This paper provides a review and assessment of the EU budget and Cohesion policy reforms proposals for 2021-27. European Commission proposals for the Multiannual Financial Framework for 2021-217 were tabled in May 2018 and presented as being both ambitious for the EU but also pragmatic given the straightened budget circumstances associated with Brexit. It was also said to be future-oriented in reflecting the pressures of rapid developments in innovation, the economy, the environment and geopolitics, while retaining a strong commitment to solidarity.
The Commission’s proposals provide for a budget of €1,135 billion in commitments (2018 prices) for 2021-27, equivalent to 1.11 percent of EU27 GNI. Initial reactions from some net payers (Austria, Denmark, Netherlands, Sweden) is that the size of the budget is unacceptably high, compounded by the proposed phasing-out of rebates, which could lead to steep increases in some net payments. At the other end of the spectrum, several net recipients are critical of the ‘lack of ambition’ of the EU budget (Greece, Hungary, Poland, Portugal) as are the European Parliament and Committee of the Regions. Taking account only of the ERDF, the Cohesion Fund and the ESF+, the proposed Cohesion policy budget is around €331 billion for 2021-27 compared with €374billion for 2014-20. The budget lines for agricultural policy (Heading 2 and III) also show a pronounced reduction in proposed spend on agriculture, fisheries and rural development. Although the Commission has proposed changes to the Berlin formula, the Cohesion allocations are primarily determined by ‘adjustments’: a safety net (to limit cuts); and a reverse safety net capping (to limit increases). Increases in Cohesion policy allocations are concentrated in southern Europe – especially Greece, Italy and Spain. the absence of the UK is placing greater pressure on those net payers seeking a smaller EU budget to take a more prominent role.
There are several points of note about the broad approach to the reform. First, there is no clear mission for Cohesion Policy. The reform appears to be more ‘pragmatic drift’, without a clear leitmotif, rather than any significant shift in the paradigm of the policy. Second, the Commission is seeking more control over EU spending, reflected in the proposed shift from shared management to central management of funding, and greater influence for the Commission services in areas such as the European Semester, application of the proposed conditionality on the rule of law, and the introduction of structural reform programmes. Third, the line of argument – characteristic of previous reform debates – that Cohesion policy is ineffective or inefficient seems to have been laid substantially to rest. Finally, the reform proposals weaken the long-standing commitment to a coordinated use of the Funds.