Communication from the Commission to the European Parliament and the Council concerning the revision of the multiannual financial framework (2007-2013)
Date: 2008-12-10
Institutions: European Commission
Subjects: budgetary discipline (EU), commitment of expenditure, financial management, fund (EU), interinstitutional agreement

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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 

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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) 

(2) 

(3) 

(4) 

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.  

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

Any revision of the compulsory expenditure in the financial framework must not lead 
to a reduction in the amount available for non-compulsory expenditure1. 

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

1 

Condition not applicable in the case of the present proposal. 

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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 crisis2. 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 20063. 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 
programming4, 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.  

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COM(2008) 800. 
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). 
SEC(2008) 514, May 2008. 

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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 ceiling5 

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 

OJ L 128, 16.5.2008, p. 8 and 9.  

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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 

Heading 2 - Preservation and Management 

0 

-3 500 

-1 500 

0 

of Natural Resources 

Total change in commitment 
appropriations 

0 

-3 500 

1 500 

2 000 

0 

0 

0 

0 

0 

0 

Total change in payment appropriations 

0 

-3 500 

-1 110 

1 070 

1 590 

1 450 

500 

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. 

0 

5 000 

0 

-5 000 

0 

0 

0 

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FINANCIAL FRAMEWORK 2007-2013 REVISED FOR EUROPEAN ECONOMIC RECOVERY PLAN 

COMMITMENT APPROPRIATIONS

1. Sustainable Growth

1a Competitiveness for Growth and Employment
1b Cohesion for Growth and Employment

2. Preservation and Management of Natural Resources
of which: market related expenditure and direct payments

3. Citizenship, freedom, security and justice

3a Freedom, Security and Justice
3b Citizenship

4. EU as a global player
5. Administration (1)
6. Compensations

(EUR million – current prices) 

2007

53 979

8 918

45 061

55 143

45 759

1 273

637

636

6 578

7 039

445

2008

57 653

10 386

47 267

55 693

46 217

1 362

747

615

7 002

7 380

207

2009

62 700

14 272

48 428

58 139

46 679

1 523

872

651

7 440

7 699

210

2010

63 782

14 388

49 394

60 113

47 146

1 693

1 025

668

7 893

8 008

2011

63 638

12 987

50 651

60 338

47 617

1 889

1 206

683

8 430

8 334

2012

66 628

14 203

52 425

60 810

48 093

2 105

1 406

699

8 997

8 670

2013

69 621

15 433

54 188

61 289

48 574

2 376

1 661

715

9 595

9 095

Total
2007-2013
438 001

90 587

347 414

411 525

330 085

12 221

7 554

4 667

55 935

56 225

862

TOTAL COMMITMENT APPROPRIATIONS

124 457

129 297

137 711

141 489

142 629

147 210

151 976

974 769

as a percentage of GNI

1.04%

1.03%

1.05%

1.03%

1.00%

0.99%

0.98%

1.02%

TOTAL PAYMENT APPROPRIATIONS

122 190

126 181

122 748

134 575

135 042

141 650

142 908

925 294

as a percentage of GNI
Margin available
Own Resources Ceiling as a percentage of GNI

1.02%

0.22%

1.24%

1.01%

0.23%

1.24%

0.93%

0.31%

1.24%

0.98%

0.26%

1.24%

0.94%

0.30%

1.24%

0.95%

0.29%

1.24%

0.92%

0.32%

1.24%

0.96%

0.28%

1.24%

(1) The expenditure on pensions included under the ceiling for this heading is calculated net of the staff contributions to the relevant scheme, within the limit of € 500 million at 
2004 prices for the period 2007-2013.

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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  management6,  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 Commission7, 

Whereas: 

(1) 

(2) 

(3) 

(4) 

(5) 

(6) 

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.  

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.  

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.  

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. 

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

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

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OJ C139, 14.6.2006, p. 1. 
COM(2008)… . 
COM(2008) 800. 

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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 
The President 

For the Council 
The President 

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ANNEX  

FINANCIAL FRAMEWORK 2007-2013 (revised) 

COMMITMENT APPROPRIATIONS

1. Sustainable Growth

1a Competitiveness for Growth and Employment
1b Cohesion for Growth and Employment

2. Preservation and Management of Natural Resources
of which: market related expenditure and direct payments

3. Citizenship, freedom, security and justice

3a Freedom, Security and Justice
3b Citizenship

4. EU as a global player
5. Administration (1)
6. Compensations

(EUR million - constant 2004 prices)

2007

50 865

8 404

42 461

51 962

43 120

1 199

600

599

6 199

6 633

419

2008

53 262

9 595

43 667

51 452

42 697

1 258

690

568

6 469

6 818

191

2009

56 789

12 927

43 862

52 658

42 279

1 380

790

590

6 739

6 973

190

2010

56 636

12 776

43 860

53 379

41 864

1 503

910

593

7 009

7 111

2011

55 400

11 306

44 094

52 528

41 453

1 645

1 050

595

7 339

7 255

2012

56 866

12 122

44 744

51 901

41 047

1 797

1 200

597

7 679

7 400

2013

58 256

12 914

45 342

51 284

40 645

1 988

1 390

598

8 029

7 610

Total
2007-2013
388 074

80 044

308 030

365 164

293 105

10 770

6 630

4 140

49 463

49 800

800

TOTAL COMMITMENT APPROPRIATIONS

117 277

119 450

124 729

125 638

124 167

125 643

127 167

864 071

as a percentage of GNI

1.08%

1.06%

1.08%

1.06%

1.03%

1.02%

1.01%

1.048%

TOTAL PAYMENT APPROPRIATIONS

115 142

116 572

111 177

119 499

117 562

120 897

119 579

820 428

as a percentage of GNI
Margin available
Own Resources Ceiling as a percentage of GNI

1.06%

0.18%

1.24%

1.03%

0.21%

1.24%

0.96%

0.28%

1.24%

1.01%

0.23%

1.24%

0.98%

0.26%

1.24%

0.98%

0.26%

1.24%

0.95%

0.29%

1.24%

1.00%

0.24%

1.24%

(1) The expenditure on pensions included under the ceiling for this heading is calculated net of the staff contributions to the relevant scheme, within the limit of € 500 million at 
2004 prices for the period 2007-2013.

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