EU recovery fund increases EU budget – but CAP still faces cut after inflation
While the European Commission has presented a new set of proposals for the EU budget for 2021 to 2027 – to cater for the economic impact of Covid-19 to the tune of €750 billion – the Common Agricultural Policy (CAP) remains in the firing line.
Although the new proposals provide for a slightly increased CAP budget compared to what was proposed last February, overall a significant cut (when inflation is taken into account) is still proposed (compared to existing 2014-2020 CAP funding).
Instead of being cut by 14%, as was the case with February’s plans, CAP funding will now face a cut (allowing for inflation) of around 9% on its current level. For the record, the total (existing) CAP funding for 2014 to 2020 was €382.5 billion (if the UK is excluded from the calculation).
The proposed new Multiannual Financial Framework (MFF) would see €348.3 billion going towards CAP, of which €258.3 billion would be allocated to Pillar I and €90 billion allocated to Pillar II.
Proposed 2021-2027 Multiannual Financial Framework (MFF):
This is an increase of just under €20 billion compared to what was proposed by European Council President Charles Michel in February. He proposed a total CAP figure of €329.3 billion, with €256.7 billion going to Pillar I and €72.5 billion to Pillar II.
Pillar II sees the largest proportion of the overall increase, being now €17.5 billion higher in these new proposals than in February’s plans.
The increase in proposed funding for CAP – and indeed the increase in the overall MFF – is as a result of a new funding instrument called ‘Next Generation EU’, aimed at economic recovery in the wake of Covid-19.
Some €15 billion of that new €750 billion would be allocated to CAP – all of which is earmarked for Pillar II.
The new funding instrument will also see a significant bump in funding for the European Just Transition Fund, which will be increased to €40 billion, with €30 billion coming from the Next Generation EU fund.
Meanwhile, funding for LIFE (an environmental and climate action programme) remains unchanged under these new proposals, at €4.8 billion.
‘Constant price’ vs ‘current price’
The above figures, including those for the original proposals from the European Council President in February, are expressed in ‘constant prices’, using 2018 as a base year.
If these figures are expressed in ‘current’ or ‘nominal’ prices (according to 2020 prices) the total MFF would rise to just above €2 trillion, of which CAP would constitute €391.4 billion – divided between €290.7 billion for Pillar I and €100.7 billion for Pillar II.
Under ‘current prices’, funding for the Just Transition Fund would be €44 billion, while funding for the LIFE programme would be €5.4 billion.