EP seminar discusses the revision of the MFF and the budgetary capacity of the euro area

The revision of the 2014-2020 Multiannual Financial Framework (MFF) and the budgetary capacity of the euro area were the two main topics, MEPs analysed on Wednesday morning, during the first session of a three-day seminar, organised by the European Parliament in Brussels, which concludes on Wednesday with the closing remarks from the EP President Martin Schulz.

French MEP Pervenche Beres, of the Committee on Economic and Monetary Affairs of the European Parliament, co-rapporteur of the report on Budgetary capacity of the euro area, in her remarks at the morning session of the seminar, referred to the background since the establishment of the euro area and also to the Bratislava decisions which, as she said, chose to make defence the most important issue.

This, she believes, does not seem to help as the EP has to deal with the issue of what actually stimulates the EU and the euro zone. She also talked about the objectives of the budget, which include to counter asymetric shock and ways to address problems if a shock affects all members.

Reimer Boge, from Germany, member of the Committee on Budgets, co-rapporteur of the report on the Budgetary capacity of the euro area, said there is one question to answer and this relates to regaining confidence, noting that there is mistrust in the eurozone.

“We are missing a European public opinion, we have to try to understand each other, we need a more regular a more intensive debate between national parliaments,” he said, adding that as far as the budget is concerned, there is possibility to adjust contributions from member states, and come to a stronger mandate to implement the agreed rules.

He also referred to a question that needs to be answered, namely how to handle risk sharing and sovereignty sharing.

In their draft report on the budgetary capacity of the euro area, the two Rapporteurs German Euro MP Reimer Boge and French Pervenche Beres, point out that the vulnerable features of the monetary union emerged during the global fiscal and financial crisis, worsened and led to a public debt crisis during which public loan cost increased dramatically in certain member states.

The crisis, they suggest, has proved that a common monetary policy without a common fiscal policy cannot address the asymmetric threats in the eurozone.

The report recommends a boost to the economic and social convergence within the eurozone and encouragement of structural reforms by the member states at times of favourable economic period.

It is also necessary to set up a medium to address asymmetric threats, something which will reinforce the strength of the euro zone overall, the report says.

The EP advocates in the report a public fund of the euro zone to take collective decisions, monitor and manage the fiscal capacity for the euro area, a fund which will have macroeconomic, fiscal and financial competencies.

Addressing today’s session, at the seminar, Isabelle Thomas, also from France, of the Committee on Budgets, co-rapporteur of the Revision of the 2014-2020 Multiannual Financial Framework (MFF), said that the budget is cut year on year, a fact that needs to be rectified very quickly so that “we can meet our commitments.”

The end result, she noted, is that “we are not achieving what we set out to achieve, we must ensure there is no such a great gap between what is said and what is done,” adding that the revision of the MFF should give the Parliament an opportunity to carry out a fundamental change.

French Jean Arthuis, chairman of the Committee on Budgets, talked about a “crucial state”, saying that “we have a gap between commitments and payment and we need to know what competencies Europe will have in the future.”

An EP resolution, adopted in April 2014, on the negotiations on the Multiannual Financial Framework (MFF) 2014-2020 – lessons to be learned and the way forward acknowledges that the fiscal consolidation that Member States are currently facing made a more ambitious agreement on the MFF 2014-2020 infeasible.

It stresses that the EU budget is predominantly an investment budget with a strong leverage effect that makes possible a number of projects that would otherwise be difficult or impossible to implement, a catalyst for growth, competitiveness and jobs across the Union and a powerful agent for reform; strongly regrets, therefore, that some Member States seem to regard national contributions to the EU budget purely as a cost to be minimised.

The EP stresses the need to significantly improve the modalities of any future MFF negotiations, in order to avoid deadlocks and save valuable time and resources in the course of negotiations; considers that these modalities should be formalised in an agreement at the highest political level, which should take account of the shortcomings of the recent negotiations and fully safeguard Parliament’s role and prerogatives, as set out in the EU Treaty.

On the way forward, the EP declares its intention to ensure that all new provisions that were successfully incorporated into the MFF Regulation and IIA are utilised in full in the annual budgetary procedure. It expects that the Council will not attempt to impose restricted interpretations of these provisions, especially on the nature and scope of all special instruments, but that it will instead act responsibly and approve the necessary appropriations to meet both its previous commitments and unforeseen expenditure even if, as a result, the annual MFF ceilings need to be exceeded.

The Parliament places particular emphasis on the new rules on flexibility that should allow maximum use of the respective MFF ceilings for commitments and payments and stresses that the practice of previous financial frameworks whereby the annual EU budget remained far below the MFF ceilings, particularly in payment appropriations, can no longer be sustained.

Furthermore, it stresses that the Commission proposals for the MFF revision should take full account of the latest macroeconomic projections and include a thorough assessment of the operation of all special instruments, in particular the global margins in commitments and payments and recalls that this process will not have a downward impact on any pre-allocated national envelopes, including the ESF share of these national envelopes.

It also stresses the need to stimulate a broad and open discussion on the results achieved with the EU’s funding programmes, and in particular an assessment of the extent to which these programmes contribute to the achievement of the Europe 2020 objectives.

Finally it strongly believes that the High Level Group on Own Resources represents a unique opportunity to overcome the deadlock that has arisen over the reform of the current own-resources system. It expects that it will contribute significantly to understanding the shortcomings of the current system and the benefits that can derive from an in-depth, comprehensive reform and the introduction of new and genuine own resources which can significantly reduce the share of GNI contributions to the EU budget.

Source: Cyprus News Agency.