Debate: Impact on the  EU budget of increasing European Union Recovery Instrument borrowing costs - Own resources: a new start for EU finances, a new start for Europe
Date: MONDAY, 8 MAY 2023
Speaker: Thierry Breton
Language: EN

On the first report, having NextGenerationEU financing and repayment costs financed within the MFF ceilings until 2027 was of course part of the political agreement reached in November 2020.  In light of Russia’s war of aggression in Ukraine, the current socio—economic context and also macroeconomic developments, we are facing an unprecedented situation, which has also implications of course, for our budgetary planning. The Commission will in the coming weeks propose the draft budget for 2024, which will present its projection for the interest rate cost related to the non-repayable support under NextGenerationEU.  However, this projection will come inevitably with uncertainty, of course, due to rising disbursement volume in the rest of 2023 and also future interest rates. In addition, the midterm review will be an opportunity to assess how the implementation of the MFF is progressing and if the EU budget continues to provide the means for common responses to common challenges over the coming years.  As indicated in the statement made at the time of the conclusion of the 2023 budget procedure, the Commission will, in the context of the MFF midterm review, assess the sustainability and expenditure ceilings and sub—ceilings of all headings of the MFF. The sustainability of the current planning for the yearly NextGenerationEU borrowing cost will also be examined in this context.  However, the macroeconomic environment is more complex than at the time of the agreement on the 2021—2027 MFF, with again, as I said earlier, rising interest rates. And in these new and unforeseen circumstances, we must ensure that additional financing costs for NextGenerationEU are fully financed – as you know, this is an obligation, but without disproportionate effect on policies and programmes financed by the MFF. It is, of course premature at this stage to single out what could be the most appropriate approach to address these issues.  As mentioned in the report of the Committee on Budgets, the inherent volatile nature of financing costs in a certain sense is not fully in the spirit of the longterm programming of the MFF, and we are ready to try to find solutions in full transparency.  Now, on the own resources report, securing adequate funding and diversifying revenues are part of the numerous challenges the budget is definitely facing. This is why we need new own resources and the successful introduction of the plastic—based own resource, also supported by the Parliament, must be seen as an encouragement, if I may say so.  As explained before, again, interest rates increased to levels not seen over the last decade, putting the expenditure side of the budget under very high stress.  Now that the CBAM Regulation and the ETS Directive have been approved, we need to step up negotiations on our own resource proposals. We need to act quickly and use the momentum. The agreement on the sectoral proposals will require some adjustment on the legislative proposals we have put forward in December 2021. But of course we should not waste any time and engage in sustainable and substantial, I should say, negotiation to agree on new own resources as soon as possible.  At the same time, the Commission is looking into how this first basket can be supported by additional own resources. In particular, it is extremely important to assess how quickly additional new own resources can be approved and established, whether they can generate sufficient revenue for the EU budget, and we need to look at the simplicity of implementing them.  These are all important criteria that the Commission will assess carefully in view of our proposals this year. It is, of course, in its assessment, that the Commission will look very closely at your suggestions. Our objective is to make a proposal soon, and in this respect, I count on your support because the Parliament plays a very important role and agrees, as your report on own resources highlights, on the importance and urgency of new own resources.