Home Open Access News Finance The finances of the European Union, including the research budget

The finances of the European Union, including the research budget

November 28, 2018

The finances of the European Union, including the research budget are placed under the spotlight by Günther H.Oettinger, Commissioner for Budget & Human Resources at the European Commission

The finances of the European Union differ from those of national administrations in many respects, but what they all have in common is that there is a constant tension between short-term needs and longer-term ambitions. How do we cope with the crises of the moment – perhaps an environmental catastrophe or humanitarian disaster – whilst preparing for the challenges of mid-century: climate change, changing demographics, economies transformed by artificial intelligence (AI)?

Negotiations for the next multiannual financial framework

One of the EU’s mechanisms to reconcile this tension is a seven-year budget cycle that sets the outline for each annual budget. I am currently leading the European Commission’s negotiations for the next multiannual financial framework (MFF 2021-27), whilst also ensuring smooth implementation of the annual budgets set in the MFF for 2014-20, which was agreed by the Member States and the European Parliament back in 2013.

We concluded the detailed negotiations on spending in 2019 in December 2018. The budget has been set at €165 billion. Since EU rules do not permit us to run a deficit, the spending limits are balanced by decisions on raising the necessary revenue. The lion’s share of that comes from Member States contributions in addition to customs duties and a share of the value-added tax (VAT).

Ahead of the negotiations, I pushed to keep spending on investment and growth at ambitious levels. The broad parameters of the 2019 budget were set back in 2013, so there was only limited scope to make incremental changes. Nevertheless, there are some important trends in this budget which are worth pointing to as they herald a shift in focus which I am confident will become even more marked with the next MFF.

The research budget

Firstly, I would draw attention to the research budget. The Horizon 2020 programme makes up 7% of the current seven-year framework (and 7% of the 2019 budget too) and is one of the largest research and development funding programmes in the world. We have seen many European success stories in the field of research and technology, but we need to do much more to encourage the creation of start-ups if we want to stay in competition with the U.S. and Silicon Valley. We will be enhancing the European Innovation Council (EIC) pilot initiative in 2019, which currently has €2.7 billion of the Horizon 2020 budget directed towards making this happen. The initiative will test elements of the planned future structure of the EIC under the Horizon Europe proposal to fast-track disruptive and market-creating innovation.

This brings together the parts of Horizon 2020 that support high-risk/high-return, breakthrough research and will experiment with a number of new approaches, consistent with our longer-term drive for more mission-oriented policies. Scientists and researchers will find opportunities for networking, mentoring and coaching, and strategic advice aiming to upgrade the innovation ecosystem in Europe.

European countries will also be able to coordinate their supercomputing strategies and investments together with the European High-Performance Computing (HPC) Joint Undertaking. The idea was adopted very quickly by both the European Parliament and the Council in autumn 2018, so the joint undertaking will be able to start work in 2019 with a dedicated work programme reflecting Europe’s investment priorities for HPC infrastructures and research and innovation.

We expect the work programme to include actions, such as continuing the development of the European microprocessor and exascale systems and of exascale software and applications and co-designing their integration in extreme scale prototypes. The Euro HPC joint undertaking with also contribute to the creation of national HPC Competence Centres, which will stimulate the wider use of HPC and address the specifically HPC-related skills gap.

The Facility for Refugees in Turkey

Another noteworthy aspect of the 2019 budget is the contribution towards the €3 billion which will be spent through the Facility for Refugees in Turkey, to care for and support refugees still fleeing wars and persecution in Syria and elsewhere. Migration is a high priority in the 2019 budget, as it has been in all EU annual budgets since 2015, but here too there is an important trend, as this funding will increasingly be used to tackle the root causes of migration and to strengthen the EU’s borders, rather than being primarily needed for emergency actions in the Member States.