Cut proposals to EU budget and Horizon Europe risk leaving urgently needed ambition on paper

Authors: Elisa Kollenda, Faustine Bas-Defossez

As the European council debates reducing the next EU budget, IEEP has taken a look at what this could mean for the Green Deal, the Union’s new “growth strategy”, and Horizon Europe, the upcoming flagship research and innovation framework programme.

This weeks’ EU political debate is revolving around the European Commission’s draft of new climate and environmental laws that are part the new European Green Deal, unveiled on 11 December.

According to the latest State of the Environment Report (SOER), published last week, the situation is more than alarming – “we do not only have to do more; we also have to do things differently”, says the comprehensive assessment by the European Environment Agency.

Over the next decade, we are going to need very different answers to the world’s environmental and climate challenges than the ones we have provided over the past 40 years. But being ambitious means having the necessary means at our disposal – financially and institutionally – to do things differently and move beyond business as usual.

At some €148 billion, the EU budget is smaller than that of countries like Austria or Belgium

However, at some €148 billion, the EU budget is, in fact, smaller than the budgets of countries like Austria or Belgium. National governments in the EU spend more than 50 times what the EU does through its budget, and EU spending represents less than 1% of the total value of the EU’s economy (i.e. the gross national income of all EU Member States).

One would assume that given the level of well-documented challenges Europeans face today – from the climate crisis to the biodiversity collapse – member states would support not only an ambitious green deal but also necessary financial means to implement it, reducing the discrepancies between the EU budget and the national ones.

Unfortunately, even if the Green Deal may still be in its early stages, it may already be coming under threat, as member states are negotiating to limit their contributions to the EU long-term budget.

In light of the meeting of the Heads of State on December 12-13 around the Multiannual Financial Framework (MFF), Finland’s presidency published its proposed figures on the overall budget and its allocation to different policy areas in a negotiation box.

The detailed numbers mirror a frugal approach of the Member States to the EU’s long-term budget.

In fear of increased contributions after Brexit, Member States like Germany, the Netherlands, Austria, Sweden and Denmark have attempted to limit spending to one percent of the EU27’s Gross National Income (GNI) – significantly below the 1.114% proposed by the European Commission.

The detailed numbers mirror a frugal approach of the Member States to the EU’s long-term budget

The Presidency paper now sets the overall MFF budget at 1.07% of the EU’s GNI – halfway between the Commission proposal of and the amount pushed by some Member States.

Commission President Ursula von der Leyen expressed concern over the “severe” cuts and announced to discuss the question with her “peers in the European Council”.

Next to the overall budget, the negotiation box reveals details on the distribution of the budget into different areas.

While, the Commission, focusing on new priorities, proposed cuts in the “traditional” policy areas of cohesion and agricultural funding, the numbers proposed by the Finnish Presidency look more balanced on paper.

The country’s foreign minister Tytti Tuppurainen (pictured) sees the Finnish proposal as an investment in sustainability.

“Investing in the new priorities is important so that we can address the challenges of climate change, create sustainable growth in Europe and protect the security of our citizens comprehensively,” she said. However, compared to the original MFF outline, the new priorities see a decrease in investments and contributions – are they, therefore, still an investment in sustainability?

One notable example is Horizon Europe, the EU’s next research and innovation framework programme.

While the SOER report urges that “the focus now must be on scaling up, speeding up, streamlining and implementing the many solutions and innovations — both technological and social — which already exist, while stimulating additional research and development, catalysing behavioural shifts and, vitally, listening to and engaging with citizens”, the Finnish Presidency has proposed a cut the Horizon Europe budget.

The original Horizon Europe proposal saw 10 billion euro allocated by the European Commission for the food and natural resources cluster in the Horizon Europe budget (Communication from June 2018), where systemic change is urgently needed.

The budget increase was a promising development that is now likely to be reduced

The figure marked a significant increase compared to the predecessor programme Horizon 2020, with approximately 3.8 billion euro in the “food security, sustainable agriculture and forestry” pillar. This budget increase was a promising development that is now likely to be reduced.

Latest developments would likely translate into the 8.6-billion-euro budget for agricultural research and development.

This is still an increase compared to the current level of expenditures, however, for an ambitious green deal to materialise and for the necessary changes to be brought into our food system, we need to match the ambition with financial means. Otherwise, we risk heading for a dead end.