[pic] | COMMISSION OF THE EUROPEAN COMMUNITIES |

Brussels, 10.11.2008

COM(2008) 859 final

2008/0254 (COD)

COMMUNICATION FROM THE COMMISSION TO THE EUROPEAN PARLIAMENT AND THE COUNCIL

concerning the revision of the multiannual financial framework (2007-2013)

Proposal for a

DECISION OF THE EUROPEAN PARLIAMENT AND OF THE COUNCIL

amending the Interinstitutional Agreement of 17 May 2006 on budgetary discipline and sound financial management as regards the multiannual financial framework

COMMUNICATION FROM THE COMMISSION TO THE EUROPEAN PARLIAMENT AND THE COUNCIL

concerning the revision of the multiannual financial framework (2007- 2013)

Financing trans-European energy interconnections and broadband infrastructure projects in the context of the European Economic Recovery Plan

This Communication contains a proposal for the revision of the multiannual financial framework (hereinafter referred to as "the financial framework") in accordance with Points 21 to 23 of the Interinstitutional Agreement (IIA) of 17 May 2006 on budgetary discipline and sound financial management.

Point 21 of the IIA provides that, in the event of unforeseen circumstances, the Commission may propose the revision of the financial framework in compliance with the own resources ceiling.

According to Point 22, any decision to revise the financial framework by up to 0.03% of the European Union GNI needs to be taken jointly by both arms of the budgetary authority in compliance with the voting rules laid down in the fifth subparagraph of Article 272(9) of the Treaty establishing the European Community. Any revision above 0.03% of the European Union GNI will be taken jointly by both arms of the budgetary authority, with the Council acting unanimously.

Point 23 of the IIA introduces a number of specific conditions the institutions need to respect:

1. The institutions will examine the scope for reallocating expenditure between the programmes covered by the heading concerned by the revision, with particular reference to any expected under-utilisation of appropriations. The objective should be that a significant amount, in absolute terms and as a percentage of the new expenditure planned, should be within the existing ceiling for the heading.

2. The institutions will examine the scope for offsetting any raising of the ceiling for one heading by the lowering of the ceiling for another.

3. Any revision of the compulsory expenditure in the financial framework must not lead to a reduction in the amount available for non-compulsory expenditure[1].

4. Any revision must maintain an appropriate relationship between commitments and payments.

1. ADDITIONAL FINANCING NEEDS DUE TO UNFORESEEN CIRCUMSTANCES

On 26 November 2008, the Commission made a comprehensive proposal for a European Economic Recovery Plan which aims at using and coordinating all tools at the disposal of the Union and its Member States to respond to the looming recession of the European economy as a consequence of the financial crisis[2]. A crisis of this scale of the global financial markets and economy would represent and unforeseen circumstance within the meaning of Point 21 of the Interinstitutional Agreement of 17 May 2006[3]. It calls for a swift, ambitious and well-targeted action, such as proposed in the European Economic Recovery Plan.

The Plan foresees a co-ordinated fiscal stimulus of about EUR 200 billion, or 1.5% of GDP, with around EUR 170 billion provided by actions in the Member States' own budgets, and around EUR 30 billion as EU level action within the EU budget and from the European Investment Bank (EIB).

As part of the EU's contribution to this stimulus, the Plan proposes to improve energy interconnections and broadband infrastructure by mobilising a further EUR 5 billion for the years 2009 and 2010. Accelerating investments in these areas as part of a major structural shift towards a low-carbon economy is considered to offer both immediate and long-lasting benefits to the Union.

The Commission remains fully committed to budgetary discipline as set out in the Interinstitutional Agreement of 17 May 2006. In the context of an economic crisis of an unprecedented dimension it suggests, however, to use amounts available within the ceilings of the financial framework which otherwise will remain unspent.

2. SCOPE FOR REALLOCATING EXPENDITURE UNDER THE CEILING OF HEADING 1A

In accordance with Point 23 of the IIA the Commission has examined the scope for reallocating expenditure between the programmes covered by the heading concerned by the proposed revision, with particular reference to any expected under-utilisation of appropriations. It appears that the programmes have all been adopted with their respective envelopes without possibility at this stage to redeploy or re-profile significantly the envelopes within the annual ceilings. Furthermore, the purpose of the proposed revision is to provide additional means for operating the shift towards a low-carbon economy, in line with the European Economic Recovery Plan's approach, without this being at the expense of other priority programmes and activities financed under Heading 1A.

Point 13 of the IIA provides that the institutions are required to ensure that "sufficient margins" are left available beneath the ceilings. According to the latest financial programming[4], the margins available under the ceilings of heading 1 A for the years 2009 to 2013 amount to a total of EUR 684 million. The Commission concludes, with a view to Point 13 of the IIA, that the margins of heading 1A cannot be used to contribute to the financing of the additional activities foreseen in the European Economic Recovery Plan.

3. SCOPE FOR OFFSETTING THE RAISING OF ONE CEILING BY LOWERING ANOTHER CEILING

The Commission considers that EUR 5,000 million can be made available to heading 1A "Competitiveness for Growth and Employment" by using the margins of heading 2 "Preservation and Management of Natural Resources".

The margins available or foreseen for heading 2 are EUR 3,600 million in 2008 and EUR 3,850 million in 2009.

The considerable margin foreseen for 2009 is mainly due to the high level of assigned revenue estimated in that year (EUR 1,050 million) and the high amount of assigned revenue carried over from 2008 (EUR 1,340 million). It is also explained by the very low level of market expenditure.

Consequently, the Commission proposes to increase the annual ceilings for commitment appropriations under heading 1A by EUR 3,000 million for 2009 and by EUR 2,000 million for 2010. This increase will be offset by a decrease of the annual ceilings for commitment appropriations under heading 2 by EUR 3,500 million for 2008 and EUR 1,500 million for 2009.

This decision shall not prejudge the funding of required Common Agricultural Policy (CAP) expenditure. As regards the decrease of heading 2, the Commission undertakes to take all appropriate measures to ensure that decisions taken on CAP expenditure and its financing, including the agreement on the Health Check, are respected.

4. MAINTAINING AN APPROPRIATE RELATIONSHIP BETWEEN COMMITMENTS AND PAYMENTS

Point 23 of the IIA also requires that any revision must maintain an appropriate relationship between commitments and payments.

Based on the payment profiles foreseen for the additional commitments under heading 1A and the corresponding reduction of payments related to heading 2, the annual ceilings for payment appropriations should be modified as follows:

Total payment appropriations

(EUR million, current prices) |2007 |2008 |2009 |2010 |2011 |2012 |2013 | 2007-2013 | |- current IIA ceiling[5] |122 190 |129 681 |123 858 |133 505 |133 452 |140 200 |142 408 | 925 294 | |- required modification |0 |-3 500 |-1 110 |1 070 |1 590 |1 450 |500 | 0 | |Overall, this modification is neutral in budgetary terms.

5. OVERVIEW OF THE PROPOSED REVISION OF THE FINANCIAL FRAMEWORK

The table below summarises the proposed changes to the ceilings in the financial framework. These amounts are expressed in current prices.

Commitment appropriations (EUR million) |2007 |2008 |2009 |2010 |2011 |2012 |2013 | 2007-2013 | | Heading 1A - Competitiveness for Growth and Employment | 0 |0 |3 000 |2 000 |0 |0 |0 | 5 000 | |Heading 2 - Preservation and Management of Natural Resources |0 |-3 500 |-1 500 |0 |0 |0 |0 | -5 000 | | Total change in commitment appropriations |0 |-3 500 |1 500 |2 000 |0 |0 |0 |0 | | Total change in payment appropriations |0 |-3 500 |-1 110 |1 070 |1 590 |1 450 |500 |0 | |These changes result in the below financial framework table in current prices.

The formal decision on the revision of the financial framework must refer to the basic table agreed in the IIA, which is expressed in constant 2004 prices. The amounts in current values are thus to be converted into 2004 prices by means of a fixed deflator of 2% a year, in accordance with Point 16 of the IIA.

FINANCIAL FRAMEWORK 2007-2013 REVISED FOR EUROPEAN ECONOMIC RECOVERY PLAN

(EUR million – current prices)

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2008/0254 (COD)

Proposal for a

DECISION OF THE EUROPEAN PARLIAMENT AND OF THE COUNCIL

amending the Interinstitutional Agreement of 17 May 2006 on budgetary discipline and sound financial management as regards the multiannual financial framework

THE EUROPEAN PARLIAMENT AND THE COUNCIL OF THE EUROPEAN UNION,

Having regard to the Interinstitutional Agreement of 17 May 2006 on budgetary discipline and sound financial management[6], and in particular to Point 21, the first and second paragraphs of Point 22, and Point 23 thereof,

Having regard to the proposal from the Commission[7],

Whereas:

(1) On 26 November 2008, the Commission adopted the Communication to the European Council "A European Economic Recovery Plan"[8], which aims at using and coordinating all tools at the disposal of the European Union and its Member States to respond to the looming recession of the European economy as a consequence of the financial crisis. A crisis of this scale of the global financial markets and economy would represent an unforeseen circumstance within the meaning of Point 21 of the Interinstitutional Agreement of 17 May 2006.

(2) The Plan foresees a co-ordinated fiscal stimulus of about EUR 200 billion, or 1.5% of GDP, with around EUR 170 billion provided by actions in the Member States' own budgets, and around EUR 30 billion as action at the level and within the budget of the European Union and from the European Investment Bank.

(3) As part of the European Union contribution to that stimulus, the Plan proposes to improve energy interconnections and broadband infrastructure by mobilising a further EUR 5 billion for the years 2009 and 2010. Accelerating investments in these areas as part of a major structural shift towards a low-carbon economy is considered to offer both immediate and long-lasting benefits to the European Union.

(4) The required increase in the global ceiling of heading 1A can be offset by a decrease in the ceilings for heading 2 "Preservation and Management of Natural Resources" for the years 2008 and 2009.

(5) In order to maintain an appropriate relationship between commitments and payments, the annual ceilings for payment appropriations should be adjusted.

(6) Annex I to the Interinstitutional Agreement on budgetary discipline and sound financial management of 17 May 2006 should therefore be amended accordingly,

HAVE DECIDED AS FOLLOWS:

Sole Article

Annex I to the Interinstitutional Agreement on budgetary discipline and sound financial management of 17 May 2006 is replaced by the Annex to this Decision.

Done at Brussels,

For the European Parliament For the Council

The President The President

ANNEX

FINANCIAL FRAMEWORK 2007-2013 (revised)

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[1] Condition not applicable in the case of the present proposal.

[2] COM(2008) 800.

[3] Interinstitutional Agreement between the European Parliament, the Council and the Commission on budgetary discipline and sound financial management of 17 May 2006 (OJ C 139, 14.6.2006, p.1).

[4] SEC(2008) 514, May 2008.

[5] OJ L 128, 16.5.2008, p. 8 and 9.

[6] OJ C139, 14.6.2006, p. 1.

[7] COM(2008)… .

[8] COM(2008) 800.