1.Introduction

This report provides a long-term forecast of future inflows and outflows covering the next five years (2019-2023) as required by Article 247(1)(c) of the Financial Regulation. The analysis takes into account the principles and terms set out in the draft Withdrawal Agreement between the EU and the United Kingdom. It does not assess the impact on the long-term forecast of a failure to conclude or ratify the Withdrawal Agreement.

The scope of the forecast captures the elements of the current and the next financial frameworks. It is based on the level of commitment appropriations for 2019 and 2020 as included in the Draft Budget 2019 and the accompanying financial programming for 2020. For the years 2021-2023 the commitments presented in the Commission’s proposal for the next Multiannual Financial Framework (MFF) are taken into account.

New information, following the MFF proposal of 2 May 2018, is also reflected as follows: the Member States’ updated forecasts for the implementation of the 2014-2020 European Structural and Investment Funds (ESI Funds) provided by 31st July 2018; amendments to the 2018 budget (i.e. the Draft Amending Budget N°5 and the results of the global transfer exercise) and the Amending Letter No.1 to the Draft Budget 2019. The initiatives announced on 12 September 2018 to further strengthen the European Border and Coast Guard Agency and the European Asylum Agency have been taken into consideration, as well.

2.Results of the Forecast

2.1. Payments

2.1.1.Payments until the end of the current MFF (2019-2020)

For the year 2019, the forecast payments follow the levels proposed in the Draft Budget 2019, (including the Amending Letter No.1). The payments for 2020 have been assessed taking into account the implementation in 2014-2017 and the first half of 2018, the information made available at the time of the Draft Budget 2019 preparation, as well as the Member States’ updated forecasts for the implementation of the 2014-2020 ESI Funds. For the final year of the current MFF, it is expected that all spending programmes will reach cruising speed. The bulk of the 2007-2013 programmes under the cohesion policy is expected to be closed by the end of 2019.

2.1.2.Payments in the next MFF (2021-2023)

The forecast payments in 2021-2022 ensure compatibility with the Own Resources ceiling of 1.20% of EU GNI. While the Commission has proposed to increase the Own Resources ceiling to take account of the GNI base for 27 Member States, the current level may still be applicable due to the lengthy ratification process of the new Own Resources Decision.

At the start of the next programming period (2021-2022) half of all payments (51%) would cover the outstanding commitments of the previous financial frameworks (RAL for 'Reste à liquider'). Further 35% of the payments would cover non-differentiated appropriations where payments immediately follow commitments (i.e. the 1st Pillar of the Common Agricultural Policy, expenditure under Heading 7 "European Public Administration", the subsidy to decentralised agencies). The remaining 14% would result from the launch of the new generation of spending programmes.

As of 2023, more than half of the outstanding commitments of the period pre-2021 would be paid out and thus the share of payments on pre-2021 commitments will decrease. In parallel, the implementation of the 2021-2027 programmes is expected to enter into cruising speed with a substantial increase in payment levels in 2023 compared to the first two starting years (68% of the total payments up from 45% in 2021).

2.1.3.De-commitments

The overall amount of de-commitments forecast for 2019-2023 is EUR 6.4 billion. Around two thirds of the de-commitments relate to the programmes of the 2014-2020 period (EUR 4.3 billion) while the de-commitments of the RAL originating before 2014 are gradually phasing out as is the case for the payments on that RAL. No de-commitments are anticipated for the commitments of the 2021-2027 MFF proposal.

The de-commitment levels vary across headings as the forecast is built taking into account de-commitments already made and de-commitments identified at the time of the Draft Budget 2019 preparation. In principle, de-commitments are forecast for the entire duration of the programming period. Since for most programmes and actions no automatic de-commitment rules exist, any annual breakdown of de-commitments would be highly approximate. To estimate the size of the de-commitments up until 2023 only, the de-commitments on the end-2018 RAL were broken down proportionally to the related annual payments. Potential de-commitments for the 2019 and 2020 commitments would mostly take place after 2023, in line with the general closure cycle of programmes.

A specific forecast is made for the 2014-2020 ESI funds – it takes account of the experience with the 2007-2013 programmes’ closure and also the expected de-commitment timing. As the actual year of de-commitment depends on the specific closure dates for each Member State and given the n+3 de-commitment rules in place, the de-commitments are likely to be spread over 2024-2026. Therefore, there is no impact on the forecasting period of this report.

2.1.4.Evolution of the level of outstanding commitments (RAL)

The RAL at the start of the reporting period is expected to stand at around EUR 276 billion and to reach EUR 295 billion at the end of the current financial framework. By the end of 2023 it is projected at around 314 billion, which results in a 14% increase in nominal value over the 5 analysed years. However, the annual evolution of the RAL volume is not even as the RAL develops in function of the ratio of the annual payment to the annual commitments. This ratio is 90% for the year 2019 and increases to 99% in 2023. Payments come close to the commitments in 2023 mostly due to the combination of the first automatic de-commitment target for the new programmes under the Common Provision Regulation and the n+3 de-commitment target for the last tranche of the 2014-2020 ESI Funds and the closure of these programmes. As a result, the growth of the RAL volume in 2023 compared to the previous year would be limited to below 1%.

2.2. Revenue