Finland tables long-term EU budget limiting expenditure

The proposal goes below the ambition of the European Commission and Parliament, and the EU needs as well

Finland's EU presidency proposed a 2021-2027 EU budget equal to 1.06% of the bloc's gross national income (GNI), which goes below the ambitions of both the European Commission and Parliament, news wires reported. The draft envisaged an overall ceiling of 1.07% of EU GNI (€1,087bn), and payment appropriations (the money that can be actually spent during the period) of 1.06% of EU GNI, representing €1,080bn.

The EU Multiannual Financial Framework (MFF) will be discussed by the Council during the 12-13 December summit. So far, the differences between the EU institutions and among EU countries have impeded progress towards achieving an agreement by the end of this year, as was initially planned. EU leaders failed to narrow their differences, as Member States maintained their stubborn positions on the EU's spending volume and priorities.

According to an EU official, the document represents “a balanced compromise” between the views of the various groups within the Council but admitted that it is “very difficult” to satisfy all positions. The Parliament had proposed 1.3% of EU GNI, while the Commission's original proposal included a ceiling equivalent to around 1.11%, which translates into €1,105bn in payments.

In an earlier draft, Finland has proposed a range of overall spending between 1.03% and 1.08%, but the proposal was strongly criticised by many countries, in particular those defending funding for farmers and less developed regions. The critics said that Finland did not make an effort to strike a fair balance between the net contributors and the other countries. The Common Agricultural Policy and cohesion funds represent currently around two-thirds of the EU's budget.

Germany, the Netherlands, Denmark, Sweden, and Austria want to limit the overall expenditure to around 1% of GNI. They argue that the budget has to shrink given that the EU will be smaller after the UK's planned departure. Finland claims that the proposal would allow the Union to respond to new challenges and priorities, “as well as safeguards funding for the modernised Common Agricultural Policy and future oriented Cohesion Policy.”

Spending on the Cohesion matters would not exceed €374bn, of which €323bn will be allocated to “economic, social and territorial cohesion”. The Finnish proposal represents a 12% reduction compared with the current MFF. The bulk of the money will go to less developed regions (€194bn), while €43.2bn will still go to transition regions and €34.2bn to more developed regions.

As part of the budget negotiations, some EU countries also want to get rid of special rebates like those enjoyed by Britain and the Netherlands. The Netherlands, expectedly, is not impressed by this idea. France meanwhile favours introducing an EU-wide digital tax on tech giants like Facebook and Google to boost joint coffers without raising individual Member States' contributions.

The EU Commission new president, Ursula von der Leyen, last Wednesday expressed deep concern about the “severe cuts” proposed for the Union's long-term budget. Commenting the Finnish proposal, she pointed out that it goes against not only the proposal by the Commission, but against the EU interests as a whole.

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