Commissioner Hahn's opening statement in the European Parliament BUDG Committee on the Draft Budget 2021 - Hoofdinhoud

Dear Chair, dear rapporteurs, dear Members,

Thank you for the opportunity to present our proposal for the draft budget 2021.

This proposal is closely linked to the revamped proposal for the next multiannual financial framework (MFF) and the proposal to boost the post-COVID-19 recovery through the new Next Generation EU - both of which I had the pleasure of presenting to you last month.

The coronavirus pandemic has majorly disrupted our lives and has overturned many of our previously held beliefs on economic activity and public spending.

It is time to act and to provide hope, a feeling of optimism and a sense of direction. It is the time for a true European moment; to come out of the crisis stronger.

Last month's proposals were truly historic - to recover from the pandemic and to move our society towards a prosperous, sustainable future.

Next Generation EU will boost the financial firepower of the EU budget with €750 billion [or €809 billion in current prices]. Part of the funds will be channelled through EU programmes to enable immediate action needed to protect people and get the economy back on its feet.

The 2021 Budget will benefit from that firepower. After all the crises measures taken in 2020, 2021 should be the year of recovery and the draft budget together with Next Generation EU will provide the much needed boost.

We are also putting forward a new, flexible and clear budget structure.

It better shows the spending on our political priorities; with a higher degree of transparency and it will allow everyone to follow the budget more easily.

It won't be a privilege of experts to understand how much we spent on research; every EU citizen will be able to find that amount easily.

The draft budget supports our most urgent priority of recovering from the pandemic, whilst clearly staying on course towards a green and just transition and the European Green Deal.

The digital transition cannot wait - we need to harness the power of digitalisation fairly. We further need to build a stronger and more resilient European Union in the world.

The Commission proposes that €378 billion would be made available in 2021 through the EU budget, including the contribution from the Next Generation EU. Additionally, up to €133 billion will be provided in loans to Member States.

These are truly extraordinary amounts for the Union's budget but we are living in extraordinary times.

Our proposed draft budget 2021 comprises almost €167 billion in commitments and €164 billion in payments [in current prices].

The additional €211 billion from external assigned revenue through Next Generation EU would also be channelled through the EU budget, to be implemented through new or well-established programmes.

This would provide for a swift implementation and Parliamentary oversight.

Payments from Next Generation EU will follow a needs-based approach, according to how fast Member State are ready to implement their recovery and resilience plans.

This slide also allows me to underline one important feature of what we have proposed: with the Next Generation EU, the net balance improves for each Member State, provided that repayment is financed by new own resources! This means net contributors pay less and net recipients get more.

This slide presents the draft budget breakdown and shows the additional contributions from Next Generation EU for each heading, on top of the proposed level of voted appropriations.

Let me briefly present the key features:

Heading 1 becomes a strong centre dedicated to the single market, innovation, strategic infrastructure including the space programme, and the digital transformation. Horizon Europe will increase support for health and climate research and innovation. The new Solvency Support Instrument is proposed as part of the European Fund for Strategic Investments (EFSI), and will support viable companies suffering capital shortfall due to the crisis. Under the enhanced InvestEU, we will additionally [fifth window] focus on building up Europe's strategic autonomy.

The new heading 2, Cohesion and values, is again split into two sub-headings. It will fund a modernised cohesion and regional development policy but also a recovery and resilience cluster providing technical assistance and support for the European Recovery and Resilience Facility grant component. The cost of financing Next Generation EU is also included here. Cohesion programmes will receive additional support for crisis repair measures from REACT-EU.

Under heading 3, Natural resources and environment, the European Agricultural Guarantee Fund (EAGF) and the European Agricultural Fund for Rural Development (EAFRD) measures will continue in 2021 under the rules of 2014-2020 [so-called transitional arrangements for 2021], but with the new amounts adjusted to the new MFF for 2021. [This is why Next Generation EU top-up for rural development will only kick-in in 2022]. This heading also includes a substantial (+18.7%) increase for the LIFE programme, and 1.5 billion EUR for the Just Transition Fund (to be topped up by a further €8 billion under Next Generation EU). This should contribute significantly to reaching the 25% climate expenditure target.

Heading 4, Migration and border management, continues our current support of this policy area, with a significant increase (+78.2%) for the border management cluster.

Heading 5 contains three clusters: security, defence, and resilience and crisis response. In the resilience cluster the new EU4Health programme is in fact much larger than its predecessor - although the budget is relatively limited, the extra funding through NGEU is quite substantial. Similarly with the upgraded rescEU.

Heading 6, Neighbourhood and the world, increases significantly, partly because it contains funding previously outside the EU budget channelled via the European Development Fund (EDF). This heading will also be reinforced by the external assigned revenue from Next Generation EU.

We followed the MFF proposal of 27 May except for some technical adjustments and minor changes to some smaller programmes which otherwise would be significantly cut. We therefore propose to keep support at the level of the 2018 MFF proposal for these programmes. [Rights and Values, Justice, Antifraud, social dialogue and communication towards citizens]

Finally, as regards administrative expenditure, the Commission proposal provides appropriate and sufficient levels of funding for all institutions, pensions and European Schools.

Here you see the key programmes, which receive a substantial boost via Next Generation EU.

While the bulk of the additional means will clearly be concentrated on supporting Member States through REACT-EU and the European Resilience and Recovery Facility (ERRF), there will also be very significant reinforcements of programmes such as Horizon, InvestEU, NDICI [external relations] and HUMA [humanitarian aid].

We are presenting the planned implementation of the Next Generation amounts transparently in addition to the annual budget amount. This is to provide the budgetary authority with the full picture when deciding on the annual budget.

And I wish to underline that Commission stands ready to provide full transparency on the implementation during the implementation of the Next Generation EU.

The draft budget 2021 also provides a comparison with this year's budget. However, the headings and budget nomenclature of the proposed 2021-2027 MFF are not directly comparable to those of the previous MFF. In fact, the comparison is rather difficult for several reasons:

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  The statistical effect of the UK leaving the EU: The commitment level is lower, but it is not a budget cut - it is a first budget of 27 Member States rather than 28!
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  The Next Generation EU has an effect on the profiles of the programmes over the MFF.
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  At heading or programme level, the change of the MFF structure coupled with brand new programmes and new nomenclature make it difficult to compare.
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  The integration of the EDF into the budget: Neighbourhood Development and International Cooperation Instrument (NDICI) geographic programmes are now reinforced by the budgetisation of the European Development Fund increasing the funding possibilities from the EU budget for Sub-Saharan Africa.
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  It's important to note that the total level of payments increases compared to 2020, providing sufficient appropriations to honour previous commitments (RAL) and the launch of the new programmes.

In conclusion,

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  It is in all of our interests to reach a swift agreement on the MFF, which will allow for a smooth adoption of the draft budget - so that we can implement programmes as of 1 January 2021.
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  I count on your continuous cooperation.
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  It is our common obligation to act in the interest of the European Union and its recovery.
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  Once the political agreement on the MFF is reached, the draft budget 2021 can be adapted to the outcome in an amending letter.
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  This recovery plan is Europe's opportunity to become more resilient, green and digital - let's not waste it.