The CoR demands to set up a central crisis response reserve in the MFF
Two years after its adoption, it is clear that the Multiannual Financial Framework (MFF) 2021-27 of the European Union does not offer sufficient responses to current crises such as the consequences of the Russia’s invasion of Ukraine, high inflation and the sharp rise in energy costs. The mid-term review of the long-term budget, as planned by the European Commission for the second quarter of 2023, should therefore adjust to regions' and cities' needs on the ground and promote economic, social and territorial cohesion. These are the main demands made by members of the European Committee of the Regions (CoR) during a plenary debate with prominent members of the European Parliament, that were included in an ad hoc opinion adopted on 24 May.
Local and regional authorities are responsible for, on average, half of public investment, one third of public expenditure and a quarter of tax revenues. That is why they are key partners in improving the design and implementation of funding programmes from the territorial perspective, helping to address resources where they are really needed.
In a debate with prominent members of the European Parliament, CoR members called for a real review of the current EU's 1.2 trillion MFF, which covers a seven-year period from 2021 until 2027. The updated MFF should take additional challenges on board – such as the high inflation and the high cost of housing – and provide adequate resources to address them, local leaders argued.
Jan Olbrycht (PL/EPP), Member of the European Parliament and co-rapporteur on “upscaling” the MFF 2021-2027, said: “The current MFF no longer answers needs of the Union since it was designed before many unforeseen crises hit the Union. Now, less two years after its adoption, the EU budget is already stretched to its limits. There are no margins left in many headings what significantly restricts what the EU can do to tackle unpredictable crisis. Therefore, a simple review is not a solution for the current challenges - we urgently need a solid revision of the MFF.”
Local and regional leaders called for the MFF to contribute to overall economic, social and territorial cohesion through a balanced distribution of resources. In doing so, it must also be ensured that small municipalities have equal access to funding. Moreover, CoR members underlined that the objectives of Cohesion Policy can only be achieved if resources for long-term investment are available, not constantly used to respond to crises, as it has been the case in recent months and years.
Thomas Habermann (DE/EPP), District Commissioner of Rhön-Grabfeld and rapporteur of the opinion on the MFF mid-term review adopted at the plenary session, said “European funds are helping municipalities and regions across Europe to implement the necessary measures on the ground. This applies, amongst others, to the accommodation and integration of refugees, climate protection measures, digitization and the demographic change. And European funds, together with the national contributions of the member states, will also be indispensable in the reconstruction of Ukraine. I call on the European Commission to undertake a fundamental revision of the current Multiannual Financial Framework in view of the current crises. We must ensure that the levels responsible for implementing EU rules have the necessary financial resources at their disposal. Strengthening the European Union budget alone without simultaneously supporting subnational budgets cannot and will not suffice.”
The opinion suggests that a central, comprehensive crisis response reserve should be set up in the MFF, which, if not used by the end of the budget period, should be used under the relevant fund to strengthen crisis prevention at the local and regional level. Finally, CoR members further underlined that the focus has to be on reinforcing or consolidating existing funding programmes rather than creating new ones to avoid possible fragmentation, and called on the European Commission to examine how existing funds could be used in the most efficient way.
Nikola Dobroslavic (EPP/HR), President of Dubrovnik-Neretva Region said "The locally based approach ensures that the investment goes where it's needed the most. Funding needs to be provided for existing programs, not to create new ones."
Sari Rautio (EPP/FI), Member of Hämeenlinna City Council said "We stand by the side of the European Parliament for the Commission to come up with an extensive revision of the MFF. Both green and digital transitions need to take place in a manner that leaves no one behind. This means that resources must be fairly distributed throughout the Union, with adequate resources being available and better coordination of policies across all levels of government."
Eddy van Hijum (EPP/NL), Member of the Council of the Province of Overijssel said "We need to adapt the allocation of funds within the MFF, not by cutting funding for new or existing policies. As local and regional representatives, we need more flexibility in the management of our funds and a willingness to set and adjust goals ourselves."
Rob Jonkman (EPP/NL), Alderman of the municipality of Opsterland said “As the CoR's RRF rapporteur, I would like to comment on the idea of creating a new fund outside the budget. Following the example of the Recovery and Resilience Facility of more than €800 billion, the European Commission has started borrowing money on the capital market, at high interest rates eventually, that was agreed in 2020 at the same time as the current budget. What can be seen is that such funds/instruments are being placed further and further away from our regions and cities, which are responsible for a large part of the implementation. If there is a proposal, we must consider together how we as regions and cities will be involved in this. Because the trend we are now seeing of renationalisation, think of the Just Transition Fund, Brexit adjustment Reserve and RRF, must be stopped.
Background: On 2 May 2018, the Commission submitted legislative proposals for a new MFF for the period 2021-2027. In the wake of the COVID-19 outbreak, on 27 May 2020 the Commission put forward the recovery plan NextGenerationEU that included revised proposals for the MFF and own resources, and the setting up of a recovery instrument worth 750 billion euros. In September 2022, the President of the European Commission confirmed in a letter of intent that a review of the MFF will be put forward in 2023.
