Beginning of December, the Finnish presidency of the Council circulated a “negotiating box” on the 2021-2027 Multiannual Financial Framework (MFF) and own resources. 19 months after the Commission proposal and one year after the adoption of the European Parliament’s position, this negotiating box puts forward, for the first time, tentative figures for further Council discussions, notably a proposed overall level of €1,087 billion (1.07% of the EU’s GNI) for the next MFF.

This proposal is significantly smaller than what the Commission initially proposed. The budget has already caused controversy in the European Parliament. For Johan Van Overtveldt (ECR, BE), Chair of the Committee on Budgets, “the Finnish presidency proposal is well below Parliament’s expectations when it comes to meeting the Union’s commitments to investment, youth, climate and security”. The proposal also created opposition amongst supporters of increased cohesion funds in southern, central, and eastern states – who see it as a betrayal of the principle of redistribution in the EU, and insufficient to fulfil the European Commission’s agenda for a more ambitious union. But those on the other side of the argument are unhappy too. Germany and Member States comprising Denmark, Estonia, Finland, Ireland, Latvia, Lithuania, the Netherlands, and Sweden – view the budget as too large, as they do not want it to exceed 1 percent of GNI. (The Finnish presidency believes that, given these differences between Member States on the issue, the best it could hope for was to distribute discontent between them evenly.)

Since then, Commission President Von der Leyen unveiled the “Green Deal” to an extraordinary sitting of the European Parliament on 11 December. On 12 December, the European Council met with both climate and the MFF on its agenda. The European Council handed over negotiation duties for the next EU long-term budget to its president, Charles Michel, during the first round of the December summit on 12 December. EU Leaders did not discuss the content of the EU budget on 12 December at all.

The first day of the summit was overwhelmed by the climate discussion that ended up without an agreement, as Poland refused to sign up for the climate neutrality by 2050. However, the negotiation on the Multiannual Financial Framework (MFF) could be instrumental in bringing Warsaw on board in June. There are strong concerns that the cost of the transition will be higher for some countries than for others.

President Von der Leyen said she will present the financial instruments of her Green Deal in January, including the Just Transition Fund and the European Investment Fund and advised Poland to look at the details of these initiatives. “But of course, it goes in parallel to the development of the MFF,” von der Leyen explained. “Clearly a significant part of the future budget will have to be earmarked to climate agenda,” Michel told the press, “a minimum of 25% is the proposal.”

The longer the MFF discussions continue, the longer the delay to the Commission’s implementation of its work programme from the beginning of 2021. France would like to reach a deal that will help President Emmanuel Macron justify the energy he has invested in the European project to a domestic audience with a view to national elections in March. Germany intends for its presidency of the EU, which will begin in July 2020, to focus on the many other challenges the bloc faces. There is a great weight of expectation on Charles Michel’s shoulders to find a way through this roadblock.

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