Parliament sets out demands for reform of EU spending

The European Parliament today voted through its demands for the upcoming review of the EU budget and are asking the European Commission to revamp the rules on spending to include more flexibility to deal with crises, to stop funds meant for cohesion or research from being diverted to address emerging issues.

MEPs say the review must come with more money to finance new EU initiatives that keep springing up, such as the European Sovereignty Fund and the Chips Act for the semiconductor industry.

“We see a need to rethink the architecture, the structure of our budget. It’s not sufficient. It’s not fit for purpose,” said MEP Margarida Marques, one of the leaders of the Parliament’s call for a revision.

The call comes after the Parliament and EU member states concluded yet another set of lengthy and difficult negotiations over next year’s budget last month. Each year, there’s a big a fight over how much money from the stretched budget should go where, and MEPs are fatigued.

This year, the fallout from Russia’s war in Ukraine, the energy crisis and rising inflation further complicated the intense talks, prompting MEPs to declare the current budget and its rules are unsustainable.

The Commission has already promised to carry out a voluntary review of the budget next year, but the Parliament wants to make sure it brings change. “A review, a mere review, is not enough,” said Jan Olbrycht, co-rapporteur for the Parliament’s initiative. “The budget has to be changed. It’s not just a question of having more money, we have to change and amend the budget in such a way that it is able to react to any challenge that comes up.”

MEPs want the Commission to put forward a proposal in the first quarter of 2023, instead of the current summer 2023 deadline.

EU budget commissioner Johannes Hahn did not make any promises for increased funding nor changes to the rules during his address to the Parliament on Wednesday. “The commitment for a [seven-year budget] review is not a commitment to propose a revision, and at this stage it’s too early to speculate or foresee any such initiative,” he said.

But Hahn did note a “deep reflection” is needed in the face of new crises and rising inflation. “The Commission will carefully assess the sustainability of the expenditure ceilings and subceilings of the current [seven-year budget], because the union budget must continue enabling us to deliver on our policy priorities,” said Hahn.

Research demands

Each of the Parliament’s committees had a chance to add their list of demands to the final report calling for a revamp. The industry, research and technology committee, ITRE, took the opportunity to demand more investment in the EU’s open strategic autonomy and defence, as well as funds for tackling the energy crisis.

ITRE says new initiatives must get fresh funding, instead of taking away from existing programmes, such as the Horizon Europe research programme. That includes the Chips Act, which the Commission now wants to root in Horizon, diverting €450 million from other research areas to cover the costs, and the New European Bauhaus cultural innovation initiative for which the MEPs want to see €500 million in fresh money. Other demands include a €60 million a year fellowship scheme for researchers at risk.

The MEPs also want more money to go into public private partnerships under Horizon Europe, thus boosting investment in industrial clean hydrogen and digital tech research and innovation, as well as top-ups for the EU’s space and defence research programmes.