EUROPEAN COMMISSION Brussels, 15.9.2017 COM(2017) 473 final COMMUNICATION FROM THE COMMISSION TO THE COUNCIL AND THE EUROPEAN PARLIAMENT Technical adjustment of the financial framework for 2018

in line with movements in GNI (ESA 2010)



(Article 6 of Council Regulation No 1311/2013 laying down the multiannual financial framework for the years 2014-2020) updating and replacing Communication COM(2017)220 final



1.introduction On 24 May 2017 the Commission adopted a Communication to the Council and to the European Parliament on technical adjustment of the financial framework for 2018 in line with movements in GNI (ESA 2010). Following the entry into force on 14 July 2017 of Council Regulation (EU, Euratom) No 2017/1123 amending Regulation (EU, Euratom) No 1311/2013 laying down the multiannual financial framework (MFF) for the years 2014-2020 as a result of the mid-term review/revision, the figures included in the Communication of 24 May 2017 in respect of the Emergency Aid Reserve and the Flexibilty Instrument should be updated for reasons of transparency. Therefore this Communication updates and replaces the Communication of 24 May 2017. The adjustments of figures in this Communication result directly from the amendment of the MFF Regulation by Regulation (EU, Euratom) 2017/1123 and do not deviate from the provisions of Article 6(4) of the MFF Regulation, according to which no further technical adjustments than those referred to in Article 6(1) are made either during the year or ex-post. The MFF Regulation as amended by Council Regulation (EU, Euratom) No 2015/623 of 21 April 2015 and as adjusted in the technical adjustment for 2017 contains the financial framework table for EU-28 for the period 2014-2020, expressed in 2011 prices (Table 1). According to Article 6(1) of the MFF Regulation, the Commission makes each year, ahead of the budgetary procedure for year n+1, a technical adjustment to the multiannual financial framework (MFF) in line with movements in the EU's gross national income (GNI) and prices and communicates the results to the Council and the European Parliament. As far as prices are concerned, expenditure ceilings at current prices are established using the fixed 2% annual deflator as provided for in Article 6(2) of the MFF Regulation. As far as movements in GNI are concerned, the present Communication includes the latest economic forecasts available. At the same time the Commission calculates the margin available under the own-resources ceiling set in accordance with Decision 2007/436/EC, Euratom, the absolute amount of the Contingency Margin provided for in Article 13, the global margin for payments provided for in Article 5, and the global margin for commitments provided for in Article 14 of the MFF Regulation. On 16 October 2016 the new Own Resource Decision 2014 (ORD 2014) entered into force retroactively from 2014 onwards. With the ORD 2014 in force the ceilings of own resources and the ceiling for appropriations for commitments could be adapted to the new GNI data according to the European System of Accounts (ESA 2010). The maximum amount of own resources is now established at 1.20% of GNI (previously set at 1.23%) and the maximum amount of commitments at 1.26% of GNI (previously set at 1.29%). The purpose of this communication is to present to the Council and the European Parliament the result of the technical adjustments (EU-28) for 2018 according to Article 6 of the MFF Regulation. 2.Terms of the adjustment of the MFF table (Annex - tables 1-2) Table 1 shows the financial framework for EU-28 in 2011 prices as included in Annex I of the MFF Regulation adjusted according to Article 5. Table 2 shows the financial framework for EU-28 adjusted for 2018 (i.e. in current prices). The financial framework expressed in percentage of GNI is updated with the latest economic forecasts available (spring 2017) and long-term projections and is adjusted according to Article 5 of the MFF Regulation. 2.1.Total figure for GNI Compared to the Technical Adjustment for 2017 the figures for GNI are now recorded according to ESA 2010 instead of ESA 95. According to the latest forecast available, the GNI for 2018 is established at EUR 15 704 241 million in current prices for EU-28. According to the Article 6 (4) of the MFF Regulation no further technical adjustments are made in respect of the year concerned, either during the year or as ex-post corrections during subsequent years. Therefore for information only, the updated GNI according to ESA 2010 is established at EUR 13 977 179 million for 2014, EUR 14 641 031 million for 2015, EUR 14 764 598 million for 2016 and EUR 15 168 167 million for 2017. For the same reason, the own resources ceiling currently established at 1.20% of GNI (ESA 2010) is adjusted only from 2018 onwards in the MFF table in the annex. For 2017 and previous years the own resources ceiling is shown at 1.23% of GNI based on ESA95. 2.2.Main results of the technical adjustment of the MFF for 2018 The overall ceiling for commitment appropriations for 2018 (EUR 159 514 million) equals 1.02 % of GNI. The corresponding overall ceiling concerning the payment appropriations (EUR 154 565 million) equals 0.98% of GNI. On the basis of the latest economic forecasts, this leaves a margin beneath the 1.20% own resources ceiling of EUR 33 886 million (0.22% of GNI for EU-28). 3.Global Margin for Payments (GMP) According to Article 5 of the MFF Regulation, the Commission shall adjust the payment ceiling for the years 2015-2020 upwards by an amount equivalent to the difference between the executed payments and the MFF payment ceiling of the year n-1. Any upward adjustment shall be fully offset by a corresponding reduction of the payment ceiling for year n-1 in constant 2011 prices.

In the technical adjustment for 2016, the remaining margin of 2014 (EUR 104 million in current prices) was transferred to 2015 (EUR 106 million in current prices) and the ceilings were adjusted accordingly. In the technical adjustment for 2017 the remaining margin of 2015 (EUR 1 288 million) was transferred to the years 2018-2020. In this year's technical adjustment the GMP for 2016 is calculated. The payments for other special instruments are treated as being over and above the MFF ceilings. The 2016 payment ceiling was EUR 144 685 million in current prices. The payments executed in 2016 amount to EUR 131 819.4 million. This amount consists of the executed payments of the payment appropriations authorised in the 2016 budget (EUR 130 164.4 million) and carry-overs from 2016 to 2017 (EUR 1 655.0 million). The payments for special instruments are excluded from the execution (EUR 1 016.3 million, consisting of EUR 984.7 million executed and EUR 31.7 million carried-over). Therefore the execution taken into account for the calculation of the GMP is EUR 130 803.0 million. All carry-overs from 2015 to 2016 were counted as executed for the purposes of the calculation of the 2015 GMP but not all of them were actually executed. Therefore the lapsed carry-overs need to be added to the calculation as they in fact constitute underexecution. The lapsed carry-overs from 2015 to 2016 amount to EUR 109.4 million, of which EUR 0.1 million for the special instruments. The total amount of the lapsed carry-overs taken into account is thus EUR 109.3 million. The remaining margin under the 2016 payment ceiling is EUR 13 991.3 million in current prices (i.e. EUR 144 685 million – EUR 130 803 + EUR 109.3 million). According to Article 6(2) of the MFF Regulation, the 2% annual deflator shall be used for the calculation of the GMP and the corresponding adjustment of the ceilings. The 2016 ceiling is therefore reduced by EUR 13 991.3 million in current prices or EUR 12 672.0 million in 2011 prices. In line with the expected profile of payment needs, the GMP is transferred to the payment ceilings of the years 2018 to 2020 in equal instalments in 2011 prices (EUR 4 281 million), which corresponds to an increase in current prices of EUR 4 852 million in 2018, EUR 4 949 million in 2019 and EUR 5 048 million in 2020. This results in an unchanged overall payment ceiling for the period 2014-20 in 2011 prices and an increase of the overall payment ceiling by EUR 858 million in current prices. The table below shows the details of the calculation of the GMP for 2016. The table below shows the corresponding adjustments of the payment ceilings : 4.Special Instruments A number of instruments are available outside expenditure ceilings agreed in the financial framework 2014-2020. These instruments aim at providing rapid response to exceptional or unforeseen events, and provide some flexibility beyond the agreed expenditure ceilings within certain limits. 4.1.Emergency Aid Reserve According to Article 9 of the amended MFF Regulation the Emergency Aid Reserve can be mobilised up to a maximum amount of EUR 300 million per year in 2011 prices, or EUR 344.6 million in 2018 at current prices (EUR 2 301.4 million for the whole period in current prices). The portion of the unused amount of the previous year can be carried over to the following year. The carry-over from 2016 to 2017 amounts to EUR 98.6 million. 4.2.European Union Solidarity Fund According to Article 10 of the MFF Regulation, the EU Solidarity Fund can be mobilised up to a maximum amount of EUR 500 million per year in 2011 prices, or EUR 574.3 million in 2018 at current prices (EUR 3 944.7 million for the whole period in current prices). The portion of the unused amount of the previous year can be carried over to the following year. The carry-over from 2016 to 2017 amounts to EUR 563.1 million. The amount of EUR 508.1 million which lapsed at the end of 2016 is used to increase the Flexibilty Instrument in 2017. 4.3.Flexibility Instrument According to Article 11 of the amended MFF Regulation the Flexibility Instrument can be mobilised up to a maximum annual amount of EUR 600 million in 2011 prices, or EUR 676 million in 2017 and EUR 689 million in 2018 in current prices (EUR 4 315 million for the whole period in current prices). The portion of the unused annual amounts of the previous 3 years may be carried over. According to Article 6(1)f refering to Art 11(1) second subparagraph each year, starting in 2017, the annual amount available for the Flexibility Instrument in 2017 shall be increased by the amounts equivalent to the portion of the annual amount for the European Union Solidarity Fund (EUR 508.1 million) and the European Globalisation Adjustment Fund (EUR 137.6 million) which have lapsed in the previous year.