The Recovery Package is a historic step, but the budget cuts are unacceptable.

Despite the apparent, intense struggle of the Member States to reach a compromise on the recovery package and the budget for the period 2021 to 2027, MEPs refused to give their approval to the multi-year budget of the European Union in the last session preceding the summer break. The massive reduction in subsidies would result in the budget from 2024 onwards being below the level of 2020. This puts the implementation of EU commitments and priorities at risk.

Parliament will not accept a fait accompli

Important key programmes such as those on climate protection, digital change and health face the risk of underfunding next year. The European Parliament said that this is particularly dangerous for health and research programmes at these times of a global pandemic. On the contrary, targeted increases would be needed for a whole range of programmes, as well as for the relevant EU agencies and the European Prosecution Service. Therefore, a satisfactory compromise must be reached between the European Council and the Parliament. In the end, the Council conclusions represented no more than a political agreement by the Heads of State and Government.

Reduction of grants in the Recovery Package undesirable

In its resolution of 23 July, the European Parliament expressly welcomed the Recovery Package of EUR 750 billion as part of the next generation EU reconstruction aid. However, the reduction of non-repayable grants to EUR 390 billion would be regrettable.

A plastic tax is not enough

Moreover, the problem of counter-financing has not been solved. This would require addition of more internal resources to the budget. Parliament would not accept solutions without reforming the Union's own resources system, which should also include a range of new internal resources. The plastic tax, which has been reopened for discussion, would only be a first small step towards meeting Parliament's expectations.

Negotiations between the European Council and the Parliament will start this September. A compromise must then be ratified in the Member States, which should be done by the end of this year. The deadline is ambitious. Should the new budget not be adopted in time, Article 312 (4) of the Treaty on the Functioning of the European Union (TFEU) provides for a temporary extension of the limit and other previous-year provisions of the former financial framework, pending the adoption of the new Financial Regulation.