As the Deputy will be aware, the European Commission has, on 27 May, published revised proposals for the next Multiannual Financial Framework (MFF) to run from 2021-2027 to be supplemented by a proposed temporary European recovery instrument “Next Generation EU”.
The total amount being proposed for the period 2021-2027 is €1.85 trillion in commitments (2018 prices) - €1.1 trillion for the MFF and €750 billion for “Next Generation EU”.
It is proposed that the “Next Generation EU” financing, which is designed to help Member States recover from the economic effects of Covid 19, will be raised by “temporarily” increasing the Own Resources ceiling to 2.00% of EU Gross National Income (GNI) allowing the Commission to borrow €750 billion on the financial markets to fund measures over the period 2021 - 2024. €500 billion of “Next Generation EU” financing will be in the form of grants to Member States, with the remaining €250 billion as loans. This additional funding to be channelled through EU Budget programmes, will be repaid back between 2028 and 2058 drawing on future EU Budget contributions from Member States or the Own Resources of the Union.
The Commission favours the introduction of new Own Resources to facilitate the repayment of the market finance raised and to help reduce the pressure on national budgets. They have indicated that they may propose additional new Own Resources (such as an extension of the Emissions Trading System based own resources to the maritime and aviation sectors, a carbon border adjustment mechanism, a single market levy and a digital tax) at a later stage of the 2021-2027 financial period.
While much of the details have yet to be teased out, a staff working document from the Commission estimates that Ireland may potentially receive a total of up to €3 billion from grants and loans upfront under the recovery package from 2021 to 2024, potentially requiring contributions from Ireland over a thirty year period of €18.7 billion from 2028 to 2058. However, the Commission proposals are detailed and will require careful examination in consultation with relevant Government Departments to assess the implications for Ireland’s priorities at an overall and sectoral level and to assess the implications for Ireland’s contributions to and receipts from the EU Budget.
In terms of initial assessment of the “Next Generation EU” package, it is understood that Ireland’s allocation would be just under €2 billion in grants between 2021 and 2024 to include:
- €354 million in rural development – Green Deal, F2F, Biodiversity Strategy;
- €215 million from ReactEU (essentially Cohesion Programmes)
- €132 million from the Just Transition Fund;
- €1.209 billion from the new Recovery and Resilience - investments and reforms, including in relation to the green and digital transitions and the resilience of national economies.
Further receipts should be available to Ireland under competitively awarded programmes under the “Next Generation EU” package, but this is difficult to estimate at this point. Ireland should also be able to assess significant additional funds under the separate SURE Instrument and EIB Pandemic Guarantee Fund.
Heads of State and Governments are expected to discuss the Commission’s MFF and “Next Generation EU” proposals at European Council on 19 June. There is considerable time pressure on the European Council to reach political agreement (requiring unanimity) on the revised package to facilitate negotiation with and consent from the European Parliament in time to ensure that the next MFF can come into operation from 1 January 2021.
