On 1 February 2023, after several months of negotiations, the heads of state and government were able to reach consensus on the EU budget framework until 2027. On 6 February, a deal was also reached with the European Parliament. The current EU financial framework until 2027 will now be increased by a total of 64.6 billion euros.

Focus primarily on support for Ukraine and migration policy
The largest item of expenditure is the financial support for Ukraine totalling 50 billion euros, of which 33 billion euros will be granted as loans and the remaining 17 billion euros as non-repayable assistance. The money is to be used to finance recovery and reconstruction measures. The pre-conditions for granting support are the maintenance of democratic mechanisms, the rule of law, respect for human rights and the fight against fraud, corruption and irregularities.

Owing to the fact that the funds originally earmarked have already been utilised, additional 9.6 billion euros is to be allocated to address internal and external dimensions of migration. Payments are planned for Syrian refugees in particular: 2 billion euros involve payments for Syrian refugees in Turkey and a further 1.6 billion euros for Syrian refugees in Syria, Jordan and Lebanon.

A total of a further 4 billion euros has been earmarked for support measures, again particularly for migration and border management, for both the southern neighbourhood regions and the Western Balkans.

Additional funds for strategic technologies as well as solidarity and emergency aid
The Strategic Technologies for Europe Platform (STEP) aims to specifically promote strategic and digital technologies that are important for economic growth, as well as environmental and biotechnology in the European Union. Existing funds (research, cohesion) are mainly used for financing, with a co-financing rate of up to 100%. STEP also aims to increase investment capacity in the defence sector. Additional funding of 1.5 billion euros will be made available for this purpose.

After the funds for aid in the event of disasters and emergencies were already fully utilised after half the term of the EU financial framework, an additional 1.5 billion euros has also been budgeted for the Solidarity and Emergency Aid Reserve. The flexibility instrument, which can also be used in emergencies, will also be increased by 2 billion euros.

Interest payments for the EU stimulus package as a major unknown factor
Due to the sharp rise in the ECB's key interest rates, the costs of the loans taken out at EU level for the NextGenerationEU stimulus package are now becoming an unexpected problem. The EU Commission does not provide any information on the estimated interest costs, but the think tank Bruegel assumes that the costs will be twice as high as originally calculated. A cascade mechanism is to be introduced to solve this problem: First, available funds from the EU budget heading that contains the majority of the funds from the EU recovery package (the so-called "reconstruction" facility) are to be utilised. The possibility of the Member States making corresponding contributions to cover the interest payments is also mentioned.

Budget reallocations hit employee concerns hard
Around 10.6 billion euros of the necessary additional funds are to be raised through budget reallocations, including money from the European Globalisation Adjustment Fund. Instead of the previous 210 million euros per year for qualification measures and training for employees, only 30 million euros will be available from this year onwards. Savings are also planned for the EU4Health programme and the EU research programme - a total of more than 3 billion euros by 2027. However, AK believes that these funds should not be cut under any circumstances, especially at a time when there is renewed talk of relocating production sites to third countries.

It is also incomprehensible that the mid-term review of the EU budget does not address the largest expenditure items such as the funds for the Common Agricultural Policy at all. The financing of socio-ecological restructuring also plays virtually no role, although the solution to this issue is becoming increasingly urgent.

Own resources reform is a long time coming
There is de facto no more talk of the revenue side of the EU budget. Proposals such as revenue from the emissions trading system, the Carbon Border Adjustment Mechanism or shares in the residual profits of multinational companies could flush several billion into the EU budget or be used to finance the EU recovery package, but no progress has been made in this respect for some time now.

The bottom line is that the impression remains that the EU Commission and the Council in particular have only done what is necessary to keep the budget going. The documents do not mention any structural adjustments and reforms to support employees and the broad majority of the EU population. One can only hope that greater progress will be made in the negotiations for the next financial framework from 2028.

Further information:
EU Parliament: Deal on mid-term revision of EU´s long-term budget
European Council: Conclusions, 1 February 2024
A&W Blog: Krisen machen Anpassungen beim EU-Haushalt nötig (Crises require adjustments to the EU budget) (German only)
EU Commission: EU Commission proposes new EU own resources (German only)
EU Commission: European Globalisation Adjustment Fund for Displaced Workers (EGF)