The European Council and European Parliament issue their respective guidelines for the 2025 Budget

The Council re-affirmed its commitment to extend financial relief to Ukraine and supporting its resilience and long-term reconstruction. It emphasised realistic and prudent budgeting, with sufficient margins to deal with unforeseen circumstances and at the same time ensure the implementation of Union programmes. It urged the Commission to align the draft budget with the outcome of the agreement on the MFF 2021-2027 revision in February.

The Parliament recognised the difficulty of the 2025 budget procedure, amid high international tensions, and the election year. It emphasised the need for a people-centred EU budget that is focused on investments tailored to improving people’s lives and boosting the Union’s competitiveness. The Parliament expects the 2025 budget to focus on the green and digital transitions, ensuring prosperity and security as well as inclusiveness across the EU and to champion affordable living, societal cohesion and high-quality public services. The Parliament further underscored the need for a future-oriented budget including comprehensive migration and asylum policies and for enhancing the EU’s security and defence capabilities.

The European Commission is expected to table the 2025 budget before the summer and will be agreed upon by the Council and the Parliament by the end of this year. The Council and the Parliament share the power to decide on the EU budget and the Parliament has the final say. The 2025 Budget will be the first annual budget after the revision of the Multiannual Financial Framework (MFF).

The European Council adopts the Midterm Evaluation of the Recovery and Resilience Facility (RRF)

The Council on 12 April 2024 approved the conclusions of the mid-term evaluation of the RRF, EU’s recovery instrument at the heart of the EUR 800 billion NextGenerationEU (NGEU) plan. It recognised the positive contribution of the RRF to the green and digital transitions and other EU priorities and noted the incentive to implement the country-specific recommendations (CSRs) by expediting structural reforms.

The Council asked the Commission and the member states to identify concrete ways to streamline and improve the implementation of the facility and the recovery and resilience plans while ensuring the adequate protection of the financial interests of the EU.

It can be recalled that the European Commission on 21 February 2024  presented the mid-term evaluation of the RRF. The RRF, established in 2021, is the EU’s programme of large-scale financial support for Member States to recover from the Covid-10 pandemic and bolster their resilience as well as to make their economies and societies greener, more digital and more competitive. The RRF focuses on green transition, digital transformation, economic cohesion, productivity and competitiveness and has been used as the instrument to address urgent challenges such as in the case of Ukraine, increased energy prices, high inflation, and supply chain disruptions.

To benefit from the facility, member states have submitted recovery and resilience plans (RRPs) to the Commission, setting out the reforms and investments they intend to implement by the end of 2026. So far, EUR 648 billion has been committed to this end.

The midterm evaluation includes country snapshots, which you can access via this link.

European Commission mobilises research and innovation funding for the green and digital transitions

The Commission on 17 April 2024 adopted an amendment to the 2023-24 Work Programme of Horizon Europe, the EU’s research and innovation programme, which increases the 2024 budget by nearly EUR 1.4 billion. Sourced from previously unallocated funds, the additional budget will result in a total budget of EUR 7.3 billion. This additional fund includes an investment of EUR 650 million in the EU Missions (for example, making more than 100 cities climate neutral), a New European Bauhaus facility, experimental actions opening EU research and innovation opportunities to more newcomers, and other innovative actions.

Some of the main features of this update of the Horizon Europe Work Programme include:

  • EU Missions – EUR 648 million in 2024 in research and innovation activities underpinning the EU Missions
  • New European Bauhaus – aims to bring the benefits of the European Green Deal into people’s daily lives and living spaces and allocates EUR 20 million to preparing the ground for the implementation of the NEB Facility
  • Experimental actions to attract newcomers – The actions include four open topics giving researchers more freedom to focus their work on a subject they choose with a total budget of EUR 76 million in Horizon Europe Clusters addressing ‘Health’, ‘Climate, energy and mobility’ and ‘Food, Bioeconomy, Natural Resources, Agriculture and Environment’.
  • Cultural Heritage – dedicates EUR 48 million to the European Collaborative Cloud for Cultural Heritage
  • Pandemic preparedness – an investment of EUR 50 million for a European Partnership for pandemic preparedness
  • Paving the way for 2025 – to ensure continuity of certain recurrent actions, such as the Marie Skłodowska-Curie Actions (MSCA) and ‘Teaming for Excellence’ and ‘ERA (European Research Area) Fellowships’

Horizon Europe is the EU’s research and innovation programme for 2021-27. From an original budget of EUR 95.5 million for seven years, the budget was reduced by EUR 2 billion as part of the mid-term revision of the EU’s long-term budget to make way for other urgent priorities such as aid to Ukraine.

European Commission endorses Ukraine Plan, paving the way for regular payments under the Ukraine Facility

On 15 April 2024, the Commission adopted the Ukraine plan, Ukraine’s comprehensive reform and investment strategy for the next four years. This allows for regular and predictable support to Ukraine under the EU’s €50 billion Ukraine Facility. Financing under the Facility will help Ukraine to keep its administration running, pay salaries and pensions, provide basic public services, and support recovery and reconstruction.

Disbursement of payments will be subject to the implementation of the agreed reform and investments steps according to the Implementing Decision of the European Council. The financial support is based on a precondition that Ukraine continues to uphold and respect effective democratic mechanisms.

The Commission assessed that the Ukraine Plan is in accordance with the objectives of the Ukraine Facility in terms of identifying key reforms and investments to boost sustainable economic growth. It also provides guidance for the recovery, reconstruction and modernization of Ukraine as well as proposes mechanisms and arrangements to protect the financial interests of the EU.

European Commission adds EUR 10 million to support researchers forced to flee Ukraine under the MSCA4Ukraine initiative

On 18 April 2024, the European Commission agreed to top up the current funding support for displaced researchers under the scheme set up under Marie Skłodowska-Curie Actions (MSCA). The extra funds are intended to support least 50 additional researchers, including doctoral candidates and postdoctoral researchers, who were forced to flee Ukraine to continue their work safely on research projects at universities, companies, research centres and other institutions based in the EU and countries associated to Horizon Europe and allow the researchers to access training, skills and career development opportunities. Specific support will be available for organisations hosting the researchers and fellows relocating with their families.

This scheme is part of EU support to Ukraine on research and innovation. Complementary programmes include Ukraine’s participation in Horizon Europe and Euratom programme without Ukraine shelling out financial contribution, a recently-opened Horizon Europe Office in Kyiv, a scheme to support Ukrainian deep-tech companies under the European Innovation Council (EIC), and the creation of a European Institute of Innovation and Technology (EIT) Community Hub in Ukraine, which will give Ukrainian innovators remaining in their home country access to partners, markets, testbeds, trainings and investment.

The MSCA4Ukraine is managed by a group of organisations experienced in supporting researchers at risk. The next MSCA4Ukraine call will be launched in May 2024, allowing selected researchers to start their fellowships by early 2025.

European Parliament approves fiscal rules reform, critics decry impending austerity

On 23 April 2024, the European Parliament adopted new EU fiscal rules that are focused on investments, debt reduction, and improving dialogues. The new rules offer more protection for a government’s capacity to invest. According to the Parliament, it will now be more difficult for the Commission to place a member state under an excessive deficit procedure if essential investments are ongoing, and all national expenditure on the co-financing of EU funded programmes will be excluded from a government’s expenditure calculation, creating more incentives to invest.

In addition, member countries with excessive debt will be required to reduce it on average by 1% per year if their debt is above 90% of GDP, and by 0.5% per year on average if it is between 60% and 90%. If a country’s deficit is above 3% of GDP, it would have to be reduced during periods of growth to reach 1.5% and build a spending buffer for difficult economic conditions. Other provisions include three extra years to achieve the objectives of their respective national plans and the possibility for a discussion process for countries with excessive deficits or debt.

However, according to critics such as civil society and labour unions that have campaigned against these policy and fiscal reforms, the new rules set arbitrary limits on debt and deficit and will push EU countries to implement austerity measures such as cutbacks in social spending and will hamper social and climate objectives. There are estimates that with the new rules, EU member states need to cut EUR 100 billion a year starting 2027, which would impact social services and investments, or they need to raise the amounts through taxation.

After the adoption of these rules, the Commission will prepare a reference expenditure trajectory for member countries exceeding the deficit and debt rules, which will be the basis for member governments to draft four to seven year-plans of reforms and investment. If the Council rejects the country proposal, the Commission’s plan will be followed.