument in action.

As of June 2019 the EU Trust Fund in response to the Syrian Crisis had provided education, health, water-management, livelihood and other services to 4.3 million people in the countries impacted by the Syrian crisis. A total of 92 health centres were upgraded, refurbished and equipped.

Thanks to the facility, over 1.7 million refugees continue to benefit from a monthly cash allowance called the emergency social safety net to help them meet their basic needs. By the end of 2019 humanitarian assistance had helped 1.7 million of the most vulnerable refugees. A total of 684 919 Syrian children were enrolled in the 2019-2020 school year – corresponding to 63% of the total population of Syrian school-age children in Turkey. Over 3 900 educational facilities (including Early Childhood Education centres) have been upgraded through the provision of equipment since the start of the facility and 40 new schools have been constructed. A further 320 are in the process of being built. Moreover, 179 healthcare centres are now operational. Since the start of facility funding, 11.9 million primary healthcare consultations have been provided to refugees, while 3.5 million vaccination doses have been provided to Syrian infants and pregnant women.

The Facility for Refugees in Turkey continues to deliver much-needed assistance to refugees and host communities in Turkey in all the priority areas it covers, i.e. basic needs, education, healthcare, protection, socioeconomic support and municipal infrastructure. The first tranche of EUR 3 billion has been fully contracted, with 72 projects rolled out. The full operational budget of the second tranche of EUR 3 billion was committed at the end of 2019. The Facility Steering Committee meets on a regular basis to monitor and steer the implementation of the facility. Six-monthly monitoring reports, which are publicly available, confirm that the facility is continuing to achieve its goals.

In 2019, the EU Emergency Trust Fund for Africa (EUTF) contributed to facilitating political dialogue with African partner countries, applied innovative approaches, and produced remarkable and visible results across the three operational windows of the Fund (North Africa/Horn of Africa/Sahel and Lake Chad) by pooling funding and expertise from a wide range of stakeholders. The Fund further consolidated its achievements, bringing the total number of approved programmes to 224, for a total of EUR 4.4 billion.

Moreover, the EU continued to cooperate with partners all over the world to address challenges related to forced displacement. Every year, 80% of the EU humanitarian aid budget (EUR 1.6 billion in 2019) goes to projects helping the forcibly displaced and their host communities to meet their immediate basic needs in situations of conflict, crisis or protracted displacement.

Since the start of the migration crisis in 2015 the EU has provided vital support and protection to millions of people in need, helping to address the root causes of irregular migration and forced displacement through economic and employment opportunities and as well as by strengthening resilience. It has also helped to create the conditions for legal migration, including through resettlement, and effective migration management. Work to prevent irregular migration continued, in collaboration with partner countries, among others by fighting migrant smuggling networks in the Sahel. Work has continued to improve the rate of effective return for people without a right of residence in the EU or in other countries. By the end of 2019, irregular EU border crossings were 92% ( ) below the peak levels of 2015.

Humanitarian aid works alongside development cooperation, with a specific needs-based perspective addressing the impact of conflicts and natural or man-made disasters. It provides assistance in line with humanitarian principles of humanity, neutrality, impartiality and independence. In total, 177 million people received humanitarian aid in 2019. The largest share of the 2019 humanitarian aid budget went to refugees from and people internally displaced by the Syrian and Yemeni conflicts, while 23% between 2014 and 2019 went to ‘forgotten crises’ (crises with little media attention and poor coverage), such as the Burundi regional refugee crisis, the conflict in Ukraine and the conflict involving the FARC guerrilla movement in Colombia. The EU maintained its efforts in relation to crisis prevention in order to preserve peace and strengthen international security. The EU was present in every significant humanitarian crisis in 2019. In larger crises, the EU consistently responded to situations in which other donors were not present, and often played the role of coordinator and catalyst. The programme also contributed to building the capacity and resilience of vulnerable or disaster-affected communities. The disaster-preparedness actions benefited 38 million people in disaster-prone regions. A crucial aspect underpinning the EU’s positive results in fostering resilience is the progressive move towards cash-based assistance, as the Commission maintained its commitment to delivering 35% of humanitarian assistance through cash transfers.

The Instrument contributing to Stability and Peace has been of great importance in the EU’s efforts to promote peace in a variety of circumstances in Afghanistan, the Central African Republic, Colombia, Libya, Syria, Ukraine and Yemen. Strengthening dialogue with civil society, conflict prevention and peacebuilding has been essential in order to prevent the worsening of humanitarian crises. The protection of civilian communities has been enhanced through support for security and defence forces in volatile regions.

Development cooperation in Asia and the Middle East/the Gulf continued to focus in 2019 on the least-developed and most-fragile countries, with a particular emphasis on good governance and sustainable sector reforms. An enhanced focus was put on job creation and sustainable and inclusive growth via the promotion of investments. The development of the private sector was key, as it has a major role to play in sustainable economic development and growth.

In 2019, projects and programmes achieved important results in Latin America, in key sectors such as water and climate change, the private sector and investment, economic development, security, the rule of law and governance. With regard to regional cooperation, successful initiatives in strategic sectors were launched and further developed during the year. With regard to security, two actions were agreed to foster intra-Latin American cooperation in the area of integrated border management, with the selection of four land-border-crossing posts involving seven countries, and to support the fight against human trafficking.

In a context of shrinking civic and democratic space, the EU has reaffirmed its unconditional support for these values worldwide, while confirming its central role in international fora. According to the World Bank’s ‘rule-of-law’ score, the situation has been steadily deteriorating since 2014. For example, for the proportion of seats held by women in national parliaments, the little progress made between 2015 and 2018 was undone in 2019. The EU has continued to promote democracy, the rule of law, good governance human rights and international law principles, especially through the European Instrument of Human Rights and Democracy (EIDHR).

The ambitious External Investment Plan has offered innovative ways of mobilising public and private sources of financing for development. Through initiatives like the Digital Energy Facility, the EU has set the foundations to modernise and digitalise the energy sector, promote innovative business models and establish the necessary preconditions for increased access to sustainable energy worldwide, with a specific focus on Africa.

The European Green Deal has a strong external dimension aiming to reinforce the EU’s role as a global leader on environmental, climate and energy matters. In 2019, the EU enhanced the integration of environment and climate change across all instruments and sectors of EU international cooperation and development, for an effective implementation of the 2030 Agenda and Paris Agreement.

Within the framework of the EU’s external action, the primary objective of Development Cooperation is the reduction and, in the long term, eradication of poverty. EU effort and contribution has notably been instrumental in securing food and nutrition security, in developing sustainable agriculture as well as in supporting health and education programmes, including by promoting gender equality and women’s empowerment, the rights of children and culture. Economic growth and job creation have been supported via trade and private sector development, particularly concerning local entrepreneurs, by enhancing the digital economy and by providing training and education to the local workforce.

The programmes under this heading contribute to forging a stronger Europe in the world. They finance geographic and thematic actions that help the poorest in the world and ensure that the EU promotes democracy, peace, solidarity, stability, poverty reduction, prosperity and natural resource preservation, both in the EU’s immediate neighbourhood and across the world. The development, neighbourhood and other external policies of the EU share key objectives, such as fostering a sustainable economy that is not in contradiction with achieving social and environmental development, human rights, and promoting democracy, good governance and the rule of law. The EU has maintained its efforts on crisis prevention in order to preserve peace and strengthen international security.

In 2019, EUR 12 billion of commitment appropriations (7% of the total budget) were allocated to ‘Global Europe’ (Heading 4), distributed among the main programmes as follows.

The justice programme promotes judicial cooperation between Member States’ authorities and contributes to the effective and coherent application and enforcement of EU law in the areas of civil and criminal law, the rights of persons suspected or accused of crime and the rights of victims of crime. The justice programme supports the application of many EU legal instruments in judicial cooperation in criminal matters, such as the European Arrest Warrant, which is the most successful EU instrument in criminal matters with over 10 000 cases per year. The electronic criminal records information system, which is an information technology system used by the central authorities of the Member States, has registered a large increase in the number of exchanges of information: by the end of 2019 the number of exchanges of information in the system exceeded 3.5 million.

Safety is equally important when it comes to food. The food and feed programme contributes to a high level of health for humans, animals and plants throughout the food chain by preventing and eradicating diseases and pests and by ensuring that consumers and the environment are well protected. While increasing the overall level of safety, these actions also enhance the competitiveness of the EU’s food and feed industry, favouring the creation of jobs. In 2019 approximately 13 500 public officials in Member States and non-EU countries in charge of official controls were trained to improve their effectiveness, efficiency and reliability.

Consumers need to be confident that unsafe products have no place on the EU market and that the relevant rules are effectively and efficiently enforced, both domestically and across borders. This is why the EU supports a coordinated and coherent approach to the enforcement of safety and market-surveillance rules across the Member States. Through the consumer programme, in 2019 Member States’ authorities communicated more than 2 000 notifications of dangerous products through the Rapid Alert System for dangerous non-food products.

1.6.3. The EU budget supports the single market by promoting the safety of consumers and citizens

In March 2019 the EU reinforced and strengthened disaster risk management by upgrading the Civil Protection Mechanism. The result was rescEU, and the objective is to improve both the protection of citizens from disasters and the management of emerging risks. rescEU entails a new European Union reserve of capacities (the ‘rescEU reserve’), which initially includes a fleet of firefighting planes and helicopters. rescEU’s scope goes beyond forest fires, however, and is expected to include responding to other threats such as medical emergencies or chemical, biological, radiological and nuclear incidents. Before it was upgraded, the Civil Protection Mechanism had been activated 20 times in 2019, with three requests for assistance from within the EU and 17 from outside the participant states. Later in 2019 the rescEU programme was also activated to contribute to the aerial forest-fire capacities in Greece, and some further preparatory work was performed to implement the new rescEU mechanism. Now, due to the COVID-19 outbreak, all efforts are focused on the stockpiling of medical equipment, with an initial budget of EUR 50 million.

Disasters know no borders. A well-coordinated response at the EU level avoids duplication of relief efforts and ensures that assistance meets the real needs of the affected region. Civil protection assistance consists of governmental aid delivered in the immediate aftermath of a disaster aiming to reduce the loss of human life and the environmental, economic and material damage caused by disasters. For a coherent, predictable, cost-effective and more visible EU response to disasters, the European Response Capacity was set up, ready to help anywhere in the Member States and in non-EU countries, as needed. The EU’s Civil Protection Mechanism is funded partly under Heading 3 and partly under Heading 4.

2019 was a landmark year for EU border management, with new rules strengthening the European Border and Coast Guard Agency entering into law in December ( ). These rules allow the agency to support the Member States in their border management activities and to jointly implement integrated border management at the EU level. This wide-ranging new regulation strengthens the EU’s management of its external borders and provides for the creation of a standing corps of 10 000 operational staff in the agency. This standing corps will have executive powers and its own equipment to enable it to intervene wherever needed along the EU’s external borders, or when requested by non-neighbouring countries. The reinforced mandate requires a substantial annual increase in the EU’s contribution to the agency over the course of the next financial framework, as proposed by the Commission, in line with the gradual increase in staff and equipment.

Based on its existing mandate, in 2019 the European Border and Coast Guard Agency deployed around 7 000 border guards and other experts to assist Member States in protecting the EU borders and implementing the EU return policy. Frontex organised the return of almost 16 000 persons and contributed to the rescue over 28 600 migrants at sea. ( ) Apart from curbing irregular immigration, the European Border and Coast Guard Agency joint operations have helped seize 390 stolen vehicles and more than 125 tonnes of drugs at the external borders.

·providing, together with international partner organisations, 1 100 places in shelters for unaccompanied children in mainland Greece, and ensuring access to education to more than 12 000 children at public schools.

·providing, together with the United Nations Refugee Agency, 25 000 accommodation places on an annual basis on the Greek mainland and the islands, as well as cash assistance to more than 90 000 asylum seekers;

·more than 62 000 people in need of international protection have been offered safe and legal pathways to the EU via resettlement schemes with the support of the Fund;

·nearly 6 million people to receive integration assistance, and over 70 000 people have taken part in pre-departure activities;

The EU budget has supported Member States and EU agencies with funding of almost EUR 11 billion since 2015 to respond to the immediate challenges on the ground, investing in stronger and more efficient asylum systems, more efficient return procedures and integration measures, and better management of the EU’s external borders. The Asylum, Migration and Integration Fund and the Internal Security Fund play an important role in the immediate response to migration issues and to support the integration of non-EU country nationals in EU societies, while the European Social Fund supports the integration in the labour market and social inclusion of migrants. Since 2015 ( ) the following has been achieved.

The EU budget supported the continued comprehensive response in the European Union to migration challenges and the effective management of its external borders. Work on the European agenda on migration made a positive contribution to replacing unsafe and uncontrolled migration with safe, orderly and regular migration. A breakdown of the 2019 funding under Heading 3 (EU internal) is shown below. Funding from external instruments (Heading 4) also contributes to the external dimension of migration policy, in particular by addressing the root causes of migration.

1.6.1. The EU budget provides support and solidarity to EU Member States for migration and border management

In 2019, EUR 4 billion (2%) of commitment appropriations were allocated to ‘Security and citizenship’ (Heading 3). These programmes deal with key political challenges such as migration, border management, law enforcement, security-related risks, and health and consumer protection, along with culture, combatting all forms of intolerance and promoting the rights of vulnerable groups.

The performance review carried out in 2019 showed that 70% of EU priorities under the European Maritime and Fisheries Fund had reached their milestones. A 20% share of all performance reserves, amounting to EUR 67 million, was made available for reallocation because the associated priority had not reached its milestone. The reallocation of the reserve allowed most Member States to make a more comprehensive review of their operational programmes. Only one Member State (Slovakia) has lost the performance reserve.

Interventions from the budget are often linked to improving sustainability through investments in infrastructure and the digitalisation of operations. In 2019 over 8 700 fishing vessels, about 10% of the EU fleet, benefited from the European Maritime and Fisheries Fund. It is estimated that more than 80 000 fishers, their spouses or partners, 18 000 members of producer organisations and 40 000 employees of processing companies benefit from the support ( ).

Several of the EU’s actions under the maritime policy contributed to boosting investments in a sustainable blue economy. The capacity of offshore wind energy in the EU is growing compared to onshore wind energy. Ocean energy remains relatively small, but new technologies are expected to significantly increase deployed capacity in the near future. Member States have made progress in better integrating aquaculture in their spatial planning and reducing administrative burden, but more efforts are required to unlock the real potential of the sector.

As a member of several regional fisheries management organisations, the EU promotes better ocean governance, improved performance, a culture of compliance and science-based fisheries management, including the application of the ecosystem-based and precautionary approaches. The fight against Illegal, unreported and unregulated fishing remained a priority. The EU supported this fight in bilateral cooperation as well as in regional fisheries management organisations, sub-regional bodies and in global fora.

The challenges in the maritime sector are slightly different, and are linked to a large extent to the question of employment in coastal areas and the sustainable management of fishing stocks. Recent economic data show that sustainable fisheries pay off in terms of higher and stable yields, fleet profitability and jobs. The EU's fisheries conservation policy, as in previous years, aims to achieve maximum sustainable yield for fish stocks by 2020. When necessary, emergency measures are put in place, for example the eastern Baltic cod fishery was closed for the second half of 2019. Nevertheless, further efforts are still needed to reach maximum sustainable yield for all commercially exploited stocks by 2020.

1.5.3. Investment in sustainable fisheries is paying off in terms of higher and stable yields, fleet profitability and jobs

Rural development support will also provide a decisive contribution to the new call for enhanced environmental and climate actions linked to the European Green Deal. The plans will put greater emphasis on research, technology and digitalisation, and focus specifically on attracting young people into farming while continuing to promote employment, growth, social inclusion and local development in rural areas.

Taking stock of the various issues, the proposals for the post-2020 common agricultural policy introduce a new strategic plan covering both pillars and with a focus on supporting viable farm income and resilience across the EU to enhance food security.

The performance review carried out in 2019 provides further evidence that the programme had been working reasonably well, including when compared with other European Structural and Investment Funds. Some 64% of the rural development programmes had achieved all their milestones by the end of 2018, whereas 13% had experienced serious failure in achieving at least one milestone. Such programmes were typically related to long-term investments, and corrective action was taken by the Member States concerned.

Overall, the fund is making an important contribution to development. For example, broadband access in rural areas has improved considerably (59% of rural households had next-generation access in 2019). The overall coverage of EU households that had broadband access in 2019 was 86%. ( ). The level of achievement of the targets relating to improving farm viability and competitiveness at the end of 2018 was relatively good, considering that implementation for investment operations normally takes several years. In general, investment support increases the economic performance and market participation of the supported farms. Assistance for skilled farmers, including young ones, can have positive effects on farm viability, especially in relation to farm productivity and competitiveness.

Some of these issues are linked to a development gap in rural areas, which are often less well served by essential infrastructure and services. This problem is addressed by the second pillar of the common agricultural policy, the European Agricultural Fund for Rural Development, which supports all entities operating in rural areas to foster sustainable and inclusive growth in the EU. By the end of 2019 total payments made under this fund to Member States since 2014 amounted to EUR 50.4 billion, placing the fund ahead of the other European Structural and Investment Funds in terms of the speed of disbursement.

However, significant challenges remain to be addressed in the coming years. Agricultural income still lags behind salaries in the economy as a whole, and remains dependent on direct support. Moreover, a substantial proportion of the sector continues to face low profitability due, among other reasons, to high production standards and production costs, and the fragmented structure of the primary sector. Despite direct support from the common agricultural policy, a large proportion of farm labour does not reach the benchmark of average national labour productivity. Finally, the declining trend in agricultural employment has continued, in spite of the role played by various schemes and measures supported under the two pillars of the common agricultural policy allowing further targeting of the needs of certain categories of beneficiaries – in particular young farmers, small farmers and specific sectors or regions facing structural problems.

In 2019 about 6.2 million farmers benefited from direct payments, fewer than in 2018 (6.5 million), which reflects the average declining trend in the number of farms. On the other hand, agricultural factor income per full-time worker is increasing compared to 2013 levels, as is the total factor productivity in the agricultural sector. Direct payments have allowed farmers to cope better with the negative effects on income caused by decreasing agricultural prices, and market measures have helped to limit the domestic price volatility of most agricultural products. Market measures in particular were rather successful and less necessary overall during 2018 and 2019.

One of the main objectives of the common agricultural policy is to ensure a fair standard of living for the agricultural community. This objective is pursued by increasing the individual earnings of farmers and agricultural employees on the one hand, when necessary, and through direct market interventions to stabilise market prices on the other.

While the agricultural sector’s share of the economy has decreased over time, the sector remains vital for our society as a whole in order to ensure viable food production in the EU. The common agricultural policy recognises this and the challenges deriving from it.

Under the next multiannual financial framework, LIFE will be an important part of the European Green Deal supporting the transition to climate neutrality by 2050, the implementation of the new biodiversity strategy for 2030, the climate pact, the revised climate adaptation strategy and deploying a new strand dedicated to the clean-energy transition.

The LIFE metamorphosis project proposes to demonstrate, at the industrial scale, two innovative waste-treatment systems: one for urban waste plants and the other for agro-industrial and other organic waste-treatment plants. In addition, the project tests the use of bio-methane derived from waste streams produced by the automotive sector. If successful, the two prototypes could produce over 176 million kilowatt hours of renewable energy annually (close to the annual electricity consumption of 50 000 homes), 5 years after the start of the project.

To address environmental challenges more specifically, the LIFE programme contributes to implementing the seventh environmental action programme in the form of integrated projects that improve citizens’ quality of life by helping Member States comply with EU legislation in five areas: nature, water, air, climate-change mitigation and climate-change adaptation. The attractiveness of the LIFE programme is very high, financing a large number of different projects. The quality of the projects selected and the added value of the programme is demonstrated, for example, by the number of people benefiting from improved air quality (1.5 million) and the percentage of targeted species that are progressing towards conservation status (42%). Projects selected have had a wider impact than originally expected, and have been shown to have important catalytic effects: for every euro spent through LIFE, EUR 45 is spent by other partners ( ).

In spite of that progress, substantial challenges remain in relation to the environmental performance of the EU’s agricultural sector, in particular in the context of the European Green Deal, where the EU has committed itself to further deep cuts in greenhouse gas emissions. The key natural resources of soil, air and water are still under pressure in many areas, and there is scope for further progress to be made. The Commission has factored this into the proposals for the future common agricultural policy, through the ‘new green architecture’.

As of 2018 ( ), 79% of the total EU agricultural area was subject to at least one ‘greening’ obligation, increasing the environmental impact of this measure, although Member States have required derogations from certain greening rules in order to alleviate the situation of farmers affected by exceptional weather conditions over the last 3 years. Progress has also been made with respect to management contracts, contributing to carbon sequestration or conservation, or to the reduction of greenhouse gas or ammonia emissions. At present, over 85% of the targets for climate actions in the agricultural sector have already been reached in the management of biodiversity, soil and water.

The most important in terms of contribution under this budget heading is the common agricultural policy. The fundamental objectives of the policy are twofold, namely providing fair income to farmers and developing rural regions in the EU. Almost all farmers who benefit from EU-level support systematically implement cross-compliance and greening measures that are beneficial for the environment and climate: crop diversification, maintenance of permanent grassland and dedication of 5% of arable land to ecologically beneficial areas. Rural development policy continues to support various types of area-related payments linked with specific management requirements. These are often accompanied by support for dedicated investments, training and advice, having a combined positive impact on biodiversity, soil, water and air in both the farm and forest sectors.

All programmes under this budget heading make important contributions to achieving the EU’s climate ambitions and combating the loss of biodiversity, and will remain important going forward in the context of the European Green Deal.

1.5.1. Spending on natural resources on land and in water safeguards the environment and helps tackle the climate emergency

Funding provided under this heading is crucial for the green transition and the quality, quantity and sustainability of food supplies, and also for the economic development of rural and maritime communities.

In 2019, EUR 59 billion was allocated to Heading 2, supporting sustainable growth in the area of natural resources. This represents 37% of total annual budget expenditure. The funding for the agricultural policy remained stable compared to last year. Heading 2 finances the two pillars of the common agricultural policy: Pillar I, consisting of market support measures and direct payments financed by the European Agricultural Guarantee Fund; and Pillar II, the rural development programmes financed by the European Agricultural Fund for Rural Development. The heading also includes the European Maritime and Fisheries Fund and the international aspects of the common fisheries policy, along with the environment and climate action programme (LIFE).

For the future cohesion policy, the Commission has proposed a number of measures to accelerate implementation. These include gradually reintroducing the rule that Member States only have 2 years to send in payment claims against commitments made before the allocated funding is decommitted automatically, and setting the level of pre-financing at a lower annual payment of 0.5% of the total support for each fund. Other proposed measures aim at simplifying procedures and rules, so as to speed up implementation and improve the monitoring of flows of programme funding.

The Commission has proposed to further strengthen the role of performance in the budgeting process for the European Structural and Investment Funds for the 2021-2027 multiannual financial framework. Rather than putting parts of the envelopes of the programmes in a reserve based on performance, the Commission has proposed to allocate funding for the first 5 years only. Allocations for the final 2 years will be made based on a substantial and in-depth midterm review, leading to corresponding reprogramming in 2025 based on progress achieved up to the end of 2024. This allows not only the performance of programme strands but also changed socioeconomic situations and new unforeseen challenges to be taken into account.

As a result of the assessment of performance of programmes and regular monitoring of their financial progress, a number of them (14% for regional development and 17% for the European Social Fund) were identified as being ‘in difficulty / poor / critical’. These were closely monitored, putting in place corrective actions tailored to the needs of each operational programme and following up on the specific issues identified by means of high-level meetings, technical exchanges, targeted advice and dialogue with national authorities.

Overall, the performing priorities accounted for 82% of the total performance reserve. The review resulted in the definitive release of EUR 16.5 billion ( ) out of a total of EUR 20.2 billion ( ) of the performance reserve. This amount can now be spent as initially planned. The remaining EUR 3.7 billion in the performance reserve in the priorities that did not achieve their 2018 performance milestones will be reallocated towards priorities that did, thereby optimising investments and strengthening the focus on getting measurable and effective results from the EU’s Cohesion policy funding. At the end of 2019, the performance review could not be carried out for some programmes due to deficiencies linked to reliability of monitoring systems and data. These deficiencies were however resolved in early 2020, which resulted in completing the performance review.

As an initial step towards strengthening budget performance, the 2014-2020 multiannual financial framework included a performance reserve of 6% of the envelopes of cohesion policy programmes, which was set aside at the start of the period. The definitive allocation of this performance reserve was conditional on whether the programmes reached the 2018 performance milestones ( ). This was assessed as part of the performance review in 2019, also taking into account all available results on the reliability of performance data reported. The performance reserve was consequently released to the performing priorities.

A high level of project selection does not automatically translate into prompt expenditure. The amount of payments made continued to increase in 2019, but the cumulative level of payments is lower than at this stage of the previous period. Compared to the 2007-2013 programming period, the share of interim payments for 2014-2020 at the end of the sixth year of implementation is still lagging behind by 7 percentage points. Expenditure is slower to materialise for projects that are still in the planning or procurement stage, projects with a multiannual character or projects that are otherwise immature.

The implementation of the 2014-2020 cohesion policy programmes remained at cruising speed in 2019 ( ). More than EUR 322 billion, representing 92% of the total financing available for the period, has already been allocated on the ground to concrete projects. By December 2019 the European Regional Development Fund, the Cohesion Fund, the European Social Fund and the Youth Employment Initiative had selected more than 1 million projects from all over the EU that were eligible for support. By the end of 2019 the level of project selection was comparable to the same time frame from the 2007-2013 period. The difficulties relating to implementation, such as the late start of operational programmes at the beginning of the period, have overall been addressed but significant disparities between and within Member States remain.

1.4.3. Implementation has caught up but payment levels still need to be raised following the performance review

A fair transition can only be accomplished if the human capital stands at its heart. Through the European Social Fund, the EU directs funding to support the upskilling and reskilling of workers and hence prepare them for the future.

In addition, the Commission is actively engaged in the Coal Regions in Transition Initiative, which provides tailor-made support for the clean-energy transition in 13 pilot coal- and carbon-intensive industrial regions. These efforts will continue under the future financial framework with the proposal for a Just Transition Fund, which aims at alleviating the social and economic impacts of the energy transition, such as those arising from the closure of coal mines.

So far, accomplishments with regard to climate mitigation have included the conservation of habitats corresponding to an area of almost 3 million hectares, with the conservation of almost 9 million more hectares already planned ( ). Cohesion policy projects have also been successful in implementing large numbers of projects to reduce greenhouse gas emissions. These projects have already resulted in a reduction in greenhouse gas emissions equivalent to 1.3 million tonnes of carbon dioxide per year, with further projects already selected that will result in an additional reduction of almost 10.3 million tonnes of carbon dioxide equivalent annually ( ) ( ). This has been achieved through projects such as promoting renewable energy sources and providing financing for the construction of over 1 000 MW of additional electricity capacity powered by these renewable sources ( ).

Sustainable green investment focuses on addressing climate change through both mitigation and adaptation actions. Here, climate mitigation actions put together those projects that address the underlying causes of climate change so as to slow it down or halt it. Climate-adaptation actions are projects that increase the resilience of the EU’s economy and infrastructure to the expected or actual changes in the climate. Major projects in this regard have improved flood-protection systems, with projects being financed that cover 4 million people, and forest-fire-protection systems, with projects covering 10.8 million people ( ).

While fighting climate change is a common endeavour, not all regions and Member States are starting from the same point. Often there is an inverse link between the level of economic development and the sustainability of the economy. This is recognised in cohesion policy through the fact that one of the two major strands of the Cohesion Fund is geared towards environmental objectives in economically less developed Member States, and that the European Regional Development Fund supports the shift towards a climate-neutral economy mostly in less developed regions.

Cohesion spending provides strong support for the EU’s ambitious energy and climate policies, and helps regions and cities to reach the target of climate neutrality by 2050 and contribute to a socially fair transition. The 2014-2020 programmes will invest over EUR 47.5 billion ( ) in the low-carbon economy and climate-change adaptation by the end of 2023.

The European Social Fund has so far helped 26 million people through various projects by the end of 2019 ( ). From these, 3.1 million people had found jobs and 3.7 million gained a qualification as a result of the ESF intervention. Youth unemployment is of particular concern to the EU. Through the Youth Employment Initiative, the EU budget has managed to significantly reduce unemployment by providing education and training to 2.7 million young participants. The European Social Fund also caters for disadvantaged groups; and supported, for instance, 1.9 million people with disabilities; as well as 3.9 million migrants and people with a foreign background through access to education and training; boosting their employability. Overall, 40% of those benefiting from projects financed by the European Social Fund, finding employment and receiving training, belong to disadvantaged groups.

Beyond the structural investments from the European Regional Development Fund and the Cohesion Fund, cohesion policy supports people directly by providing them with opportunities for further education and the acquisition of necessary skills in order to become and remain competitive in the job market.

These and other projects financed under cohesion policy have made an important contribution to assisting less-developed Member States and regions in catching up with the rest of the EU in terms of gross domestic product ( ). It has been estimated that every euro spent through cohesion policy has generated a return of close to EUR 3 in additional gross domestic product ( ). The ensuing development is beneficial to the entire EU, for both cohesion and non-cohesion Member States. The latter benefit from spillovers generated by investment in less-developed areas both directly, through increasing sales of investment goods, and indirectly, due to increased demand from households in cohesion areas generating additional trade ( ).

An additional aspect of cohesion policy is the structural improvements that are financed, which serve to lift people’s living standards and safety. The European Regional Development Fund has so far allowed 27.5 million people to benefit from improved health services. Along with the Cohesion Fund it is also financing the construction of improved water supply facilities, waste-water treatment plants and waste recycling facilities, with projects currently under way expected to exceed the targets set for 2023.

Living standards and cohesion are further enhanced by linking EU regions together through new and improved transportation infrastructure. Transport projects are essential to allow the continued economic development of disadvantaged regions, to provide their populations with further opportunities for travel and employment and to strengthen the EU’s single market. The Cohesion Fund and European Regional Development Fund have financed 4 259 km of new or upgraded roads and 938 km of new or upgraded railway lines ( ).

Support for small and medium-sized enterprises is a key focus. The European Regional Development Fund has supported investment in over 400 000 small and medium-sized enterprises, which has helped to create an additional 109 000 jobs ( ) and has made an important contribution to economic growth. The forecast rate of job creation by the end of 2019, based on the selected projects, has reached 83% of the overall expectations for total job creation by the end of 2023.

The main objective of these programmes is to reduce the economic and social disparities between EU regions. In order to achieve this, Member States have a large amount of flexibility and a responsibility to identify the most important policy areas where action is required, which can then be implemented and co-financed from the EU programmes. Depending on the level of development, Member States have to concentrate more or less financing on a limited number of chosen policy areas. Significant amounts are spent on small and medium-sized enterprises, transport, environment and human capital.

·The Youth Employment Initiative, which supports young people who are not in education, employment or training to integrate them into the labour market.

·The Fund for European Aid to the Most Deprived, which supports actions to provide food and basic material assistance to the most deprived.

·The European Social Fund, which aims to boost employment and education opportunities in the EU and to improve the situation of the most vulnerable people. It works by investing in the EU’s human capital – its workers, its young people and all those seeking a job – through education and upskilling.

·The Cohesion Fund, which helps the Member States with the biggest development needs (those with a gross national income per inhabitant of less than 90% of the EU average). It aims to reduce economic and social disparities and to promote sustainable development.

·The European Regional Development Fund, which strengthens economic and social cohesion in the European Union by reducing imbalances between its regions. Actions are concentrated on innovation and research, the digital agenda, support for small and medium-sized enterprises and the low-carbon economy and transport.

Geared towards achieving socioeconomic convergence, resilience and territorial cohesion, cohesion funding helps address both current and emerging challenges, laying the foundation for the EU’s sustainable future. Cohesion policy contributes to the delivery of the EU’s key priorities by supporting growth and job creation at EU level and structural reforms at national level. The funding plays a key role in preparing for the green and digital transitions and contributing to a fairer and more social Europe by supporting measures to tackle youth unemployment and poverty and to promote social inclusion.

In 2019, EUR 57 billion was allocated to the programmes under this heading, representing 35% of the total EU budget for the year. Cohesion policy programmes are implemented through shared management. Member States are responsible for allocating funding to specific thematic areas under the funds, which are planned via operational programmes.

TO THE EUROPEAN PARLIAMENT, THE COUNCIL AND THE COURT OF AUDITORS 2019 Annual Management and Performance Report for the EU budget

On the basis of the assurances and reservations in the annual activity reports ( ), the College adopts this Annua