EU budget
The EU budget combines resources at EU level and enables EU countries to achieve more together than they could if they acted alone, for instance financing infrastructure or research projects.
The EU budget is mainly used for investment and complements national budgets. Its main goal is to boost growth and competitiveness at a broader EU level. It is only used when it is more effective to run initiatives at EU level rather than at local, regional or national level.
It funds projects and activities that focus on
- developing rural areas and less-developed regions
- protecting the environment
- supporting EU education and research programmes (e.g. Erasmus+ and Horizon Europe)
- protecting the EU’s external borders
- promoting international development
- promoting human rights
Some examples of what the EU budget does
Currently, EU countries agree on a long-term budget that covers several years. Within that framework, an annual budget is drawn up and agreed every year, which allocates funding to specific projects, programmes and needs in line with the long-term budget.
Long-term budget
The long-term budget – known as the Multiannual Financial Framework (MFF) – sets out the spending priorities and limits for several years. It sets the maximum annual amounts for EU spending as a whole and the main spending categories. It also helps the EU plan its funding programmes several years in advance.
The current long-term budget runs from 2021 to 2027. It is the result of negotiations among the European Parliament and the Council based on a proposal made by the Commission.
This long-term budget, together with the post-COVID recovery fund NextGenerationEU, amounts to about €2 trillion in current prices.
The negotiations on the long-term budget start a few years before it is adopted.
The Commission launches the formal process by presenting a package of proposals for the next long-term budget. This package includes proposals for
- a legal act (regulation) setting out how much the EU can spend (the ‘MFF Regulation’)
- a decision that lays down the sources of EU revenue (the ‘Own Resources Decision’)
- legislation in specific sectors, governing all EU funding programmes.
The Council of the EU prepares its position on the basis of the Commission’s proposals. It identifies the points on which political direction and priority-setting from EU leaders are needed. Its findings help EU leaders in the European Council draw up their draft conclusions on the package. This provides political guidance on the main parts of the budget, enabling the Council to reach its position.
The European Parliament also adopts a position on the Commission’s proposals.
Once all the parties have set out their position, negotiations between Parliament and Council begin, with the goal of finding common agreement.
Once an agreement is found, the long-term budget is adopted by following a ‘special legislative procedure’. As regards the 2 main legal acts:
The MFF Regulation is adopted after
- unanimity is reached in the Council on the deal agreed in the negotiations
- the Parliament gives its consent to conclude the decision-making process (it can approve or reject the Council's position but it cannot amend it).
Before the Own Resources Decision can enter into force, it requires
- unanimous agreement in the Council
- an opinion from the Parliament
- approval by every EU country according to their constitutional requirements (e.g. by national parliaments).
If necessary, the long-term budget can be revised during its lifetime if unprecedented and unexpected new challenges occur.
For example, this was the case for 2021-27 following Russia’s invasion of Ukraine, high inflation and interest rates, and challenges related to migration. As a result, the Commission proposed a revision to the budget in 2023, and the Council adopted it following the Parliament’s consent in 2024.
Annual budget
A new annual budget is negotiated and adopted every year. This sets out the spending and revenue for the financial year, within the amounts agreed under the long-term budget.
The Commission puts forward a draft budget which is then negotiated and agreed by the European Parliament and Council. The Commission is responsible for implementing the budget.
Depending on the type of funding concerned, the EU budget can be managed either
- jointly by the Commission and national authorities
- directly by the Commission
- indirectly by other authorities inside or outside the EU.
EU countries and the Commission share the responsibility for implementing about half of the budget.
How the annual budget is negotiated and adopted
The EU’s annual budget is decided jointly by the Parliament and the Council. It is drawn up and negotiated in the year preceding its implementation.
- By 1 July, all EU institutions send the Commission their respective statement of estimates.
- By 1 September, the Commission submits its draft annual budget to the Parliament and the Council based on the current MFF Regulation and the budget guidelines for the coming year. Most of the time, the Commission presents the draft budget already in June.
- By 1 October, the Council adopts its position on the draft budget (including amendments).
- Within 42 days the Parliament takes its position (also including any amendments).
After the draft has been submitted and positions adopted, the next steps depend on how and when agreement is reached.
If the Parliament and Council disagree:
- a ‘conciliation committee’ with representatives of both the Parliament and the Council is convened. They are tasked with reaching an agreement on a joint text within 21 days of the Parliament adopting its position
- after that, the Parliament and Council have 14 days to approve or reject the joint text.
There are three possible outcomes:
- If the joint text is approved by both Parliament and Council: the budget is adopted by the Parliament
- If the Council rejects the joint text: the Parliament can still adopt the budget but only if a majority of MEPs, accounting for 60% of the votes cast, vote in favour
- If the Parliament and Council both reject the joint text or fail to agree: the budget is rejected and the Commission must submit a new draft budget
Like the long-term budget, the annual budget can be amended to react to unexpected circumstances or new information that was not available at the time of the Commission’s proposal.
This can take the form of a ‘letter of amendment’ (if the budget has not been adopted) or an amending budget (during implementation). They follow the same rules as the long-term budget.
Timeline of the annual budget negotiations