The EU budget is mainly dedicated to investment. For this reason, the EU adopts long-term spending plans, known as multiannual financial frameworks (MFFs), that run for a period of 5-7 years. The long-term budget sets out the EU’s spending priorities and limits. The current MFF runs from 2021 to 2027.
The EU budget finances activities that range from developing rural areas and conserving the environment to protecting external borders and promoting human rights. Together with NextGenerationEU, the budget helps EU economies to recover from the COVID-19 crisis. The Commission, the Council and the Parliament all have a say in determining the size of the budget and how it is allocated. However, the Commission is responsible for managing the budget. Every year, the European Parliament assesses the implementation of the previous year’s budget and decides whether or not to grant a ‘discharge’ (i.e. whether to approve of the way the Commission has implemented the budget) to the Commission on the basis of a recommendation from the Council.
Drafting the budget
The annual budget is decided jointly by the Commission, the Council and Parliament. The Commission submits a draft budget to the Council and Parliament for their consideration. The Council and Parliament can make changes to the draft. If the Commission, Council and Parliament disagree, they have to work out a compromise.
Each year’s budget sets out the amounts available to be spent within the limits agreed in advance in the multiannual financial framework. This enables the EU to plan its funding programmes effectively for several years in advance.
Managing EU funds
Over the 2021-2027 period:
- national authorities will manage around three quarters of the budget expenditure jointly with the European Commission (shared management)
- the European Commission and its agencies and delegations will manage around 18% of the EU budget (direct management)
- other international organisations, national agencies or non-EU countries will manage 8% of the EU budget (indirect management)
- for NextGenerationEU, 90% of the funds will be channelled via the Recovery and Resilience Facility (RRF), implemented in direct management (the RRF is an instrument to offer grants and loans to support reforms and investments in EU countries with a total value of EUR 723.8 billion)
The ultimate responsibility for implementing the budget lies with the Commission, which must ensure that every euro spent is recorded and accounted for. Where undue payments have been made, the Commission works with the EU countries concerned to recover the money. Information about the measures to ensure transparency and protect the EU can be consulted here.
What the money goes on
The EU budget can be broken down into about seven areas of expenditure
2021 EU budget: main areas
Currently, the largest share of the budget goes on helping to build a greener and more resilient Europe. Ensuring a successful digital transition, strengthening cohesion policies (to help poorer regions in the EU) and nurturing innovation also account for a major share of the budget. Other areas of expenditure include combating illegal migration, improving border management, and enhancing security.