European Union: EU Budgetary Perspectives 2014-2020

Last Updated: 19 July 2011
Article by Christos Floridis

Most Read Contributor in Cyprus, December 2017


The European Commission has faced the challenge of being able to fund a number of policy areas where the EU could be more effective, by acting at EU level, in preparing its proposals for the future budget of the European Union. In its proposal, based on the Europe 2020 Growth Strategy, a new funding potential can be seen attempting to ease the direct impact of the national budgets with the creation of a new Multiannual Financial Framework (MFF).

Legal framework of the MFF

The Treaty of Lisbon included the MFF into EU primary law. Article 312 of the Treaty on the functioning of the European Union, stipulates that the MFF shall be established for a period of at least five years. The framework is set down in the form of a regulation to be adopted unanimously by the Council after obtaining the consent of the European Parliament given by a majority of its component members.

In July 2010, the European Parliament established a special committee on policy challenges and budgetary resources for the future of the EU after the present programming period, known as the SURE Committee. Its task is to examine the sectoral policies and the horizontal issues to be covered in the duration of the next MFF.

Financial capacity of the MFF

Based on the views of the European Parliament, freezing the next MFF is not a viable option for the EU; at least a 5% increase of resources is needed for the next MFF according to the European Parliament's resolution of 8 June 2011. Investing in the future for a competitive, sustainable and inclusive Europe, the Commission proposes a financial framework with 1.05% of GNI in commitments, translating into 1% in payments from the EU budget. A further 0.02% in potential expenditure outside the MFF and 0.04% in expenditure outside the budget will bring the total figure to 1.11%, which includes the financial amounts to respond to prices and emergencies.

For the new MFF there are also details provided for the expected rhythm of payments in order to give greater creditability which is of great importance for the budgetary consolidation and for tight control of payments at the beginning of the next programming period.

New principles for the EU budget

It is important to underline that the EU budget is different in structure, in approach and in its process from the national budgets. Based on pan-European logic and due to its comparatively small size, it concentrates on specific areas and policies, where it delivers high EU added value. The EU budget does not seek to fund interventions that the Member States could finance by themselves. Its objective is to enable the EU to function effectively through collective actions.

The existence of the EU budget aims to fund the common policies that the Member States have agreed to be handled at EU level, to express solidarity between EU Member States and regions, to support the development even of the weakest regions, in order to allow the function of a cohesion policy in a single economic space. Furthermore, it aims to finance interventions which complete the internal market through funding of actions, ie investment in infrastructure of pan-European use. Moreover, the objective of the EU budget is to ensure synergies and to facilitate cooperation and joint solutions that cannot be supplied or implemented by Member States acting alone as in the case of migration, justice, home affairs, research and innovation. Last but not least, new policies which need a pan-European approach can be confronted, such as demographic change, culture, environment or even climate change.

The next MFF implements principles which focus on EU added value, delivering key policy priorities, and presenting impacts and results which deliver neutral benefits across the totality of the EU Member States.

With regard to this policy in numbers and due to the fact that funding must deliver the expected results, public authorities are not entitled to receive funds and spend them as they wish, because EU funding should be delivered on commonly agreed EU objectives. The redesign of the programmes and instruments included in the MFF are mainly based on the principles of simplification and conditionality, where the results are clearly related to the implementation of the Europe 2020 Strategy and where the investment of the private sector is considered as an innovative financial instrument to magnify the impact of the EU budget enabling the use of a greater financial EU potential.

European added value

The principle of European added value reflects a legitimate expectation that EU spending is justified and based on its effective contribution to efficiently achieve the Union's policy goals. While the concept is hard to define and generally considered unable to capture the political and economical implications of the European integration, there is a consensus that every EU funding should cover those actions that Member States cannot ensure, or where it can obtain high value European results. Yet, at present, the EU and national budgetary processes are largely separated. Greater synergy with national budgets could secure better results and produce savings.

In that direction, the logic of the European semester assists. The semester, according to which Member States will have to translate EU guidance and rules in their annual policy and their budgetary choices, will be based on an interactive dialogue of control and peer review. This mechanism creates new bridges between the EU and national authorities with the aim to create more stable links in order to improve coherent transparency and efficiency in public spending.

New elements in the EU budget

The ambition of the modernised budget is to reallocate resources to priority areas such as research and innovation, education and culture, security of the EU's external borders and European infrastructure.

The key changes to be made in the main spending areas include Horizon 2020, which is a common strategic framework for research, innovation and technological development. The Commission proposes to allocate EUR 80 billion to the 2014-2020 period for the Common Strategic Framework for Research and Innovation. This funding will be complemented by important financial support for research and innovation through the structural funds. In contrast, only EUR 60 billion was spent on research and innovation during the programming period 2007-2013.

In cohesion policy instruments concerning solidarity and investment for sustainable growth and employment, the amount of EUR 376 billion is proposed for the 2014-2020 period. This amount comprises EUR 162.6 billion for convergence regions, EUR 38.9 billion for transition regions, EUR 53.1 billion for competitiveness regions, EUR 11.7 billion for territorial cooperation, EUR 68.7 billion for the Cohesion Fund and another EUR 40 billion for the new instrument of Connecting Europe Facility. Moreover, the European Social Fund will represent at least 25% of the cohesion envelope, not taking into account the Connecting Europe Facility.

As already stated the Commission proposes to allocate EUR 40 billion for the 2014-2020 period for the Connecting Europe Facility which will be complemented by an additional EUR 10 billion, ring fenced for related transport investments inside the Cohesion Fund. Specifically, this amount comprises EUR 9.1 billion for the energy sector, EUR 31.6 billion for transport and EUR 9.1 billion for ICT.

The policy for agricultural and rural development is covered by the Common Agricultural Policy (CAP) which is designed to deliver a modern sustainable and efficient agricultural sector in Europe. Its objective is to promote the competitiveness of the sector to ensure full security and to preserve the environment and a fair standard of living of the agricultural community. It is one of the most important policies of the European Union as it operates a single policy with a single and significant European budget.

The reformed CAP will promote resource efficiency in order to maintain the production base for full and renewable energy across the EU. Moreover, one of its world objectives is to proceed to those actions in order to adapt to climate change and to the protection of ecosystems as well as to fight biodiversity laws.

The Commission proposes to maintain the current two Pillar structure of the CAP. Pillar I will continue to provide direct support to farmers and support market measures and Pillar II will continue to deliver specific environmental public goods, improve the competitiveness of the agriculture and forestry sectors and promote the diversification of economic activity in rural areas. The main elements of the reform will include a more equitable distribution of direct income support, the greening of direct payments, support for active farmers, capping the level of direct payments for the largest farmers, simplification of the scheme and market expenditure as well as price mechanisms. The implementation of the measures will take place with the creation of the European Agricultural Guarantee Fund (EAGF) and the European Agricultural Fund for Rural Development (EAFRD). In the post 2013 period the Commission proposes to maintain the alignment of the two funds as far as possible.

It is proposed that EUR 281.8 billion will be allocated for Pillar I of the CAP and EUR 89.9 billion for rural development. This funding will be complemented by a further EUR 15.2 billion which comprises research and innovation in food security, bio-economy and sustainable agriculture, food safety, food support for the most deprived persons, new reserve for crisis in the agricultural sector and EUR 2.5 billion in the European Globalisation Fund (EGF).

As far as human capital is concerned, in the area of education and training EUR 15.2 billion is proposed and another EUR 1.6 billion in the area of culture for the next programming period. An important financial support from structural funds will complement this funding, which in the 2007-2013 period represented EUR 72.5 billion in education and training across Europe's regions.

In order to respond to the challenges of migration, the Commission proposes to allocate EUR 8.2 billion in the area of home affairs and EUR 455 million for civil protection and the European Emergency Response Capacity.

For external instruments which identify the role of the EU as a global player, the Commission proposes to allocate EUR 70 billion for 2014-2020.

Traditionally, the European Development Fund (EDF), which finances development assistance for the EU's developing country partners, has been financed outside the EU budget to reflect the particular relations that certain Member States have with different parts of the world. For the period 2014-2020, the Commission considers bringing the EDF contribution key closer to the EU budget in order to control the visibility of the actions and the amounts provided in development aid.

Large scale projects tend to be disproportionately expensive for the small EU budget. Therefore, the Commission proposes to foresee their funding outside the MFF for the next programming period in order to ensure that the EU continues to meet its international commitments.

Instruments and implementation of the EU budget

In order to ensure accountability and cost effectiveness on EU programmes, the Commission has decided to propose radical simplification of the future sectoral programmes in order to guarantee clear eligibility conditions and appropriate levels of control, limiting risk of errors and exposure to fraud. The review of the general rules of the financial regulation will comprise a reduction of the number of separate programmes and instruments. This approach covers areas such as maritime affairs and fisheries, justice and fundamental rights, and education and culture.

Another simplification method regarding the management of programmes is the creation of a single framework with common rules where exceptions and specificities will be kept to the minimum. This means that all EU funding programmes for a certain sector will be covered within a common strategic framework.

The externalisation option of the European Commission is a possible solution as it provides extensive recourse to specialised agencies and enhances the visibility of the EU in the private sector.

One of the most important simplification rules is the mainstreaming of priorities across EU policies. EU objectives need to be reflected in proper instruments contributing to a certain policy, facilitating access to other EU policies and proposing solutions for them, such as competitiveness, creation of greener jobs and strengthening energy security.

In order to achieve more efficient administration and parallel cost reduction of the administrative expenditure, the Commission has decided to propose a number of changes to the staff regulations applicable in the EU institutions, such as adaptation of salaries with an increase of working hours without compensatory wage adjustment and an increase of the pension age in line with similar trends in Member State administrations. A new draft regulation is to be discussed together with the European Parliament and the Council for adoption as soon as possible, before the beginning of the next programming period 2014-2020.

Regarding the duration or the MFF, the Commission proposed a seven year timeframe for the 2014-2020 period in order to achieve flexibility and to strengthen the link to the achievement of the Europe 2020 targets in time. According to the EU institutions, budgetary flexibility is essential to facilitate the decision making process within the institutions, accompanied by an inter-institutional agreement on cooperation in budgetary matters and financial management. At last, responsibilities of the Member States in the management of the structural funds should be taken into consideration and therefore, a legislative framework needs to be implemented regarding the management of EU funding programmes.

EU budget results

Delivery of tangible results is a major priority for the EU budget; therefore, spending the right amount on the right policies should have a measurable and relevant impact. Attempts to address the greater concentration on strategic priorities and objectives in the 2007-2013 programming period have not always been successful due to the broad list of priorities laid down in the regulations from which the Member States could select. The lack of effectiveness is also due to the absence of coordination and complementarity between the different European funds.

Finally, the limited development of mechanisms to reward performance or to penalise non-effective use of the funds allocated to each Member State as well as the lack of sufficient incentives to improve performance are the main factors for the lack of effectiveness in financial interventions during the last programming period. It will be useful for the new MFF to create a reward fund and to be able to develop such controls on the appropriate use of the structural funds but also of the use of horizontal European programmes in order to stimulate Member States to create internal, national and regional synergies which will allow them to use the EU budget efficiently, with a perspective on future investment and development.

The content of this article is intended to provide a general guide to the subject matter. Specialist advice should be sought about your specific circumstances.

To print this article, all you need is to be registered on

Click to Login as an existing user or Register so you can print this article.

Some comments from our readers…
“The articles are extremely timely and highly applicable”
“I often find critical information not available elsewhere”
“As in-house counsel, Mondaq’s service is of great value”

Related Video
Up-coming Events Search
Font Size:
Mondaq on Twitter
Register for Access and our Free Biweekly Alert for
This service is completely free. Access 250,000 archived articles from 100+ countries and get a personalised email twice a week covering developments (and yes, our lawyers like to think you’ve read our Disclaimer).
Email Address
Company Name
Confirm Password
Mondaq Topics -- Select your Interests
 Law Performance
 Law Practice
 Media & IT
 Real Estate
 Wealth Mgt
Asia Pacific
European Union
Latin America
Middle East
United States
Worldwide Updates
Mondaq Ltd requires you to register and provide information that personally identifies you, including what sort of information you are interested in, for three primary purposes:
  • To allow you to personalize the Mondaq websites you are visiting.
  • To enable features such as password reminder, newsletter alerts, email a colleague, and linking from Mondaq (and its affiliate sites) to your website.
  • To produce demographic feedback for our information providers who provide information free for your use.
  • Mondaq (and its affiliate sites) do not sell or provide your details to third parties other than information providers. The reason we provide our information providers with this information is so that they can measure the response their articles are receiving and provide you with information about their products and services.
    If you do not want us to provide your name and email address you may opt out by clicking here
    If you do not wish to receive any future announcements of products and services offered by Mondaq you may opt out by clicking here

    Terms & Conditions and Privacy Statement (the Website) is owned and managed by Mondaq Ltd and as a user you are granted a non-exclusive, revocable license to access the Website under its terms and conditions of use. Your use of the Website constitutes your agreement to the following terms and conditions of use. Mondaq Ltd may terminate your use of the Website if you are in breach of these terms and conditions or if Mondaq Ltd decides to terminate your license of use for whatever reason.

    Use of

    You may use the Website but are required to register as a user if you wish to read the full text of the content and articles available (the Content). You may not modify, publish, transmit, transfer or sell, reproduce, create derivative works from, distribute, perform, link, display, or in any way exploit any of the Content, in whole or in part, except as expressly permitted in these terms & conditions or with the prior written consent of Mondaq Ltd. You may not use electronic or other means to extract details or information about’s content, users or contributors in order to offer them any services or products which compete directly or indirectly with Mondaq Ltd’s services and products.


    Mondaq Ltd and/or its respective suppliers make no representations about the suitability of the information contained in the documents and related graphics published on this server for any purpose. All such documents and related graphics are provided "as is" without warranty of any kind. Mondaq Ltd and/or its respective suppliers hereby disclaim all warranties and conditions with regard to this information, including all implied warranties and conditions of merchantability, fitness for a particular purpose, title and non-infringement. In no event shall Mondaq Ltd and/or its respective suppliers be liable for any special, indirect or consequential damages or any damages whatsoever resulting from loss of use, data or profits, whether in an action of contract, negligence or other tortious action, arising out of or in connection with the use or performance of information available from this server.

    The documents and related graphics published on this server could include technical inaccuracies or typographical errors. Changes are periodically added to the information herein. Mondaq Ltd and/or its respective suppliers may make improvements and/or changes in the product(s) and/or the program(s) described herein at any time.


    Mondaq Ltd requires you to register and provide information that personally identifies you, including what sort of information you are interested in, for three primary purposes:

    • To allow you to personalize the Mondaq websites you are visiting.
    • To enable features such as password reminder, newsletter alerts, email a colleague, and linking from Mondaq (and its affiliate sites) to your website.
    • To produce demographic feedback for our information providers who provide information free for your use.

    Mondaq (and its affiliate sites) do not sell or provide your details to third parties other than information providers. The reason we provide our information providers with this information is so that they can measure the response their articles are receiving and provide you with information about their products and services.

    Information Collection and Use

    We require site users to register with Mondaq (and its affiliate sites) to view the free information on the site. We also collect information from our users at several different points on the websites: this is so that we can customise the sites according to individual usage, provide 'session-aware' functionality, and ensure that content is acquired and developed appropriately. This gives us an overall picture of our user profiles, which in turn shows to our Editorial Contributors the type of person they are reaching by posting articles on Mondaq (and its affiliate sites) – meaning more free content for registered users.

    We are only able to provide the material on the Mondaq (and its affiliate sites) site free to site visitors because we can pass on information about the pages that users are viewing and the personal information users provide to us (e.g. email addresses) to reputable contributing firms such as law firms who author those pages. We do not sell or rent information to anyone else other than the authors of those pages, who may change from time to time. Should you wish us not to disclose your details to any of these parties, please tick the box above or tick the box marked "Opt out of Registration Information Disclosure" on the Your Profile page. We and our author organisations may only contact you via email or other means if you allow us to do so. Users can opt out of contact when they register on the site, or send an email to with “no disclosure” in the subject heading

    Mondaq News Alerts

    In order to receive Mondaq News Alerts, users have to complete a separate registration form. This is a personalised service where users choose regions and topics of interest and we send it only to those users who have requested it. Users can stop receiving these Alerts by going to the Mondaq News Alerts page and deselecting all interest areas. In the same way users can amend their personal preferences to add or remove subject areas.


    A cookie is a small text file written to a user’s hard drive that contains an identifying user number. The cookies do not contain any personal information about users. We use the cookie so users do not have to log in every time they use the service and the cookie will automatically expire if you do not visit the Mondaq website (or its affiliate sites) for 12 months. We also use the cookie to personalise a user's experience of the site (for example to show information specific to a user's region). As the Mondaq sites are fully personalised and cookies are essential to its core technology the site will function unpredictably with browsers that do not support cookies - or where cookies are disabled (in these circumstances we advise you to attempt to locate the information you require elsewhere on the web). However if you are concerned about the presence of a Mondaq cookie on your machine you can also choose to expire the cookie immediately (remove it) by selecting the 'Log Off' menu option as the last thing you do when you use the site.

    Some of our business partners may use cookies on our site (for example, advertisers). However, we have no access to or control over these cookies and we are not aware of any at present that do so.

    Log Files

    We use IP addresses to analyse trends, administer the site, track movement, and gather broad demographic information for aggregate use. IP addresses are not linked to personally identifiable information.


    This web site contains links to other sites. Please be aware that Mondaq (or its affiliate sites) are not responsible for the privacy practices of such other sites. We encourage our users to be aware when they leave our site and to read the privacy statements of these third party sites. This privacy statement applies solely to information collected by this Web site.

    Surveys & Contests

    From time-to-time our site requests information from users via surveys or contests. Participation in these surveys or contests is completely voluntary and the user therefore has a choice whether or not to disclose any information requested. Information requested may include contact information (such as name and delivery address), and demographic information (such as postcode, age level). Contact information will be used to notify the winners and award prizes. Survey information will be used for purposes of monitoring or improving the functionality of the site.


    If a user elects to use our referral service for informing a friend about our site, we ask them for the friend’s name and email address. Mondaq stores this information and may contact the friend to invite them to register with Mondaq, but they will not be contacted more than once. The friend may contact Mondaq to request the removal of this information from our database.


    From time to time Mondaq may send you emails promoting Mondaq services including new services. You may opt out of receiving such emails by clicking below.

    *** If you do not wish to receive any future announcements of services offered by Mondaq you may opt out by clicking here .


    This website takes every reasonable precaution to protect our users’ information. When users submit sensitive information via the website, your information is protected using firewalls and other security technology. If you have any questions about the security at our website, you can send an email to

    Correcting/Updating Personal Information

    If a user’s personally identifiable information changes (such as postcode), or if a user no longer desires our service, we will endeavour to provide a way to correct, update or remove that user’s personal data provided to us. This can usually be done at the “Your Profile” page or by sending an email to

    Notification of Changes

    If we decide to change our Terms & Conditions or Privacy Policy, we will post those changes on our site so our users are always aware of what information we collect, how we use it, and under what circumstances, if any, we disclose it. If at any point we decide to use personally identifiable information in a manner different from that stated at the time it was collected, we will notify users by way of an email. Users will have a choice as to whether or not we use their information in this different manner. We will use information in accordance with the privacy policy under which the information was collected.

    How to contact Mondaq

    You can contact us with comments or queries at

    If for some reason you believe Mondaq Ltd. has not adhered to these principles, please notify us by e-mail at and we will use commercially reasonable efforts to determine and correct the problem promptly.

    By clicking Register you state you have read and agree to our Terms and Conditions