New EU Budget Proposal
The European Commission yesterday presented its proposal for a 2021-2027 EU budget of €1.1 trillion. It has also put forward a plan for an additional €750 billion Recovery Instrument, called Next Generation EU, meant to help combat the economic impact of the coronavirus pandemic.
The recovery instrument would use joint debt incurred by the 27 member states. President of the European Commission, Ursula Von der Leyen, said the plan would provide €500 billion in grants to countries hit hardest by the pandemic, and make another €250 billion available as loans.
The grants are in line with an agreed initiative presented last week by German Chancellor Angela Merkel and French President Emmanuel Macron and would allow the Commission to borrow on the financial markets, using national commitments to the EU budget as a guarantee.
In the overall budget, the Commission is proposing up to €81 billion for the EU’s flagship research and innovation initiative, Horizon Europe, and an extra €13.5 billion of borrowed money.
The European Union has also announced it will move ahead with plans for a digital tax if the negotiations at the OECD level fail. The Commission estimates that a digital tax applied on companies with a turnover above €750 million could bolster the EU’s budget by an additional €1.3 billion per year.
The budget proposal will now be up for negotiation among EU heads of state and government. A final outcome requires unanimous approval and a deal is expected by the summer. We’ll be following the budget negotiations closely, if members have any questions, reach out to Sabina Ciofu.
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