Questions and answers: Draft annual budget 2023

(Source: European Commission)

1. What are the priorities of the draft budget for 2023?

The EU budget is the centrepiece of the Union’s recovery efforts, aiming to help Europe shape a changing world. The budget for 2023 aims to boost the recovery from the coronavirus pandemic, to put Europe on the path towards a sustainable future, to protect and create jobs, and to strengthen the Union’s strategic autonomy. This is expressed in tangible support for people in need in Europe and its neighbourhood, companies and hard-hit sectors, reinforcement of the single market and investments in future-oriented sectors. Additional proposals to finance the impact of the war in Ukraine both externally and internally will be tabled later in the year, on the basis of a more precise assessment of the needs.

The combined EU budget 2023 and NextGenerationEU will make available some €300 billion in funding to help rebuild and modernise our continent, fostering the green and digital transitions, and making sure we create a stronger and more resilient Europe, which plays an active role in the world.

In parallel, the EU budget will continue to support Europe’s political priorities, whose contribution to a sustainable recovery is more relevant than ever. The Commission remains committed to the six headline ambitions set out by President von der Leyen: the European Green Deal; a Europe fit for the digital age; an economy that works for all; promoting our European way of life; a stronger Europe in the world and a new push for democracy. The budget for 2023 will enable the Commission to deliver on all of these priorities.

2. How does the draft budget for 2023 relate to NextGenerationEU?

NextGenerationEU is giving the EU budget the additional financial means necessary to respond decisively to the urgent challenges caused by the coronavirus pandemic. It has extraordinarily been put in place for a temporary period to be used for crisis response and recovery measures. The funds it is generating are channelled through the EU budget to support investment and reform priorities, and are reinforcing programmes that are key to the recovery.

To finance NextGenerationEU, the Commission will borrow up to €807 billion on the capital markets via a diversified funding strategy. The funds will be disbursed via grants or loans, either through the Recovery and Resilience Facility or through several EU budget programmes which receive top-ups from NextGenerationEU.

To date the Commission has raised €113.5 billion in long term funding. Some €100 billion have been paid out to EU countries under the Recovery and Resilience Facility, and a few more billions under other budgetary programmes.

Payments under NextGenerationEU will continue until end-2026.

3. What are commitments and payments?

Commitments are the total volume of contractual obligations for future payments that can be made in a given year. Commitments must then be honoured with payments, either in the same year or, particularly in the case of multi-annual projects, over the following years.

Payments are the actual money paid in a given year from the EU budget to cover commitments of current and previous years.

For instance, when the EU decides to co-fund the building of a bridge, the total amount which the EU agrees to cover is a commitment. The bills for the work done are the payments that are paid over the coming years in line with the implementation life cycle of the project. The commitment is made in year N. The payments from the EU budget may follow in the same year N, but also in year N+1, N+2, N+3, etc., depending on when the invoices are reimbursed.

4. What is an external assigned revenue?

The EU budget is governed by the principle of universality. This means that there is no direct link between the source of the revenue collected (for instance the VAT or the GNI resources) and the expenditure that it finances.

There is an exception to this rule and this is the assigned revenue, meaning specific revenue, which is collected to finance specific expenditure.

The types of existing external and internal assigned revenue are listed in Article 21 of the Financial Regulation – the rules governing how the EU budget is spent.

5. What is the Union doing to support Ukraine and its people against Russia’s invasion?

The Union has responded swiftly and united in solidarity with Ukraine and its people following Russia’s invasion in February 2022.

Since the Russian aggression started, the EU has mobilised around €4.6 billion to support Ukraine’s overall economic, social and financial resilience in the form of macro-financial assistance, budget support, emergency assistance, crisis response and humanitarian aid. This includes €1.2 billion in emergency micro-financial assistance provided since February 2022, and military assistance measures provided under the European Peace Facility, amounting to €2 billion, that will be used to reimburse Member States for their in-kind military support to Ukraine.

Additionally, the European Investment Bank and the European Bank for Reconstruction and Development have provided loans of some €1.7 billion, backed by the EU budget.

The EU stands ready to provide further macro-financial assistance loan under a new exceptional programme for Ukraine of up to €9 billion in 2022 as agreed by in the European Council on 30-31 May.

As per the European Council conclusions of 31 May 2022, additional proposals to finance the impact of the war in Ukraine both externally and internally will be tabled later in the year, on the basis of a more precise assessment of the needs.

6. What happens next?

Following adoption by the College, the European Commission submits the draft 2023 EU budget to the European Parliament and the Council, which take the final decision together.

The Council usually adopts its opinion on the budget by the end of July, and the European Parliaments announces its official position in the autumn.

A specific conciliation committee is convened, usually in late autumn, to reconcile the positions of the Parliament and the Council. It has to agree within 21 days on a common budget, which both institutions should afterwards approve. This year, the period runs between 25 October and 14 November.

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