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MFF and Recovery Fund: How to find common ground for Europe’s economic restart

The new and historical proposal of the Multiannual Financial Framework (MFF) together with the Recovery Fund will be discussed at the first physical summit since Corona in Brussels on 17 and 18 July. The package on the negotiating table aims to address the consequences of the economic slowdown caused by the Corona pandemic and therefore needs to be adopted quickly. However, there are already a number of critical voices and it seems to be a tremendous task to reconcile the many different positions of the Member States.

The overall size and the question of how high the share of non-repayable subsidies should be, is a matter of particular debate. While some, first and foremost the ‘frugal four’, are interested in a decreased scale of financial resources and rather see loans being handed out others, especially the net recipients, prefer a more grant-based distribution of the financial resources. It is also necessary to clarify the conditions to which these grants are linked, as well as the amortization period of 30 years and new own resources, such as a possible digital tax or a potential carbon border tax. The European Parliament in particular, which is playing an increasingly important role in the negotiations, would benefit greatly from the new own resources.

Given that the MFF becomes valid on the 1 January 2021, everyone is aware of the shortage of time the new German Council Presidency will have to deal with. Ideally common ground will be found before the summer break. Whether this can be achieved remains to be seen.