Opinion of the European Economic and Social Committee on Communication from the Commission to the European Parliament, the European Council, the Council, the European Economic and Social Committee and the Committee of the Regions. Mid-term revision of the Multiannual Financial Framework 2021–2027 (COM(2023) 336 final)
Date: 2023-09-20
Institutions: European Economic and Social Committee
Subjects: budgetary procedure, commitment of expenditure, financial management, general budget (EU), multiannual financial framework








C_202300867EN.000101.fmx.xml












Official Journal of the European Union


EN
Series C













C/2023/867


8.12.2023






Opinion of the European Economic and Social Committee on Communication from the Commission to the European Parliament, the European Council, the Council, the European Economic and Social Committee and the Committee of the Regions. Mid-term revision of the Multiannual Financial Framework 2021–2027
(COM(2023) 336 final)
(C/2023/867)







Rapporteur:



Elena-Alexandra CALISTRU





Rapporteur:



Konstantinos DIAMANTOUROS





Rapporteur:



Stefano PALMIERI











Referral


European Commission, 18.7.2023




Legal basis


Article 304 of the Treaty on the Functioning of the European Union




Section responsible


Economic and Monetary Union and Economic and Social Cohesion




Adopted in section


8.9.2023




Adopted at plenary


20.9.2023




Plenary session No


581




Outcome of vote
(for/against/abstentions)


202/1/9




1.   Conclusions and recommendations









1.1.


The European Economic and Social Committee (EESC) considers that the Multiannual Financial Framework (MFF) is an important tool for financing programmes and actions in all policy areas, in line with the EU’s long-term priorities, providing guidance as to where the EU’s priorities are heading.












1.2.


The EESC fully supports the urgent need to reach a swift agreement on the mid-term revision of the Multiannual Financial Framework 2021–2027, on the basis of:






—


providing continued support for Ukraine, giving the country the funding it needs for its reconstruction and to fulfil the requirements on its path towards EU accession. In this context, the EESC calls for the establishment of an EU-Ukraine joint civil society platform for monitoring the transparency and effectiveness of reconstruction funds;










—


giving the EU the necessary financial means to fulfil its political priorities in areas such as the green and digital transitions, migration, health, the European Pillar of Social Rights and economic recovery;










—


ensuring the rule of law both in the EU Member States and in the reconstruction process in Ukraine, with funding conditionality linked to reforms;










—


introducing effective monitoring measures to oversee programme implementation, involving civil society organisations in the process;










—


broadly involving civil society in the design, planning and implementation of the MFF programme. The EESC regrets that the priorities for the revision were not discussed with stakeholders.
















1.3.


The changes proposed in the revision are limited, showing a lack of ambition and amounting to merely patching up the framework. Moreover, the revision is completely disconnected from the European Commission’s strategic foresight work. The EESC is concerned that the Commission may have already reached the limits of what it can propose under the current conditions.












1.4.


The revision does not address the strained budget’s effects on employment and companies and the reduced purchasing power of the MFF due to high inflation. Key issues such as Europe’s ageing society and changing demographics are also missing and the EESC believes that the MFF should better reflect all the EU’s main priorities.












1.5.


The EESC believes the proposed Strategic Technologies for Europe Platform (STEP) programme is far too small in scale and scope compared to similar initiatives in other countries. The Committee asks for greater clarity on assumptions regarding its leveraging potential but also for bold movements like the Sovereignty Fund. The EESC highlights the need for the EU to regain competitiveness, as the European economy continues to lag behind its main competitors.












1.6.


To increase the EU’s fiscal resilience, the EESC recommends long-term strategies, including creating a sustainable fiscal framework minimising exposure to interest rates, allocating administrative resources more efficiently and incorporating preventive measures for unforeseen events. The EESC also calls for a review of the expenditure ceiling accounting framework, to prioritise revenues, which grow in tandem with actual inflation while expenditures grow at a fixed 2 % trend.












1.7.


While a sense of urgency is needed in finalising the MFF revision by the end of 2023 so that the initial effects can be reflected in the 2024 budget, it is also crucial that broader discussions commence for the next MFF. The talks about the potential inclusion of Ukraine (and other candidate countries) in the EU presents considerable budgetary challenges and necessitates institutional reforms. This could significantly reshape the EU’s financial policies, causing les wealthy states to transition from net beneficiaries to contributors, while also raising complex questions about agricultural and cohesion spending. The EESC believes that comprehensive discussions are needed, including with civil society, in preparation for the next Multiannual Financial Framework




2.   Background









2.1.


After adopting the Multiannual Financial Framework (MFF) 2021–2027, the Union faced numerous unforeseen challenges, including Russia’s invasion of Ukraine and the ensuing energy crisis, which drove up inflation and borrowing costs. The Commission responded swiftly, deploying all available means such as redeployments, reprogramming and budgetary flexibilities.












2.2.


In May 2020, the EU introduced its post-pandemic recovery plan, NextGenerationEU. Its centrepiece, the Recovery and Resilience Facility (RRF), supports productivity-enhancing structural reforms and investments, including in the green and digital transitions and social rights. The RRF encompasses EUR 723,8 billion in grants and loans and is expected to increase GDP by 1,2 % by 2026, possibly more, according to the ECB’s analysis. As of May 2023, EUR 153,4 billion has been disbursed from the RRF, with EUR 225 billion of loan support available for commitment in 2023. In addition to the RRF, NextGenerationEU has provided an additional EUR 83,1 billion to support key EU programmes.












2.3.


Despite disruptions caused by Russia’s war against Ukraine, which has affected global energy systems and pushed energy prices to historic highs, the EU economy has largely recovered from the COVID-19-induced shock. However, the existing budgetary flexibility under the MFF has now been largely depleted due to crisis response programmes such as REPowerEU and direct support for Ukraine and other countries in crisis. The Union’s budget needs sustainable support for the EU’s key budget priorities and higher borrowing costs. The EU budget also needs flexibility to cope with higher borrowing costs due to the increase in interest rates.












2.4.


Numerous emergencies and shifting priorities have strained the resources of the EU administration. Additional tasks given to the Union since 2020 have not been matched with increased staff, and high inflation affects indexed contracts. A targeted MFF revision is therefore urgently needed to meet needs and priorities.












2.5.


On 20 June 2023, the European Commission presented its proposals for the reinforcement of the Multiannual Financial Framework for the period 2024–2027. The proposals aim to provide targeted enhancements in priority areas to enable the EU budget to continue supporting key objectives.




3.   General observations









3.1.


The EESC considers that the MFF is an important tool for financing programmes and actions in all policy areas, from agriculture and regional policy to research, employment, enterprise and space, in line with the EU’s long-term priorities, providing guidance as to where the EU’s priorities are heading.












3.2.


The EU’s long-term budget, which covers the standard Multiannual Financial Framework and NextGenerationEU, addresses various challenges, such as the COVID-19 pandemic and twin green and digital transitions. In the EESC’s view, the Commission’s MFF revision package clearly shows how the Commission’s focus has shifted to new priorities such as support for Ukraine, the subsequent energy crisis and covering the interest rates for RRF loans, but offered limited responses to issues related to Europe’s competitiveness (STEP is a small step in comparison to the Sovereignty Fund, which is still to become a reality), the green and digital transitions, health, the European Pillar of Social Rights and economic recovery.












3.3.


The evidence to date shows that the 2021–2027 MFF has played a role in catalysing the digital transition, supporting cohesion policy and strengthening the Common Agricultural Policy (CAP). However, the EESC stresses that, as the Commission Staff Working Document (1) also points out, there is already visible criticism of the financial constraints encountered by beneficiaries and final recipients, the late adoption of the legal bases for the new programming period, and the potential risk of decommitment or under-implementation of some projects, despite efforts to make those projects more flexible. The EESC calls for a timely conclusion of the negotiations on the current MFF revision, as well as for a search for alternative funding mechanisms, the prioritisation of effective implementation strategies and the strengthening of monitoring measures, including the ongoing involvement of civil society in monitoring programme implementation.












3.4.


The EU’s response to emergencies, such as the COVID-19 crisis and the Russian invasion of Ukraine, reflects its commitment to protect its people and support those affected by crises. However, due consideration should be given to the rapid depletion of financial reserves, delayed initiatives, over-reliance on ad hoc budget reinforcements and the pressure on the EU budget due to these unforeseen problems. The EESC is in favour of increasing the budgets for flexible reserves, simplifying allocation processes, creating a more resilient and flexible funding structure and strengthening partnerships with civil society organisations and local authorities, which can become strong allies in responding to such emergencies.












3.5.


The proposal to support Ukraine in response to Russia’s invasion is necessary, but we must never give up on diplomacy and the aspiration to a lasting ‘peace with justice’. The allocation of EUR 30,5 billion by June 2023 and the creation of the Macro-Financial Assistance+ instrument are decisive steps in supporting Ukraine in these difficult times. These efforts demonstrate the EU’s solidarity and commitment to stability in the region. In the EESC’s view, the EU’s ability to mobilise such significant resources underlines the importance and effectiveness of the EU budget in responding to geopolitical crises. Given that a lack of agreement by the Council by the end of the year will effectively mean no support for Ukraine, the EESC urges the Member States to agree in a timely manner.












3.5.1.


Although the proposal provides substantial support for Ukraine, the financial gap for 2024–2027 is larger than what the EU plans to allocate, and more commitment is needed for recovery and rebuilding. The EESC backs the EU-Ukraine Civil Society Platform’s appeal to use frozen Russian assets for Ukraine’s reconstruction (2). The EU must also play a vital role in mobilising donors and designing the Ukraine Facility to meet actual needs, supporting a fully democratic paradigm in line with EU norms. From a civil society perspective, there are concerns about the transparency and inclusiveness of funding mechanisms, and strict oversight is required to ensure the funds meet the Ukrainian people’s needs. Greater transparency in allocation and a joint EESC and Ukraine-led civil society platform could enhance public confidence and ensure the money’s efficient use.












3.6.


The proposal’s focus on migration management and strengthening partnerships with key third countries is a strength as it addresses an ongoing challenge in the EU. The EESC believes that the EU budget should contribute to a more humane and sustainable solution to the migration crisis by providing the necessary funding and cooperating with countries of origin and transit while simultaneously reinforcing the Union’s external borders. In addition, the funds allocated to addressing emergencies and supporting Member States under exceptional pressure show the EU’s commitment to collective responsibility and solidarity. However, we have to be aware that the ultimate solution will require a major sustained commitment on a Marshall Aid scale over the medium to longer term to incentivise democratic statecraft, facilitate economic development, contain migration and create viable friendly trading partners for the mutual benefit of their peoples and the citizens of the EU.












3.7.


The Strategic Technologies for Europe Platform (STEP) proposal and the ‘Sovereignty seal’ are part of the efforts to position the EU as a world leader in strategic technologies. By reallocating and supplementing funding from existing programmes, STEP aims to boost competitiveness and innovation in the EU, bringing long-term benefits to the economy and society. While the formation of STEP is a praiseworthy initiative, the source of its funding — coming from a combination of existing programmes — could lead to funding from these programmes being watered down or redirected, given that the additional resources allocated to STEP are minimal (EUR 10 billion). Its size and scope are also more limited than similar schemes set up in third countries such as the United States.












3.7.1.


The EESC calls for greater clarity as to the basis of the Commission’s assumptions on the leveraging potential. This is especially true since the size of the US economy, which was 10 % less than the EU’s in 2008, is now 50 % larger than that of the EU-27 (33 % if the UK is included), and this process is continuing. Moreover, given the essential role technological development must play in overcoming the productivity deficit which will inevitably accompany the imminent ageing/demographic challenge, Europe must become much more ambitious. The EESC warns that STEP’s narrow focus and scale could unintentionally undermine other important initiatives through reallocations, while simultaneously providing insufficient resources to establish strategic technology value chains in the EU (3).












3.8.


Despite the proposal’s call for greater budgetary flexibility, the MFF revision highlights how 90 % of the EU budget and NextGenerationEU funds have already been earmarked for specific purposes. This could significantly limit the EU’s ability to respond to unforeseen events or emergencies, putting pressure on the EU to find other ways of funding necessary initiatives. The EESC recognises the need for greater budgetary flexibility in these uncertain times. Increasing the flexibility instrument by EUR 3 billion will enable the EU to respond more effectively to unexpected challenges until the end of the current MFF in 2027.












3.9.


The MFF revision recognises that the EU administration is under pressure, with significant additional burdens and high inflation affecting the effectiveness of EU operations. While the proposal suggests raising the ceiling of MFF heading 7 (European Public Administration) to mitigate this, it does not fully address the need for a more sustainable, long-term solution to managing the increased workload and administrative challenges. More efficient use of existing funding should go hand in hand with an increase in funding under heading 7, this is urgently needed in order to alleviate the pressure as of 2024.












3.10.


As regards the Commission’s proposals to introduce new sources of revenue for the EU budget by 2024, the EESC refers to its opinion on that subject matter, which will be approved on 25–26 October 2023 (4).












3.11.


The EESC calls for greater efforts to increase public participation in the budgetary process by facilitating platforms for dialogue, public hearings and consultations. This can increase transparency, promote a sense of collective ownership and make the MFF more responsive to the needs of EU citizens. In addition, the EU should invest in digital tools to make budget data more open, accessible and user-friendly for the public, fostering a more open dialogue on EU budget priorities.












3.12.


The EESC regrets that the effort made by the Commission in recent years to systematise a strategic foresight process capable of identifying the EU’s main challenges was overlooked in preparing the revision of the MFF.




4.   Specific observations

4.1.   The main MFF 2021–2027 items









4.1.1.


The EU budget response to the COVID-19 pandemic and the energy crisis. The EU budget response to the COVID-19 pandemic was substantial and unprecedented, providing immediate support through reprioritisations and redeployments through the RRF and NextGenerationEU and financial allocations for reforms and investments, including in the green and digital transition. The implementation rate has been high and the macroeconomic impact is expected to be significant (5).












4.1.2.


Incorporating the new REPowerEU chapters as part of the budgetary response signals a strong commitment to ending Europe’s dependence on Russian fossil fuels and accelerating the green transition. It reinforces the joint effort to expand renewable energy in various sectors and achieve energy independence. Funding REPowerEU through additional redistribution and grants demonstrates the determination to prioritise sustainable and environmentally-friendly solutions aligned with the objectives of the European Green Deal.












4.1.3.


The EU’s digital transition, catalysed by the COVID-19 pandemic, is well funded through MFF 2021–2027 and NextGenerationEU, with investments in digital infrastructures, artificial intelligence, cybersecurity and others. While significant investments have been made, the over-reliance on MFF and NextGenerationEU funding may not be sustainable given the limited room for manoeuvre and the challenge inherent in multiple funding sources. While indicative of strong demand, the high rate of programme delivery may mask inefficiencies or potential inadequacies in the early adoption of digital technologies. The feasibility of ambitious targets also needs to be honestly assessed, given the complex and evolving digital landscape and the need to address emerging issues such as the digital divide and cybersecurity in the rapidly digitising landscape.












4.1.4.


With a budget of EUR 392 billion, EU cohesion policy for 2021–2027 targets regional cohesion through funds such as ERDF, ESF+, CF and JTF. It aims to boost climate objectives and includes flexibility for specific needs. The late adoption of the MFF and sectoral legal bases has caused implementation delays and resulted in potential decommitment for the Just Transition Fund. The EESC recommends adopting the legal bases more rapidly, implementing the various actions more swiftly to avoid decommitment and conducting a thorough review of strategies to ensure that climate objectives are met, guaranteeing that no region is left behind in the green transition. It is important that the EU acknowledge how the situation has changed in those areas that share a common border with Russia and Ukraine. Due to these new conditions, special measures are needed in these areas, e.g. through EU cohesion policy, learning from the experience of instruments like CARE and FAST-CARE.












4.1.5.


The EESC emphasises that the Common Agricultural Policy (CAP) 2021–2027 is a strategic policy area for the EU. The CAP was able to guarantee food security in Europe during the COVID-19 crisis and during the market disruptions and heavy inflation affecting agricultural inputs caused by the Russian war in Ukraine. The current CAP 2021–2027, with a budget of EUR 386,6 billion, has increased flexibilities in national strategic plans and allowed for more ambitious climate actions. The EESC notes that high inflation has considerably weakened the purchasing power of CAP direct payments and other CAP support measures. The EESC also points out that the CAP should continue to make food chains work better in the EU and should address more biodiversity issues e.g. through EAFRD (6)-supported projects, or the unsustainable use of water. The EESC is also positive about the EU’s long-term rural vision and considers that the CAP plays a significant role in its implementation, including issues related to poverty.












4.1.6.


Protecting EU citizens: responding to emergencies. The EU has mobilised all remaining funds from the 2014–2020 MFF and created new programmes such as EU4Health and rescEU to respond to the COVID-19 crisis and future health emergencies. However, the Solidarity and Emergency Aid Reserve (SEAR) was quickly depleted and proved insufficient to meet all demands. To strengthen the future response, the EESC considers that the EU should increase the SEAR’s budget and simplify the allocation process to speed up decision making. In addition, the EESC believes that an evaluation of the effectiveness of the EU4Health and rescEU programmes is needed to ensure that they are meeting their objectives and to steer possible improvements.












4.1.7.


Consequences of Russia’s war on Ukraine: Russia’s unprovoked invasion of Ukraine has significantly redirected the EU budget to provide aid. Initially, the budget for Ukraine was around EUR 160 million per year. However, since the start of the war, EUR 70 billion has been mobilised to support Ukraine and its people, including EUR 38,3 billion from the EU and Member States in economic assistance and EUR 21,16 billion in military aid. While the EU’s fiscal response has been comprehensive, it relies heavily on budget reallocations and surcharges, putting a strain on existing funding structures. The EESC believes that over-reliance on ad hoc budget reinforcements could lead to unforeseen budgetary pressures and a lack of long-term predictability. In addition, the humanitarian aid budget is still in high demand due to various global crises.




4.2.   The new items: a targeted and balanced adjustment of the MFF to respond to new challenges

4.2.1.   Unwavering and long-term support for Ukraine through the new Ukraine Facility









4.2.1.1.


The proposal outlines the creation of a new instrument called the Ukraine Facility, with EUR 50 billion for 2024–2027 (EUR 33 billion in loans and guarantees, and EUR 17 billion in grants), which will support Ukraine’s recovery and reconstruction efforts following Russia’s invasion in 2022. The Ukrainian government will prepare a plan, in consultation with the Commission, to guide the release of funds. The plan will set out Ukraine’s vision for reconstruction and modernisation and the reforms it intends to undertake as part of the EU accession process.












4.2.1.2.


We welcome the intention to provide long-term, reliable support to Ukraine as a replacement for the ad hoc crisis response that has prevailed to date. Addressing both immediate recovery needs and longer-term reconstruction, giving priority to direct budget support for areas such as education and infrastructure, facilitating private investment in Ukraine’s reconstruction and providing technical assistance for alignment with the EU acquis, is timely and appropriate and shows an understanding of Ukraine’s multi-dimensional needs.












4.2.1.3.


The possible use of frozen assets to support Ukraine’s recovery is an innovative approach that could provide significant help, not just from an economic point of view but also as a values-based response. Involving other international donors and leveraging private-sector investment could increase the resources available to Ukraine and create a stronger, more comprehensive support network. The EESC notes several positive aspects.












4.2.1.4.


The EESC supports the performance-based approach of the proposed funding schemes, which requires that Ukraine develop plans for reforms addressing key issues such as transparency, anti-corruption, good governance, the rule of law, trade union rights and social dialogue. This is essential to restore public and investor confidence and trust in the national government.












4.2.1.5.


From a civil society perspective, there are concerns about the transparency and inclusiveness of funding mechanisms. The proposal lacks specific mechanisms to include civil society in the planning and execution of recovery and reconstruction efforts to ensure that they meet the needs of the Ukrainian people and not just the needs of the government. Including civil society organisations in decision-making and implementation processes can increase transparency, accountability and effectiveness and ensure that the needs of all groups are considered. Civil society organisations also play a crucial role in the efficient and targeted distribution of aid, providing valuable local knowledge, community confidence and the capacity to reach vulnerable groups. Failure to involve them could lead to a top-down approach that may not adequately address the needs and interests of the affected population. Civil society should be a key player — a joint EESC and Ukraine-led civil society platform could be a solution for monitoring the transparency and effectiveness of reconstruction funds (7), including by making use of the partnership principle.












4.2.1.6.


Although the proposal mentions donor coordination and the development of a plan by the Ukrainian government, it does not provide detailed information on how the different components of the Mechanism will be coordinated or how implementation will be monitored, which could affect the Mechanism’s effectiveness. If involved on a structural level, civil society could monitor progress on crucial reforms and ensure that funds are disbursed in line with shared EU-Ukrainian priorities.












4.2.1.7.


The EESC calls for a pragmatic approach to conditionality which incentivises reforms and promotes fundamental rights and the rule of law while acknowledging the realities on the ground.




4.2.2.   Managing migration, strengthening partnerships with key third countries and addressing emergencies









4.2.2.1.


The proposal’s focus on migration management and strengthening partnerships with key third countries is a strength as it addresses a current challenge in the EU (a EUR 15 billion reinforcement of the EU budget). The EU budget can contribute to identifying a more humane and sustainable solution to the migration crisis by providing the necessary funding and cooperating with countries of origin and transit while fully respecting human rights and ensuring the health and safety of migrants and refugees. In addition, the funds allocated to deal with emergencies and to support Member States under exceptional pressure show the EU’s commitment to collective responsibility and solidarity.












4.2.2.2.


The commitment to support key countries of origin and transit in the migration crisis and the desire to strengthen support for partners in the Western Balkans is commendable. The recognition of the need to increase the financial ceilings and the Solidarity and Emergency Aid Reserve also signals a recognition of the growing challenges and an attempt to address them.




4.2.3.   Fostering long-term competitiveness in critical technologies through the Strategic Technologies for Europe Platform









4.2.3.1.


The proposal to create a Strategic Technologies for Europe Platform (STEP) will be financed by reallocating existing funds and allocating a further EUR 10 billion and aims to address the challenges faced by European industry and ensure the continent’s long-term competitiveness by channelling existing funding towards key projects and accelerating implementation in strategic areas. The EESC notes several positive aspects of STEP.












4.2.3.2.


The STEP initiative aims to consolidate various EU funds and programmes that operate under separate rules and are spread across different spending programmes. STEP proposes to strengthen existing instruments by allocating additional funds to established investment schemes such as InvestEU, the European Innovation Council, the Innovation Fund and the European Defence Fund. By pooling these resources, STEP could streamline the allocation of funds, improve efficiency and eliminate potential overlaps. This harmonisation would lead to economies of scale, thus improving the efficiency of EU investments.












4.2.3.3.


During her 2022 State of the Union address, the Commission president, Ursula von der Leyen had called for the creation of a European Sovereignty Fund. However, no such proposal was put forward in the MFF mid-term revision package. Such a fund could play a key role in filling investment gaps and increase the competitiveness of EU businesses in third countries that have already implemented similar financial schemes. To that end, the EESC calls for a more ambitious financing scheme to support the EU’s long-term competitiveness.












4.2.3.4.


As the Multiannual Financial Framework is still under strain amid continued, unexpected challenges, efforts to make spending more efficient should flank any allocation of new resources. The EESC considers that continually creating new frameworks by reallocating existing funds, as is the case for STEP, runs the risk of further fragmenting financial programmes. This in turn may lead to less efficient spending and a large number of spending priorities which lack the resources needed to meet their policy objectives. Furthermore, the EESC asks for a comprehensive impact assessment on the multiplier effects of these facilities, which are considered to have a total impact of EUR 100 billion, implying a leverage of 10 as regards the STEP allocation.




4.2.4.   Technical adjustments to new economic circumstances









4.2.4.1.


The revision of the MFF recognises the diverse challenges faced: responsibilities have been increased, budgetary flexibility had to be built in to cope with unforeseen circumstances, and the ceilings previously agreed had to be upheld. While the short-term solution of developing a new dedicated tool for managing NextGenerationEU costs and increasing the administrative budget seems appropriate, these measures may expose the EU budget to greater vulnerability to future uncertainties.












4.2.4.2.


The evaluation rightly recognises the impact of rising interest rates on the costs of financing NextGenerationEU and proposes a special instrument to cover cost overruns. Recognising this problem and endeavouring to adapt to new economic circumstances is pragmatic. However, the EESC is of the opinion that the focus should be on creating a sustainable, more resilient fiscal framework, using mechanisms such as risk-sharing between EU members or creating euro area fiscal capacity. This framework could ensure more stable financing and lower borrowing costs in the long run. Given that interest costs are much higher than initially planned, the EESC believes that the EU should review how interest costs are accounted for in the EU budget and in the MFF to ensure this does not exert undue pressure on important EU programmes.












4.2.4.3.


The evaluation correctly identifies the pressure on administrative resources due to increasing responsibilities without a corresponding increase in staff. However, the EESC considers that it would be beneficial to accompany increased funding with measures to improve efficiency, such as better use of digital tools, streamlining of administrative processes and more collaboration between EU institutions.












4.2.4.4.


The EESC recommends focusing on long-term strategies to increase fiscal resilience and ensure stable funding. These could include creating a sustainable fiscal framework that minimises exposure to rising interest rates, more efficient allocation of administrative resources and incorporating preventive measures to reduce the impact of unforeseen circumstances.












4.2.4.5.


Under the Council’s current own resources decision, the majority of the MFF is financed through contributions by Member States based on their gross national income (GNI). As such, the most direct way to increase the financial resources available under the MFF in the long term would be to attain a higher sustainable growth trajectory for the EU economy by investing in the European economy and its competitiveness. In the short term, an increase in the GNI-based contribution could be considered.












4.2.4.6.


While the evaluation proposes an increase in the flexibility instrument, it does not sufficiently address how the EU budget would cope with additional unforeseen needs. Given the limited room for manoeuvre, the EU budget could be better equipped with preventive measures, such as contingency funds or reserves, which could be used to protect against unforeseen financial needs and safeguard the EU’s ability to effectively address future crises while remaining fit for purpose. The EESC is concerned about the sustainability of support to Ukraine and the potential to address future crises in the context of limited budgetary flexibility.












4.2.4.7.


The projected payment patterns for the MFF suggest a possible overrun of the payment ceiling in 2026 due to the ‘capping’ mechanism. This could lead to financial strains hampering the EU’s ability to meet its commitments, including support for Ukraine and other strategic objectives. Transparency on these potential financial challenges is essential. The EESC calls for a review of the expenditure ceiling accounting framework, to prioritise revenues, which grow in tandem with actual inflation while expenditures grow at a fixed 2 % trend.






Brussels, 20 September 2023.


The President of the European Economic and Social Committee

Oliver RÖPKE
            





(1)  SWD(2023) 336 final.

(2)  EU-Ukraine CSP joint declaration adopted at the 12th meeting, December 2022.

(3)  Opinion of the European Economic and Social Committee on Proposal for a Regulation of the European Parliament and of the Council establishing the Strategic Technologies for Europe Platform (‘STEP’) and amending Directive 2003/87/EC, Regulations (EU) 2021/1058, (EU) 2021/1056, (EU) 2021/1057, (EU) No 1303/2013, (EU) No 223/2014, (EU) 2021/1060, (EU) 2021/523, (EU) 2021/695, (EU) 2021/697 and (EU) 2021/241[(COM(2023) 335 final — 2023/0199 (COD)) (OJ C, C/2023/866, 8.12.2023, ELI: http://data.europa.eu/eli/C/2023/866/oj)

(4)  See opinion ECO/626 on Next generation of own resources.

(5)  See evaluation report ECO/607 on Mid-term evaluation of the RRF.

(6)  European agricultural fund for rural development.

(7)  There is already a Ukrainian platform ‘Rise Ukraine’.


ELI: http://data.europa.eu/eli/C/2023/867/oj
ISSN 1977-091X (electronic edition)