EXPLANATORY MEMORANDUM

1.CONTEXT OF THE PROPOSAL

The financing needs for urgent investments arising in the wake of the crisis are unprecedented. A decisive and extraordinary response at Union level is therefore necessary. Financial support needs to be frontloaded in the crucial first years of recovery, including in 2020. This will help to bridge the gap between first response measures and longer-term recovery. The scale of the intervention and its design must reflect the magnitude and urgency of the challenges facing the Union. The Commission is proposing to harness the full potential of the EU budget to mobilise investment and frontload financial support in the crucial first months and years of recovery.

In recent weeks, the Commission has used all the remaining flexibility in the current EU budget to channel every available euro into saving lives and protecting livelihoods. These measures demonstrated the power of the EU budget to provide timely and substantial support to Member States in a crisis. They have also exhausted all remaining flexibility in the current EU budget, highlighting the urgent need to put in place new measures to drive the next and crucial phases of the recovery.

It is therefore necessary to revise Council Regulation (EU, Euratom) No 1311/2013 of 2 December 2013 laying down the multiannual financial framework for the years 2014-2020 to allow for frontloading of financial support as rapidly as possible already in 2020. This concerns notably any early need to finance the provisioning of the Solvency Support Instrument under the European Fund for Strategic Investment and the Union’s contribution to the capital increase of the European Investment Fund, the frontloading of additional cohesion spending under REACT-EU, and increased financial means for the European Fund for Sustainable Development.

2.LEGAL ELEMENTS OF THE PROPOSAL

In order to mobilise investment and frontload financial support in the crucial first months of recovery, this revision provides for an increase of the expenditure ceilings of the 2014-2020 multiannual framework for the year 2020. The Commission proposes to increase the ceilings in commitment appropriations for the year 2020 as follows:

–the ceiling on commitment appropriations for sub-Heading 1a ‘Competitiveness for growth and jobs’ is increased to the level of EUR 25 681 million (2011 prices);

–the ceiling on commitment appropriations for sub- Heading 1b ‘Economic, social and territorial cohesion’ is increased to the level of EUR 53 109 million (2011 prices);

–the ceiling on commitment appropriations for Heading 4 ‘Global Europe is increased to the level of EUR 9 665 million (2011 prices).

The proposed increases in commitment ceilings will result in an increase of payment needs of EUR 6 040 million, which is compatible with the 2020 annual payment ceiling as adjusted in the technical adjustment of May 2019. For this reason, the Commission does not propose to revise the 2020 payment ceiling. The Annex to Regulation (EU, Euratom) No 1311/2013 should therefore be amended and replaced by the Annex to this proposal. Pursuant to Article 135(2) of the Agreement on the withdrawal of the United Kingdom of Great Britain and Northern Ireland from the European Union and the European Atomic Energy Community, this Regulation should not apply to the United Kingdom insofar as it has an impact on the United Kingdom's financial obligations compared to those at the date of the withdrawal of the United Kingdom from the Union.

2020/0109 (APP)

Proposal for a

COUNCIL REGULATION