Remarks by Commissioner Hahn at the press conference on the review of the Multiannual Financial Framework

Good afternoon!

Today I will present you our MFF review which has just been adopted by the College.

Before going into the details of our proposal, let me briefly outline the political context.

The EU budget has been instrumental to enable the EU response to unprecedent challenges over the past years: the pandemic, the war of aggression against Ukraine with all its consequences: inflation, energy crisis, disruptions of supply chains.

Despite our successful dealing with these challenges, it has led us using all available flexibilities of the MFF framework for 2021- 2027. This is why we propose an MFF revision to ensure the financing of our political priorities and future challenges, based on the following principles:

– increase of flexibility both within the MFF and individual programmes

– a targeted approach by which we reinforce crucial policy areas which will strengthen the EU’s competitiveness at global level and respond to the needs of Ukraine as well as external challenges, including migration.

– the intention to present an ambitious but at the same time realistic proposal because we have to act fast in view of the strained budget situation. Acting fast means being efficient in terms of implementation.

As you know, I finished my tour de capitales last week. My message was clear – if we want to be a serious political and economic player at global level, we need more resources, while at the same time making flexible use of the existing funds. And my impression was that this message was understood.

Now to the concrete proposals. I will start with the policy priority areas we intend to reinforce:

UKRAINE

First of all – and I am sure that this does not come as a surprise to you – it’s about securing the financial support of Ukraine according to our commitment “to assist Ukraine as long as it takes”.

With the Ukraine Facility with a volume of €50 billion over four years, we will establish a constant and predictable financing of Ukraine’s most pressing needs. The Facility will consist of three pillars:

• Pillar I: Financial support via loans and grants;
• Pillar II: The Ukraine investment framework;
• Pillar III: Technical assistance.

The budgetary architecture proposal for Ukraine is flexible to reflect the circumstances on the ground. As for the financial support, the loans will be guaranteed directly by the headroom whereas the grants will be channelled via a new special instrument, the Ukraine Reserve.

MIGRATION & EXTERNAL CHALLENGES

The second policy area that we propose is Migration and external challenges. As for migration, this has also partly to do with the war against Ukraine and its consequences. But apart from the people fleeing Ukraine, we can see an increase of migration in the Southern Neighbourhood countries and of course there are still the Syrian refugees in Turkey. Concerning the internal dimension, the implementation of the new Pact on Migration and Asylum will require additional financing, in particular regarding border procedures.

Increased global economic and political instability, also triggered by factors like climate change and food crises makes it necessary that we reinforce the Solidarity and Emergency Aid Reserve (SEAR) by €2.5 billion.

And finally, there need to be sufficient resources to stabilise exposed regions and partner countries such as the Western Balkans and Moldova which will also help to contain migration waves.

STEP (Strategic Technologies for Europe Platform)

The third element of our mid-term review is the proposal to reinforce the funding for key technologies like deep and digital, clean tech and biotechnology to ensure that the EU will be a “first mover” in these fields.

The initiative STEP (Strategic Technologies for Europe Platform) will   only make use of existing instruments like Invest EU, Innovation Fund, European Innovation Council under Horizon and the European Defence Fund and Cohesion Policy.

We will also reinforce these instruments except for cohesion policy by €10 billion, thus increasing their firepower. With the additional top-ups and existing funds, we expect to be able to generate investments of around €160 billion.

In addition, we are adapting the regulatory provision to the needs by applying utmost flexibility and create synergies among existing instruments. The flexibility applies above all to Cohesion Policy, with the possibility to increase pre-financing to 30% in 2024, EU (co) financing to 100% and extending support to big companies in all except the most developed regions.

To facilitate the access of companies to the programmes, we will install a one stop shop, where we will provide guidance for the use of these instruments.

TECHNICAL ADJUSTMENTS

Apart from the targeted reinforcement of policy areas, our proposal will also  comprise necessary technical adjustments:

A structural solution to cope with the sharp rise of borrowing costs which were estimated for the whole MFF at around €15 billion. This amount will be consumed already by this summer. Therefore we will propose a special instrument, exclusively to cover interest costs overrun.

We need also an adjustment of our budget for administration which is also affected massively – despite cost-saving measures – by inflation and the need to reinforce capacities in view of new tasks for which the EU has the legal obligation to deliver.  The overall increase for the administration is a moderate amount of €1.9 billion.

NEW OWN RESOURCES

Finally, we propose separately, the second package of OWN RESOURCES as laid down in the interinstitutional agreement of 2020.

The proposal will consist of a statistical based own resource on company profits (no tax on companies!). This is a national contribution based on national account statistics.

Furthermore of an adjustment of the ETS own resource following the sectoral agreement on the revised ETS Directive and here we suggest to increase the call rate.

More details on the NOR package will be provided by the technical briefing which will follow this press conference.

CONCLUSION

Before taking your questions, I would like to conclude that with the packages adopted today, we have created a solid path to finance our policy priorities and to make the EU fit for the future. Therefore I call upon the co-legislators Council and European Parliament to proceed without delay! We need the budgetary reinforcement already to be in place in 2024.

Thank you for your attention!