Sven Giegold
Member of the European Parliament – Greens/EFA Group

Speaker of the German Green Delegation

Agreement on the EU budget: The financing of the European Green Deal is secured

Dear friends and all those who are interested, 

This week, the negotiators of the European Parliament, the European Commission and the Council of Ministers agreed on the EU budget for the next seven years. The so-called multiannual financial framework (MFF) sets directions for the future of the Union. It is also linked to an agreement on the EU recovery programme from the pandemic, called “Next Generation EU” (NGEU). The Parliament negotiated hard to strengthen the budget and gear it towards the future, while also strengthening the joint European capacity to act.

The new budget amounts to 1074 billion euros for seven years – that is a lot of money, but it is barely more than 1% of Europe’s economic output. In addition, the Parliament’s negotiating team managed to secure an extra 16 billion euros for European programmes, particularly in the areas of Erasmus, youth exchanges, research and health. The European Parliament originally demanded much more. Unfortunately, however, Parliament’s rights in the European treaties are limited in the budgetary procedure. Although the Parliament must approve the budget by an absolute majority, each individual member state also has its own veto. Thus, the enlargement of the budget framework is already a success, which was not achieved seven years ago. In addition, NGEU provides 750 billion euros for important investments, 360 billion of which are provided in the form of loans. The corona programmes are financed for the first time by raising common debt on a large scale (“corona bonds”), refinanced by joint taxes at the European level. This is a big step, since Christian Democrats and Liberals in many EU countries had resisted joint bonds and joint taxes for years. A total of more than 1.800 billion euros is therefore available up until 2027. This means that Europe has actually become stronger in the crisis, whereas before the pandemic, several member states wanted to reduce EU spending. They clearly failed at that. For us Greens, it was crucial to ensure as much money as possible would be spent on future-oriented projects and on the implementation of the European Green Deal. Here, I would like to sketch the most important innovations.

We Greens in the European Parliament are particularly proud of the binding environmental and climate protection targets in the new European budget. At least 30% of all EU funds will now go to climate protection measures. This makes the EU budget an investment budget for the European Green Deal! This is the green heart of this budget. And we were able to convince the Council to finally set stricter targets for the conservation of biodiversity as well: From 2024, 7.5% and from 2026 at least 10% of all EU funds must be used for this purpose. This is a great success in the negotiations, because the Council initially had not planned any separate spending objective on biodiversity. We have managed to make green investment the rule, not the exception! However, now it is the small print that matters. We will insist that the money will not end up in stranded investments like fossil gas infrastructure. Here, too, a good start has been made.

However, these successes do not change the fact that European agricultural policy is lagging far behind the necessary environmental and animal welfare measures. Expenditure on agricultural production in Europe is still the biggest cost item in the budget. The German Council Presidency has clearly failed to set the EU on course for the future – and unfortunately so has the European Parliament. Nevertheless: only three years ago, mandatory spending on climate protection and biodiversity conservation was out of the question. The fact that environmental protection is now a central part of the EU budget is a great success. By 2027, at least 322 billion euros will flow into fighting the climate crisis.

Moreover, this agreement means more Europe, because we will finally have common taxes at EU level, which will flow directly into the European budget. This has long been a core concern of the Parliament and all those who want to see a strong European Union. Common taxes will strengthen Europe permanently. As of next year, for example, the revenue from a new European plastic tax will flow directly into the European budget. From 2024 onwards, revenue from CO2 pricing both within the EU and on imports will be added, as well as revenue from the coming digital tax. The European Heads of State or Government have long been opposed to taxes at European level and now we have the commitment for at least four – that is a huge step. The new EU budget marks the beginning of a real ecological tax reform at European level! The introduction of a Financial Transaction Tax is planned for 2026 but is not yet binding; I will continue to fight for that.

A third key point during the negotiations between Parliament, the Commission and the Council was the rule of law. Early on, the European Parliament had made its approval of both the Corona recovery programme and the multiannual financial framework conditional on a functioning rule of law mechanism in order to better protect Europe’s fundamental rights and values. The breakthrough came on 5 November: from now on, infringements of the rule of law can be penalised by reducing EU funds. The European Parliament was able to improve the weak proposal by the German Council Presidency. But the rule of law mechanism will hopefully just be the beginning of more protection for fundamental European values. 

How is this mechanism structured? Until now, sanctions against a member state had to be decided unanimously (except for the state concerned) in the Council and were therefore de facto impossible. Under the new rules, “only” a qualified majority of member states will have to agree. I am writing “only” in quotation marks because this is still a high hurdle, since a qualified majority requires the agreement of at least 15 of the 27 member states that together make up at least 65% of the EU population. This is difficult to achieve in view of many member states with serious deficits in democracy, the rule of law and fundamental rights. The new rule of law mechanism will look like this: If the Commission discovers that the rule of law is endangered in a member state and that this could lead or has already led to a misuse of EU funds, it will propose sanctions to the Council of Ministers. The member states must vote on this within one month. This period can be extended to a maximum of three months if the state concerned asks for more time. The Council must then take a decision. This mechanism is not as strict as we had hoped, but it provides a much better protection of fundamental rights in Europe than before. And there is a clear signal: if you want money, you must play by the rules. After all – the existence of the mechanism alone is a victory, as the veto threats from Hungary and Poland currently show.

In addition to the rule of law, we were able to anchor gender equality in the EU budget for the first time. Within the framework of the corona crisis programmes, there will be first steps into binding gender budgeting.

Thanks to our efforts, the EU budget has not only become stronger at European level but also, and above all, greener. We expect a strong majority in the plenary of the European Parliament from all pro-European political groups. Strengthening Europe in the wake of the Corona crisis must not be a temporary development but a long-term goal. We Greens will continue to fight for a strong European budget geared towards future-oriented investments in order to strengthen Europe’s ability to act in the long term.

With delighted European greetings,

Sven Giegold