The European Parliament,

–  having regard to Articles 311, 312 and 323 of the Treaty on the Functioning of the European Union,

–  having regard to Council Regulation (EU, Euratom) No 1311/2013 of 2 December 2013 laying down the multiannual financial framework for the years 2014-2020(1), and in particular Article 2 thereof,

–  having regard to Council Regulation (EU, Euratom) 2015/623 of 21 April 2015 amending Regulation (EU, Euratom) No 1311/2013 laying down the multiannual financial framework for the years 2014-2020(2),

–  having regard to Council Decision 2014/335/EU, Euratom of 26 May 2014 on the system of own resources of the European Union(3),

–  having regard to the Interinstitutional Agreement of 2 December 2013 between the European Parliament, the Council and the Commission on budgetary discipline, on cooperation in budgetary matters and on sound financial management(4),

–  having regard to Regulation (EU, Euratom) No 966/2012 of the European Parliament and of the Council of 25 October 2012 on the financial rules applicable to the general budget of the Union and repealing Council Regulation (EC, Euratom) No 1605/2002(5),

–  having regard to its resolution of 15 April 2014 entitled ‘MFF negotiations 2014-2020: lessons learned and the way forward’(6),

–  having regard to its resolution of 12 December 2013 on the relations between the European Parliament and the institutions representing the national governments(7),

–  having regard to its resolutions of 19 November 2013 on the MFF 2014-2020(8) and on the Interinstitutional Agreement on budgetary discipline, on cooperation in budgetary matters and on sound financial management(9),

–  having regard to its resolution of 3 July 2013 on the political agreement on the MFF 2014-2020(10),

–  having regard to its resolution of 13 March 2013 on the multiannual financial framework(11),

–  having regard to its resolution of 23 October 2012 on the interests of achieving a positive outcome of the MFF 2014-2020 approval procedure(12),

–  having regard to its resolution of 8 June 2011 entitled ‘Investing in the future: a new MFF for a competitive, sustainable and inclusive Europe’(13),

–  having regard to the interinstitutional joint declaration attached to the MFF on gender mainstreaming,

–  having regard to the opinion of the Committee of the Regions of 15 June 2016 on the Mid-term revision of the Multiannual Financial Framework,

–  having regard to Rule 52 of its Rules of Procedure,

–  having regard to the report of the Committee on Budgets and the opinions of the Committee on Foreign Affairs, the Committee on Development, the Committee on International Trade, the Committee on Employment and Social Affairs, the Committee on Environment, Public Health and Food Safety, the Committee on Industry, Research and Energy, the Committee on Transport and Tourism, the Committee on Regional Development, the Committee on Agriculture and Rural Development, the Committee on Culture and Education, the Committee on Civil Liberties, Justice and Home Affairs, the Committee on Constitutional Affairs and the Committee on Women’s Rights and Gender Equality (A8-0224/2016),

A.  whereas the current multiannual financial framework (MFF) was adopted for the first time under the new provisions of the Treaty of Lisbon, according to which the Council, acting in accordance with a special legislative procedure, shall unanimously adopt the MFF regulation after having obtained the consent of the European Parliament;

B.  whereas the current MFF, which was agreed on in 2013, reflects the priorities of the Union at the time of adoption; whereas the EU will continue to face in the coming years challenges which were not foreseen when the MFF was approved; whereas EU’s financing priorities have multiplied, while the MFF has remained unchanged;

C.  whereas, in order to ensure the democratic legitimacy of the new MFF and to give the opportunity to the new Commission and the newly elected Parliament of reconfirming and reassessing the EU’s political and budgetary priorities by adjusting the MFF accordingly, a post-electoral revision clause was requested by Parliament;

D.  whereas the agreement on the MFF 2014-2020 was the outcome of a long and strenuous process of negotiations which took place in a very difficult social, economic and financial context; whereas as a consequence the overall level of the MFF was effectively reduced compared to the previous programming period;

E.  whereas, faced politically with the impossibility of changing the overall MFF figures decided by the European Council, Parliament successfully negotiated the inclusion of a specific article in the MFF regulation relating to a compulsory and comprehensive review/revision of the MFF, the establishment of new and enhanced flexibility provisions, and the setting-up of a High Level Group on Own Resources;

Legal framework and scope of the mid-term review/revision

1.  Recalls that in accordance with Article 2 of the MFF Regulation, the Commission shall present a compulsory review of the functioning of the MFF before the end of 2016, taking full account of the economic situation at that time as well as of the latest macroeconomic projections, and that this review shall, as appropriate, be accompanied by a legislative proposal for the revision of the MFF Regulation;

2.  Considers, in this respect, that while a review aims at assessing and evaluating the functioning of the MFF against its implementation, new economic conditions and other new developments, and as such could maintain the legislative status quo, a revision implies a modification of the MFF Regulation, which also includes (besides the legislative provisions) the MFF ceilings, on a basis of due respect for Article 312 TFEU and the limitations on the scope of the MFF revision laid down in the last sentence of Article 2 of the MFF Regulation; recalls that this article stipulates that the pre-allocated national envelopes shall not be reduced through a revision; highlights that no other limitations for the MFF revision were set, so an upward revision of the MFF ceilings is possible; stresses, in this context, that Article 323 TFEU requires that the financial means to fulfil the Union’s legal obligations in respect of third parties are being ensured;

3.  Recalls that Article 311 TFEU states that the Union shall provide itself with the means necessary to attain its objectives and carry through its policies; considers, therefore, that should the review arrive at the conclusions that the current ceilings were too low, it would be a primary law requirement to increase the ceilings;

4.  Stresses that Article 17 of the MFF Regulation provides for the possibility of revising the MFF in the event of unforeseen circumstances; points to the magnitude of the crises that have affected the Union since the adoption of the current MFF in 2013;

5.  Underlines that the scope of this resolution is to analyse the purely budgetary aspects of the functioning of the MFF and that it will not touch on the legal bases of sectoral legislation; notes, however, that many EU policies and programmes foresee their own review/revision requirements, mainly scheduled for 2017;

I.Review of the MFF – assessing its first years

6.  Considers that a review of the MFF in 2016 should take stock of a number of serious crises and new political initiatives, together with their respective budgetary consequences, which were not anticipated at the time of the MFF’s adoption; notes, inter alia, the migration and refugee crisis, external emergencies, internal security issues, the crisis in agriculture, the funding of the European Fund for Strategic Investments (EFSI), the payment crisis in the EU budget, the persistent high level of unemployment, especially among young people, as well as poverty and social exclusion; furthermore, points to the recent international agreement on climate change and the growing pressure on the development policy; observes that, in order to finance the additional pressing needs, an unprecedented recourse to the MFF’s flexibility mechanisms and special instruments was deemed necessary, as the MFF ceilings proved to be too tight in some headings; considers that, over the past two years, the MFF has essentially been pushed to its limits;

7.  Stresses that the EU budget has to match the political and strategic priorities of the EU and ensure a balance between long-term priorities and new challenges; underlines, in this respect, the key role that the EU budget must play in achieving the jointly agreed Europe 2020 strategy, which represents its main orientation and overarching priority; believes, therefore, that the MFF review should include a qualitative analysis of whether, and to what extent, the objectives set out in this strategy have been attained; insists that this assessment is coupled with a projection on whether the financial resources earmarked in support of this strategy for the remaining years of the current MFF will be sufficient to allow for its successful implementation;

A.Key events and challenges

Migration and refugee crisis

8.  Stresses that the conflicts in Syria, the Middle East and several regions in Africa have had humanitarian and migratory consequences on an unprecedented scale; recalls that the EU has been directly impacted, with more than one million refugees reaching Europe in 2015 alone and more expected in the coming years; recalls that this crisis has led to a major financial response on the EU’s part and, hence, has had a significant impact on the EU budget, notably on headings 3 (Security and Citizenship) and 4 (Global Europe);

9.  Recalls that in the course of 2015 the additional measures approved in line with the European Agenda on Migration have had an immediate budgetary impact, as notably reflected in amending budgets 5 and 7/2015; furthermore recalls that the utilisation of an additional EUR 1 506 million in EU budget 2016 by mobilising the Flexibility Instrument was approved in order to provide additional resources for migration/refugee-related measures under Heading 3 (Security and Citizenship), such as topping-up of the Asylum, Migration and Integration Fund (AMIF) and the Internal Security Fund (ISF), as well as resources for the three migration-related agencies, namely Frontex, the European Asylum Support Office (EASO) and Europol;

10.  Notes that the aforementioned budgetary decisions have completely exhausted the small margin available under this heading and have led to a de facto revision of the ceilings of Heading 3; draws, furthermore, attention to the new Commission proposals which are expected to have an impact on the EU budget, notably the proposal for a recast of the ‘Dublin III’ Regulation, with a total budgetary impact of EUR 1 829 million for the remainder of the MFF period, the proposal for the establishment of the European Border and Coast Guard Agency, with an overall budget of EUR 1 212 million for the remainder of the MFF period, and the new emergency support mechanism, with an estimated impact of minimum EUR 700 million in the period 2016 to 2018; stresses that the situation is so critical that the additional appropriations authorised for the Asylum, Migration and Integration Fund (AMIF) in November 2015 had to be reduced in March 2016 so as to finance even more pressing needs, such as the need to provide humanitarian aid in the EU, addressed by the aforementioned new emergency support mechanism;

11.  Believes that the solution of the European migration and refugee crisis requires a European approach based on solidarity and fair burden sharing; stresses, in this context, that the EU budget should support Member States to alleviate the burden of the costs related to the reception of the refugee, as this will relieve the pressure on the budgets of those Member States facing a particularly high influx of refugees; emphasises that this approach will create synergies and is, furthermore, efficient and cost-effective for all Member States;

12.  Stresses that significant, but still insufficient budgetary means have been deployed to tackle the root causes of the refugee and migration crisis by reinforcing specific EU programmes under Heading 4; recalls the measures undertaken, such as the reallocations in favour of migration/refugee-related actions of EUR 170 million in the course of 2015, as well as the approval in 2016 of an additional EUR 130 million under Heading 4 for migration/refugee-related activities, together with the reshuffling of EUR 430 million under the Instrument for Pre-accession Assistance, the Development Cooperation Instrument and the European Neighbourhood Instrument; recalls, furthermore, that in order to address the external dimension of the migration and refugee crisis the Commission has made various additional proposals having an impact on the EU budget, such as those for the establishment of EU trust funds (the Madad Trust Fund and the Emergency Trust Fund for Africa, with an estimated initial budgetary impact of EUR 570 million and EUR 405 million respectively), as well as of the Refugee Facility for Turkey, for which EUR 1 billion is to be funded from the EU budget, not counting possible additional funding; stresses that further pressure on the Union budget will arise from other planned actions announced by the Commission such as the ‘London pledge’ or from events such as the EU-Turkey summit of 18 March 2016; stresses that additional upcoming budgetary means should also allow for the inclusion of the most vulnerable migrants, especially women, children and LGBTI; is concerned, however, that owing to the magnitude of the problems the EU is facing further actions will be required;

13.  Concludes that the magnitude of the migrant and refugee crisis and the financial impact of the measures initiated by the Commission to address this issue could not have been foreseen at the time of the conclusion of the MFF 2014-2020; highlights the fact that, owing to the lack of sufficient resources, the EU has had to set up ad hoc, ‘satellite’ instruments, jointly financed by the Member States, the EU budget and the European Development Fund, namely the EU trust funds (the Madad Trust Fund and the EU Emergency Trust Fund for Africa) and the Refugee Facility for Turkey; recalls that a lack of overall budgetary strategy to address the migrant and refugee crisis led to Parliament being side-lined as regards the decision on the use of EU budget funds; highlights that the multiplication of such instruments creates a problem of accountability and democratic control in the EU which needs to be addressed; deplores, furthermore, the fact that Member States have failed by far to deliver their expected contributions to the trust funds, thus undermining the success of those funds; reiterates its call on Member States to immediately fulfil their commitments and their responsibilities;

Low level of investment

14.  Recalls that, since the global economic and financial crisis, the EU has suffered from low and insufficient levels of investment; notes, in particular, that in 2014 total investment was 15 % below the 2007 level, which corresponds to an investment drop of EUR 430 billion; considers that weak investment slows economic recovery and has direct repercussions on growth, jobs and competitiveness;

15.  Underlines that, in response to this pressing problem, the new Commission in 2014 proposed an investment plan for Europe and the establishment of EFSI, with the aim of mobilising EUR 315 billion in new investment in the real economy; reiterates its strong commitment to EFSI, which is expected to deliver a powerful and targeted boost to economic sectors that are conducive to growth and job; observes that a number of projects have already been approved and are under implementation; notes that the guarantee provided by the Union for EFSI is covered by a Guarantee Fund of EUR 8 billion constituted in the EU budget;

16.  Recalls that, in order to secure this additional funding, the financial allocation for two significant EU programmes, Horizon 2020 and the Connecting European Facility (CEF), was reduced by EUR 2,2 billion and EUR 2,8 billion respectively, while the remaining EUR 3 billion are covered by unallocated MFF margins; stresses Parliament’s commitment during the EFSI negotiations to reduce as much as possible the negative impact on these two programmes, whose financial envelopes, which were decided only in 2013, suffered important cuts compared to the Commission proposal already during the MFF 2014-2020 negotiations;

17.  Regrets that the portion of the EU budget dedicated to research and innovation has often been the first to be affected by any cuts in the budget; notes that research and innovation programmes generate EU added value, and underlines the key role of those programmes in supporting competitiveness and, thus, in assuring future growth and the long-term prosperity of the Union;

18.  Highlights, in this context, that in accordance with Article 15 of the MFF Regulation, a frontloading of resources was implemented in 2014-2015 for Horizon 2020 (EUR 200 million for European Research Council and Marie Curie actions) and COSME (EUR 50 million), in order to compensate in part for the decrease in appropriations between 2013 and 2014; notes that this frontloading does not change the overall financial envelope of the programmes, leading to less appropriations respectively for the second half of the MFF; stresses, however, that the frontloading for Horizon 2020 and COSME was fully absorbed, thus proving the strong performance of these programmes and their capacity to absorb even more;

19.  Notes also with great concern that that the success rate for Horizon 2020 has dropped to a level of 13 % from the 20-22 % enjoyed by its predecessor (FP7) in the previous programming period; regrets the fact that as a result fewer high-quality projects in the field of research and innovation are receiving EU funding; notes, similarly, the rejection of many high-quality applications relating to the CEF owing to insufficient budget funds;

Youth unemployment

20.  Stresses that youth unemployment remains dramatically high and represents one of the most pressing and serious problems that the EU is currently facing; highlights that 4,4 million young persons under 25 were unemployed across the Union in February 2016 and that this corresponds to a proportion of over 40 % in several Member States, and over 60 % in certain regions of the EU; underlines that the employment rate in the EU is well below the Europe 2020 target; consequently highlights that too many young people are at risk of social exclusion and that more specific actions on including NEETs (young people not in education, employment or training) should be taken; points to the fact that the volume of highly educated and well-trained human resources has a strong impact on Europe´s competitiveness, innovative capacity and productivity, and emphasises, in this regard, the need to invest in education, training, youth and culture; acknowledges, furthermore, the importance of the EU 2010-2018 EU Youth Strategy;

21.  Underlines that the EU budget makes a significant contribution to the fight against unemployment, especially through the European Social Fund (ESF) and the Youth Employment Initiative (YEI); points to the indication of the Commission that the designation of implementing authorities has constituted a key challenge for the financial flows of the programme; stresses also that despite the initial delays in this designation and the implementation of the YEI, the current figures indicate full absorption capacity (achieved in part through a significant increase in the pre-financing rate of this programme); notes that an evaluation of this initiative will soon be concluded by the Commission, and expects that the necessary adjustments will be introduced to ensure its successful implementation; considers that the proposed Structural Reform Support Programme could possibly provide a valuable contribution to the improvement of the administrative capacity in Member States in this context; stresses the importance of a continued assessment of the performance of the YEI by relevant stakeholders, including youth organisations;

22.  Is particularly concerned at the lack of new commitment appropriations for the YEI as of 2016, given that its entire original envelope was frontloaded in 2014-2015 (Article 15 of the MFF Regulation); stresses that in supporting this frontloading Parliament never intended that the initiative should be terminated after only two years of funding and that other MFF mechanisms, such as the Global Margin for Commitments (GMC), were put in place with the purpose of ensuring its continuation; recalls, however, that the GMC has been already mobilised only for the funding of EFSI; also notes the frontloading of appropriations, on the basis of the same article, for Erasmus + (EUR 150 million), this being another EU programme that makes a major contribution to improving the employability of young people, which was fully implemented in the first two years of this period; recalls that, according to the International Labour Organisation (ILO), an efficient Youth Guarantee at the European Union level would cost EUR 21 billion on an annual basis for the eurozone countries;

Internal security

23.  Recalls the recent terrorist attacks in France and Belgium and the increased threat levels in other Member States, which call for more coordinated and reinforced action and means at EU level; underlines that the Union has the Internal Security Fund as an appropriate instrument, and has several agencies operating in this field facing increasing pressure; considers that more European action, and therefore more funding, will be needed in this area to provide an adequate response to this threat; stresses that increased cooperation in this area requires reinforcement of the staff of the relevant agencies, which may further increase pressure on the EU budget, and recalls the limited reinforcement of staff levels of the European Counter-Terrorism Centre in Europol financed by redeployment from the Internal Security Fund;

24.  Stresses that given the current actions and legislative proposals aimed at increasing judicial cooperation, additional financial and human resources will progressively be required also for Eurojust, which will have an impact on the EU budget;

Crises in the agricultural sector

25.  Stresses that the tight ceilings for the Common Agricultural Policy (CAP) until 2020 entail much lower margins than in the previous MFF, while the sector faces more challenges; recalls that this policy is crucial for the income situation of many farmers, particularly in times of crises, and points out to the high annual absorption rate of almost 100 %; recalls the various crises that European farmers have faced since the beginning of the current MFF, most notably in the dairy, pig meat, beef and fruits and vegetables sectors, and the long-term negative effects on European farmers of the losses caused by the Russian embargo on agricultural products; notes the abolition of sugar quotas in 2017 and its possible effect on the sugar sector, with due attention also given to the particular needs of the outermost regions; highlights the budgetary impact of the emergency measures taken in response to these crises, involving EUR 500 million in the budget 2016 and EUR 300 million in 2015 which were financed from the margins in Heading 2; underlines that any reduction in this area would endanger the territorial cohesion of the EU, in particular as regards the rural areas; is, furthermore, against any movement towards a renationalisation of agricultural policy, which would create distortion in the market and unfair competition for farmers;

Environmental challenges

26.  Is concerned that the goal of spending at least 20 % of the EU budget (under the current MFF) on climate-change-related action has not been reached, and that, according to the Commission’s mainstreaming methodology, only around 12,7 % of the EU annual budget is spent on this cause; points to the significant need of financing for climate action, biodiversity protection and the sustainable use of natural resources, which will be further heightened by the effects of the ongoing global warming; notes, in particular, the COP 21 climate agreement reached at the recent Conference of the Parties to the United Nations Convention in Paris in 2015;

Economic, social and territorial cohesion

27.  Recalls that the cohesion policy is the Union’s main investment policy aiming at reducing the economic, social and territorial disparities between all EU regions and, thus, improving the quality of life of European citizens; highlights its important role in the delivery of the Europe 2020 strategy for smart, sustainable and inclusive growth, in particular through a clear earmarking of resources for the climate-related actions and for the social objectives, especially to fight the increased poverty, including child poverty, inequalities and social exclusion, and to stimulate employment; calls on the Commission to monitor the full implementation of the above-mentioned targets; considers, furthermore, that while respecting the pre-allocated national envelopes, the structural funds can also provide a valuable contribution to the arising challenges, such as the consequences of the refugee crisis;

Growing pressure on development and neighborhood policies

28.  Notes the upward pressure on global needs for humanitarian aid and disaster risk reduction stemming from the effects of conflicts and wars; points to the Addis Ababa agreement, in which Heads of State and Government affirmed their strong political commitment to achieving Sustainable Development Goals (SDGs), and is aware of the need for expenditure in this respect; recalls the EU’s recent renewal of its collective commitment to raise its official development assistance (ODA ) to 0,7 % of its GNI and to allocate at least 20 % of its ODA to basic social services, with a focus on education and health; is strongly against any use of development aid for non-development objectives;

29.  Recalls that the geopolitical situation in the Eastern Neighbourhood is also fragile; stresses the important role of the EU budget in contributing to the stabilisation of the situation in both southern and eastern EU neighbourhood and in addressing these challenges through the provision of support to countries that are currently implementing association agreements, in order to advance reforms and ensure the deepening of the relations between the EU and the respective countries;

Gender mainstreaming

30.  Welcomes the MFF mid-term review as an opportunity to make significant progress towards more effective integration of gender mainstreaming in the MFF and in the implementation and monitoring of the Joint Declaration attached to the MFF in this regard;

Payments backlog

31.  Recalls the build-up over the previous (2007-2013) MFF of a backlog of unpaid bills, which rose from a level of EUR 5 billion at end 2010 to unprecedented levels of EUR 11 billion at end 2011, EUR 16 billion at end 2012, and EUR 23,4 billion at end 2013; warns that this backlog has spilled over into the current (2014-2020) MFF, reaching an unprecedented peak of EUR 24,7 billion at the end of 2014; stresses that, at the insistent request of Parliament, a payment plan has been agreed with the aim of reducing the backlog of outstanding cohesion policy-related payment claims for 2007-2013 to a ‘normal’ level of EUR 2 billion by the end of 2016; points out that at least EUR 8,2 billion of unpaid bills were identified at the end of 2015 for 2007-2013 in the field of cohesion policy, a figure which is expected to fall below EUR 2 billion by the end of 2016; notes that this decrease provides merely temporary relief as it is only the result of submissions of payable claims for both the 2007-2013 and 2014-2020 programmes being less than announced; regrets that no action has been undertaken to address the ‘hidden backlog’ identified under other headings; draws the attention to the fact that the situation of 2012-2014 is expected to recur at the end of the current MFF unless no concrete measures are taken;

32.  Regrets that the consequences of this payment crisis have been severe, affecting beneficiaries of the EU budget such as students, universities, SMEs, researchers, NGOs, local and regional authorities and other relevant entities; recalls, in particular, the dramatic shortage of payments in the field of humanitarian operations in 2014, which negatively affected the EU’s life-saving operations; recalls that the Commission had to resort to ‘mitigating measures’ such as reducing pre-financing percentages and postponing calls for proposals/tenders and related contracting; recalls that an artificial slowdown in the implementation of the new 2014-2020 programmes occurred owing to the general lack of payments, an example being an artificial delay relating to EUR 1 billion worth of calls for proposals under Horizon 2020 in 2014, which aimed at ensuring that payments would fall due in 2015 rather than in 2014; stresses, furthermore, that penalties for late payments have been charged to the EU budget, reaching some EUR 3 million in both 2014 and 2015;

B.Substantial use of the MFF’s flexibility provisions

33.  Stresses that, in order to secure the additional appropriations that have been needed to respond to crises or to finance new political priorities since 2014, the budgetary authority has approved a substantial mobilisation of the flexibility provisions and special instruments included in the MFF regulation, after exhausting all available margins; recalls that several of those provisions resulted directly from proposals of the European Parliament, which ranked the call for maximum possible flexibility as one of its key demands in the MFF negotiations;

34.  Notes, in particular, that the special instruments were mobilised to tackle the refugee and migration crisis (full amount of the Flexibility Instrument exhausted in 2016 – EUR 1 530 million; Emergency Aid Reserve in 2016 – EUR 150 million), the payments shortage problem (Contingency Margin activated in 2015 – EUR 3,16 billion), and the financing of the EFSI Guarantee Fund (full use of Global Margin for Commitments 2014 – EUR 543 million); recalls that the decision to mobilise the Contingency Margin in payments is coupled with a decrease in the payment ceilings for the years 2018 to 2020;

35.  Anticipates that any further needs that arise in relation to the migration and refugee crisis in 2016, including the tranche of EUR 200 million for the new instrument to provide emergency support within the Union, should result in the mobilisation of the Contingency Margin as soon as necessary; recalls that no more margins are available under Heading 3, while the Flexibility Instrument has already been used up in its entirety for this year; suggests that further opportunities for flexibility for emerging challenges should be investigated;

36.  Recalls that the legislative flexibility, as enshrined in Point 17 of the Interinstitutional Agreement (IIA), allows for an increase in the overall envelope of programmes adopted by the ordinary legislative procedure of up to +/- 10 % over the seven-year period; notes that ‘new, objective, long-term circumstances’ allow the budgetary authority to depart even further from the original envelope; welcomes the fact that this provision has already been used to allow the Union to respond to unforeseen events by considerably increasing the original annual allocations of programmes such as AMIF;

II.Mid-term revision of the MFF – an imperative requirement

37.  Is convinced, on the basis of the above analysis, that the review of the functioning of the current MFF entails the conclusion that a genuine mid-term revision of the MFF, as provided for in the MFF Regulation, is absolutely indispensable if the Union is to effectively confront a number of challenges while fulfilling its political objectives; recalls that delivering on the Europe 2020 strategy remains the main priority to be supported by the EU budget; stresses the need for the EU budget to be endowed with adequate resources to effectively ensure investments conducive to growth and jobs, achieve economic, social and territorial cohesion, and promote solidarity;

38.  Urges the Commission, when preparing its legislative proposal, to take into consideration the following demands of Parliament regarding changes to the MFF Regulation, with respect both to the figures and to several provisions relating to the functioning of the MFF which need to be applicable already for the current MFF;

39.  Stresses that two legislative proposals with important budgetary implications, namely the prolongation of EFSI and the setting up of an External Investment Plan, are anticipated in the autumn of 2016; expects that all information related to the financing of these two proposals will be made available as soon as possible, in order to be duly taken into account during the negotiations on the MFF mid-term revision; reiterates its principle position that new political initiatives should not be financed to the detriment of existing EU programmes and policies;

40.  Stresses that the modifications agreed on during the MFF mid-term revision should be implemented without delay and integrated already in the EU budget 2017; calls, therefore, on the Commission to present its legislative proposal on the revision of the MFF Regulation as soon as possible, in order to allow for parallel negotiations on the MFF revision and the EU budget 2017 and a timely agreement in that respect;

41.  Takes note of the outcome of the UK referendum of 23 June 2016; calls, in this regard, on the Commission to provide the budgetary authority with all relevant information on possible budgetary implications resulting from this referendum, without prejudice to the outcome of the upcoming negotiations between the UK and the EU;

42.  Notes the important contribution that the EU has made to encouraging peace and reconciliation in Ireland, in particular through PEACE programmes, which are targeted at Northern Ireland and border counties in the south; notes that the result of the UK referendum might create grave problems for the peace process, and undermines the integrity of the peace process and of the Good Friday Agreement; calls on the Commission to continue its support for the peace process through the continued funding of the PEACE programme;

A.Parliament’s demands for the second half of the MFF

MFF figures (commitments)

43.  Is convinced that, while fully confirming the notion of large-scale political and financial support for EFSI, the EU budget should not be financing new initiatives to the detriment of existing Union programmes and policies; intends to deliver on its commitment to fully offset the EFSI-related cuts affecting Horizon 2020 and CEF, in order to allow them to accomplish their objectives as agreed only two years ago, and enable the Union to reach its research and innovation targets; stresses, in this context, that the funding level of the other programmes in Subheading 1a (‘Competitiveness for growth and jobs’) should not be affected by this compensation, pointing to their incontestable contribution to growth, jobs and competitiveness; believes that margins in Subheading 1a are not sufficient for accommodating these needs, hence calls for an increase of the ceiling in this Subheading;

44.  Strongly supports the continuation of the YEI, as a means of ensuring an urgent response in the fight against youth unemployment, following the necessary adjustments brought about by the ongoing evaluation; considers that this can only be achieved through the provision of at least the same level in commitment appropriations for YEI until the end of the current MFF as the one allocated annually to the programme during the first two years of this period (6 billion EUR frontloaded in 2014-2015), subject to the outcome of the upcoming Commission’s assessment; notes that this should entail an upwards revision of the ceilings of Subheading 1b (‘Economic, social and territorial cohesion’), as no margins are available;

45.  Is of the firm opinion that the overall budgetary allocation and pre-allocated national envelopes for the CAP, including direct payment appropriations, remain untouched during the MFF revision; underlines, moreover, the importance of ensuring that the allocation for the European Maritime and Fisheries Fund is not reduced, in order to allow for the fulfilment of the objectives of the recent Common Fisheries Policy reform;

46.  Considers that the magnitude of the migration and refugee crisis, caused by conflicts and climate change, goes to show that additional needs with significant budgetary consequences may be expected to arise for this purpose in the coming years under Heading 3 (Security and Citizenship); underlines, moreover, that under the same Heading, additional funding will also be needed to back up reinforced action at EU level for internal security in the EU and for the fight against terrorism; asks the Commission to draw up as soon as possible an updated projection of the budget required until the end of the current MFF, to meet all challenges in these fields;

47.  Is, therefore, of the firm opinion that, even with the mobilisation of the small margins available under Heading 3 and existing flexibility provisions, the resources available will not be sufficient to tackle the increased needs under this heading; calls, therefore, for significant reinforcements for the AMIF and the Internal Security Fund, as well as for the Union agencies (Frontex, the European Asylum Support Office (EASO), Europol, Eurojust and the European Union Agency for Fundamental Rights (FRA)) that have undertaken new responsibilities operating in the field, as well as other initiatives that can be undertaken; considers that an upward revision of the ceilings under Heading 3 is required;

48.  Expects that concerted action to respond effectively to the external dimension of the migration and refugee crisis, notably the political stabilisation of the European Neighbourhood and the sub-Saharan Africa and the tackling of humanitarian and economic causes of migration, will intensify over the coming years, and will be accompanied by increased requests for funding under Heading 4 (Global Europe); underlines that such requests for additional funding should not be deployed to the detriment of the EU’s existing external action, including its development policy; calls, therefore, for an upward revision of the ceilings under Heading 4;

49.  Asks for increased financial support to the three European programmes that directly concern citizens – Creative Europe, Europe for Citizens and Erasmus+ – as those programmes develop new subsidy lines to react to the current situation concerning the integration and education of refugees and are at the forefront of actions led by the Union and Member States to improve the overall social situation, mutual understanding and living together in our different societies;

MFF figures (payments)

50.  Considers that, as a matter of priority, it is necessary to act to prevent a new payment crisis occurring towards the end of the current MFF; firmly believes that every effort should be made to avoid building up a backlog of unpaid bills like the one that was observed during the previous period; stresses, however, that, at the same time as payment needs should be reaching their normal peak, a significant pressure on payments at the second half of the MFF can already be anticipated; considers that the additional pressure is due, inter alia, to the offsetting of the Contingency Margin against the already tight payments ceilings for 2018-2020, the considerable delay in launching the new programmes under shared management, including the YEI, the payment profile of EFSI, and the additional payments corresponding to the recent increases in commitments in relation to the migration and refugee crisis;

51.  Recalls that payments appropriations are the orderly consequence of past commitments; expects, therefore, that new reinforcements in commitment appropriations will be accompanied by a corresponding increase in payment appropriations, including an upward revision of the payments ceilings; considers, moreover, that the mid-term review/revision of the MFF provides an excellent opportunity to take stock of payment implementation and updated forecasts for the expected evolution of payments up to the end of the current MFF; believes that a joint payment plan for 2016-2020 should be binding, developed and agreed between the three institutions; insists that such a new payment plan should be based on sound financial management and provide for a clear strategy to meet all payment needs in all headings until the end of the current MFF, and to avoid a ‘hidden backlog’ caused by an artificial slowdown in the implementation of certain multiannual programmes and other mitigating measures, such as the reduction of pre-financing rates;

52.  Is determined to settle in an unequivocal way the issue of budgeting the payments of the MFF special instruments; recalls the unresolved conflict of interpretation between the Commission and Parliament on the one hand, and the Council on the other, which has been in the forefront of the budgetary negotiations in recent years; reiterates its long-standing position that payment appropriations resulting from the mobilisation of special instruments in commitment appropriations should also be counted over and above the annual MFF payment ceilings;

Conditionality to ensure fundamental right of the EU

53.  Insists that all countries should assume full share of responsibilities in the context of the refugee crisis and the Decision on the dedicated reallocation mechanism; calls on the Commission to introduce a financial bonus-malus mechanism as regards the Member States’ fulfilment or not of their commitments under measures adopted by the EU; upholds that any financial contribution coming from sanctioning a Member State that does not respect these measures should flow back into the EU budget as an extra revenue;

Extraordinary revenue

54.  Strongly believes that any surplus resulting from under-implementation of the EU budget or fines imposed on companies for breaching EU competition law should be budgeted as extra revenue in the EU budget, with no corresponding adjustment of the GNI contributions; considers that this measure would significantly contribute to easing the payment problem of the EU budget; calls on the Commission to make appropriate legislative proposals in this regard;

55.  Is convinced that decommitments across all headings, resulting from total or partial non-implementation of the actions for which they were earmarked, should be made available again in the EU budget and be mobilised by the budgetary authority in the framework of the annual budgetary procedure; strongly believes that, given the current constraints affecting the EU budget and the additional financing needs that the Union is facing, such provision should also apply to decommitments resulting from the implementation of the 2007-2013 programmes, including the closure of cohesion policy programmes; calls on the Commission to make appropriate legislative proposals in this regard;

Flexibility provisions and special instruments

56.  Stresses that the mere frequency and level of mobilisation of the MFF special instruments over the past two years prove beyond any doubt the worth of the flexibility provisions and mechanisms enshrined in the MFF Regulation; stresses the long-standing position of Parliament that flexibility should allow for a maximum use of the global MFF ceilings for commitments and payments;

57.  Believes, therefore, that the mid-term revision of the MFF Regulation should provide for the lifting of a number of constraints and limitations that were imposed by the Council on the flexibility provisions at the time of adoption of the MFF; considers, in particular, that any restrictions on the carry-over of unused appropriations and margins, either by setting annual ceilings (Global Margin for Payments) or by imposing time-limits (Global Margin for Commitments) should be revoked; believes that, given the current budgetary constraints across several headings, no specific scope should be defined as regards the utilisation of resources under the Global Margin for Commitments;

58.  Stresses, in particular, the mobilisation of the full amount of the Flexibility Instrument in 2016; notes that this instrument allows for financing clearly identified expenditure that cannot be financed within the ceiling of one or more headings and is not linked to a specific EU policy; considers, therefore, that it provides genuine flexibility in the EU budget, especially in the event of a major crisis; calls, accordingly, for a substantial increase in its financial envelope up to an annual allocation of EUR 2 billion, pointing out that this amount is budgeted only in the event of a decision of the budgetary authority for mobilisation of this instrument; recalls that the Flexibility Instrument is not linked to a special policy field and can be mobilised for any purpose that is deemed necessary;

59.  Points to the role of the Emergency Aid Reserve in providing a rapid response to specific aid requirements for third countries for unforeseen events, and stresses its particular importance in the current context; calls for a substantial increase in its financial envelope up to an annual allocation of EUR 1 billion;

60.  Notes the different rules in force as regards the time-span for carrying over unspent appropriations for the MFF special instruments, namely the Flexibility Instrument, the Emergency Aid Reserve, the EU Solidarity Fund and the European Globalisation Adjustment Fund; calls for the harmonisation of these rules so as to enable a general N+3 rule to apply to these instruments;

61.  Attaches particular importance to the Contingency Margin, as a last-resort instrument for reacting to unforeseen circumstances; stresses that, according to the Commission, this is the only special instrument that can be mobilised for payment appropriations only, and thus to prevent a payment crisis in the EU budget, as in 2014; deplores the fact that, contrary to the previous period, a compulsory offsetting of the appropriations is stipulated in the MFF Regulation; is of the firm opinion that this requirement creates an unsustainable situation which will in fact lower the annual amounts with regard to the MFF ceilings in the last years of the period and thus create additional pressure on the EU Budget; stresses that the Contingency Margin is, in any event, a last-resort instrument, the mobilisation of which is jointly agreed on by the two arms of the budgetary authority; calls, therefore, for the rule of compulsory offsetting to be lifted immediately with retroactive effect, as well as for an upward revision of its maximum annual amount to 0,05 % of EU GNI;

Follow up of the international agreements on environmental changes

62.  Notes that the COP 21 agreement reached in Paris is a universal, dynamic and differentiated agreement aimed at facing the challenge of climate change; underlines that, under this agreement, EU funding needs to be allocated for supporting climate action in developing countries; stresses that any funding for the possible measures originating from COP 21 should be additional to the current spending on climate actions, and calls on the Commission to present its implementation strategy and first evaluation of the possible impact of the COP 21 agreement on the EU budget in due time for the revision; underlines, moreover, that the revision of the MFF creates an excellent opportunity to ensure that the 20 % target of spending on climate-related actions is reached and to provide for a possible increase of this threshold in line with the EU’s international commitments taken during the COP 21; calls on the Commission to ensure that the mechanism of climate action mainstreaming is fully operationalised and that the current method of tracking of such spending is improved; recalls, furthermore, that the EU is also committed to implement the United Nations convention’s Strategic Plan for Biodiversity, and underlines that it should dedicate sufficient resources to fulfil its commitments in that respect;

Simplification

63.  Believes that the mid-term review/revision provides for an excellent opportunity for the first-time assessment and evaluation of the functioning of the EU policies and programmes concerned, as well as the operation of the MFF flexibility provisions and special instruments, and expects the Commission to supply an analysis identifying the shortcomings of the current implementation system; pays particular attention to the assessment of the impact on the implementation process of the new elements introduces in the current programming period, such as ex-ante conditionalities under cohesion policy; considers that the mid-term review/revision of the MFF should also take stock of the performance of funds allocated in view of the achievement of their objectives; invites the Commission to come up with concrete proposals to address the possible deficiencies and to improve and rationalise the implementation environment for the remaining years of the current MFF, in order to ensure the most efficient use of scarce financial resources and to reduce the administrative burden for the beneficiaries;

Performance based budgeting / Budget focused on results

64.  Stresses that it is important to show the added-value of EU budget delivery and supports bringing the result orientation culture at the heart of the EU spending; emphasises that performance and output-related assessment should become, where appropriate, a key principle, and stresses the particular applicability of such a principle on innovation-focussed programmes; acknowledges the work of the Commission in the context of the EU Budget Focused on Results initiative, which still needs to be further developed, and awaits the outcomes of the work of the inter-institutional expert working group on performance-based budgeting; considers that this approach can be a vehicle for boosting performance of underperforming programmes; stresses, however, that technical or programming shortcomings cannot lead to a reduction of the EU budget or the abandonment of political priorities, and that better spending alone will not solve the problem of the lack of financial means to address pressing and growing needs; reminds the Commission that Parliament, as one arm of the budgetary authority, must be included in developing the Commission’s strategy in that respect;

Financial instruments

65.  Acknowledges the increased role of financial instruments in the Union budget as a complementary form of funding as compared to subsidies and grants; recognises the potential of these instruments in terms of increasing the financial, and therefore the political, impact of the Union budget; underlines, however, that a shift from traditional financing to more innovative instruments is not advisable in all policy areas, as not all policies are entirely market-driven; highlights that financial instruments provide an alternative and complementary way of funding and should not be used for projects that can only benefit from the use of grants, which are particularly important to less developed regions;

66.  Calls on the Commission to conduct, in the course of the mid-term review/revision, an in-depth analysis of the use of the financial instruments since the beginning of the current programming period; stresses that when assessing a financial instrument, the leverage dimension cannot be the only evaluation criteria; recalls, in this context, the importance of the ‘additionality’ criteria and the assessment of the contribution to the fulfilment of the EU’s political objectives;

67.  Encourages the Commission to identify all EU policy areas where grants could be combined with financial instruments and to reflect on a proper balance between the two; is of the firm opinion that the possibility of a combination of various EU resources under harmonised management rules would help optimise the synergies between available sources of financing at EU level; underlines that increasing use of financial instruments should not lead to a reduction in the Union budget; recalls its repeated calls for greater transparency and democratic scrutiny regarding the implementation of financial instruments supported by the Union budget;

B.Parliament’s considerations concerning the post-2020 MFF

68.  Recalls that according to Article 25 of the MFF regulation, the Commission shall present a proposal for a new multiannual financial framework before 1 January 2018; stresses, therefore, that a number of key elements for the next MFF should already be debated in the framework of the upcoming review/revision;

69.  Considers that the key priorities to be addressed must include adjustments to the duration of the MFF, a thorough reform of the own resources system, a greater emphasis on the unity of the budget, and more budgetary flexibility; is furthermore convinced that the modalities of the decision-making process need to be reviewed in order to ensure democratic legitimacy and comply with the provisions of the Treaty;

70.  Recalls the budgetary principles of unity, budgetary accuracy, annuality, equilibrium, universality, specification, sound financial management and transparency, which need to be respected when establishing and implementing the Union budget;

71.  Underlines that an essential element of the difficulties in agreeing on a multiannual financial framework between Member States is their primary focus on net balances; reiterates its position that the Union budget is not a simple zero-sum game but, rather, an important trigger for convergence and the expression of common policies which create collective added value; urges the Member States, therefore, to change their perception of and approach to the Union budget, that is, to establish the size of the budget based on a thorough assessment of the financial needs deriving from the Union’s legal obligations, its political objectives set out in its programmes and policies as well as international commitments, in order to ensure that the outcome is not another stalemate that will only further disconnect the Union from its citizens; calls, accordingly, on the Commission to produce a study on the savings achieved at national level by Member States as a result of policy action funded at EU level;

72.  Points to the political imperative of setting up a decision-making procedure that guarantees the availability of the necessary financial resources, either at EU or national level, in order to ensure the full implementation of the political decisions taken by the European Council;

Duration

73.  Recalls that, according to recital 3 of the MFF Regulation, the three institutions have agreed to jointly examine the issue of the most suitable duration in the context of the review/revision; reiterates its position that the duration of the MFF should be aligned with the political cycle of both Parliament and the Commission, thus making the European elections a forum for debate on future spending priorities;

74.  Underlines, however, that, especially for programmes under shared management in the field of cohesion policy and rural development, longer-term predictability is essential, given the time it takes to agree on sectoral legislation and operational programmes at national and regional level;

75.  Believes that, given the rapidly changing political environment and with a view to ensuring greater flexibility, some elements of the MFF should be agreed for 5 years while others, notably those related to programmes requiring longer-term programming and/or policies foreseeing complex procedures for the establishment of implementation systems, such as cohesion policy or rural development, should be agreed for a period of 5+5 years with compulsory mid-term revision;

Reform of the own resources system

76.  Underlines the need for a fully-fledged reform of the own resources system, with simplicity, fairness and transparency as guiding principles; is therefore expecting an ambitious final report from the High Level Group on Own Resources by the end of 2016, as well as an equally ambitious legislative package on own resources as of 2021 from the Commission by the end of 2017;

77.  Stresses the need to reduce the share of the GNI contributions to the Union budget in order to exit the ‘juste retour’ approach of Member States; underlines that this would reduce the burden on national treasuries and thus make the resources concerned available for Member States’ national budgets; recalls that the current VAT own resource is over-complex and is in essence a second GNI contribution, and therefore calls for this own resource either to be substantially reformed or to be scrapped altogether; considers it necessary, however, to keep the GNI contributions as an element of the budget, given the need for its function as a balancing contribution;

78.  Calls for the introduction of one or several new own resources, ideally with a clear link to European policies that create added value; notes that a large number of possible new own resources have already been discussed by the High Level Group, such as a reformed VAT, a Financial Transaction Tax, ECB seigniorage, a reformed EU Emissions Trading System and carbon taxation, transport taxation, corporate taxation, electricity or digital taxation; eagerly awaits the High Level Group’s recommendations, in order to proceed and prepare Parliament’s position in this respect; calls, in this context, for the phasing out of all forms of rebates;

Unity of the budget

79.  Underlines the importance of the principle of the unity of the budget, and recalls that according to Article 310(1) TFEU, all items of revenue and expenditure of the Union shall be shown in the budget; is concerned about the recent shift from the Community method to intergovernmental decision-making as observed, since 2014, in the setting-up of the Bêkou Trust Fund for the Central African Republic, the Madad Regional Trust Fund in response to the Syrian crisis, and the EU Emergency Trust Fund for Africa, as well as of the Refugee Facility for Turkey; stresses that this form of financing entails a reallocation of funds under existing multiannual financial programmes negotiated and agreed among the three institutions; highlights that this endangers democratic accountability, as Parliament has been excluded from the setting-up of those funds;

80.  Underlines that according to the Treaty, Parliament and the Council establish the Union budget on an equal footing as the two arms of the budgetary authority; considers, moreover, that full parliamentary control over all expenditure is an essential element of all EU spending; calls on the Commission to preserve the unity of the budget and to consider it a guiding principle when proposing new policy initiatives;

81.  Reiterates its long-standing position that the European Development Fund (EDF) should be integrated in the Union budget, as from 2021, while ensuring the financing of the African Peace Facility and security-related operations;

82.  Stresses that any future integration of the EDF or such ad-hoc instruments into the EU budget entails that their respective financial envelopes are added on top of the MFF ceilings, which will need to be revised accordingly, in order not to jeopardise the financing of other EU policies and programmes;

Enhanced flexibility

83.  Stresses that the rigid structure of the Union budget deprives the budgetary authority of the possibility of reacting adequately to changing circumstances; calls, therefore, for greater flexibility in the next MFF, in particular through more flexibility between headings in the form of flexibility of unspent margins and between years with the aim of fully exploiting the MFF ceilings;

84.  Underlines that in addition to the ability to react flexibly to changing circumstances without prejudice to the agreed programming, there is also a necessity for the Union to be able to react quickly to developing crises, such as the current migration crisis; calls, therefore, in addition to the already existing MFF special instruments, for the establishment of a permanent EU crisis reserve within the Union budget in order to avoid ad hoc solutions like the setting-up of trust funds; stresses that such a mechanism, meant to respond to crises and unforeseen situations, should by its very nature operate as new MFF special instrument and be counted over and above the MFF ceilings;

Decision-making process

85.  Recalls Parliament’s critical stance as regards the manner in which the procedure leading to the adoption of the MFF Regulation for 2014-2020 was conducted; recalls that the adoption of the regulation requires Parliament’s consent; stresses, therefore, that Parliament needs to be fully involved in the relevant negotiations from the outset; considers that the EU institutions should formalise the modalities for the next MFF procedure in an agreement reached at the time of the mid-term review/revision of the MFF, which should take account of the shortcomings of the previous negotiations and fully safeguard Parliament’s role and prerogatives as set out in the Treaties; considers that these modalities should eventually be enshrined in the IIA, as is the case for the annual budgetary procedure;

86.  Considers that the unanimity requirement for the adoption of the MFF Regulation represents a true impediment in the process; calls, in that regard, on the European Council to activate the passerelle in Article 312(2) TFEU so as to allow for the adoption of the MFF Regulation by qualified majority; recalls, moreover, that the general passerelle clause of Article 48(7) TEU can also be deployed, in order to apply the ordinary legislative procedure; stresses that a shift towards qualified majority voting for the adoption of the MFF Regulation would be in line with the decision-making process for the adoption of virtually all EU multiannual programmes, as well as for the annual procedure for adopting the EU budget;

87.  Recalls that the Treaty does not assign the European Council the right to exercise legislative functions; reiterates, in this context, its strong objection to the European Council’s interference in legislation during the last MFF negotiations; demands from the European Council that it limits itself to its tasks as defined by the Treaty, and to refrain from pre-empting policy changes which are to be decided under the ordinary legislative procedure, thereby respecting Parliament’s legislative prerogatives under co-decision;

88.  Insists that the legislative process to adopt the next MFF should be concluded by the end of 2018, following substantial negotiations between Parliament and the Council; stresses that a timely MFF agreement will allow for the swift adoption of all sectorial regulations, and will enable the new programmes to start without delay on 1 January 2021; stresses the importance of better informing national parliaments and European citizens of the challenges of the next MFF through the organisation, when appropriate, of an interinstitutional, inter-parliamentary conference;

o
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89.  Instructs its President to forward this resolution to the Council, the Commission, the other institutions and bodies concerned, and the governments and parliaments of the Member States.

(1) OJ L 347, 20.12.2013, p. 884. (2) OJ L 103, 22.4.2015, p. 1. (3) OJ L 168, 7.6.2014, p. 105. (4) OJ C 373, 20.12.2013, p. 1. (5) OJ L 298, 26.10.2012, p. 1. (6) Texts adopted, P7_TA(2014)0378. (7) Texts adopted, P7_TA(2013)0599. (8) Texts adopted, P7_TA(2013)0455. (9) Texts adopted, P7_TA(2013)0456. (10) OJ C 75, 26.2.2016, p. 47. (11) OJ C 36, 29.1.2016, p. 49. (12) OJ C 68 E, 7.3.2014, p. 1. (13) OJ C 380 E, 11.12.2012, p. 89.