The multiannual financial framework lays down maximum amounts ('ceilings') for each broad category of expenditure ('headings' for a clearly determined period of time (several years).
It aims to ensure EU expenditure develops in an orderly manner, within the limit of the EU's own resources.
2007-13 financial framework objectives
This was adopted in 2006 when the European Parliament, EU Council and Commission signed an interinstitutional agreement on budgetary discipline and sound financial management.
There are 3 main priorities for 2007-13:
For information on the the new Multiannual Financial Framework 2014-2020, visit this website.
The diagram below shows the broad categories of expenditure (source: interinstitutional agreement on budgetary discipline and sound financial management of 17 May 2006 and its amendments).
To facilitate comparisons with previous financial frameworks, the 2 components of heading 2 – 'common agricultural policy' and 'rural development and environment' – are shown separately.
1a. Competitiveness for growth and employment
– research and innovation, education and training, trans-European networks, social policy, economic integration and accompanying policies.
1b. Cohesion for growth and employment
– convergence of the least developed EU countries and regions, EU strategy for sustainable development outside the least prosperous regions, inter-regional cooperation.
Includes the common agricultural policy, common fisheries policy, rural development and environmental measures.
3a. Freedom, security and justice
– justice and home affairs, border protection, immigration and asylum policy.
– public health, consumer protection, culture, youth, information and dialogue with citizens.
Covers all external action ("foreign policy") by the EU. Does not include the European Development Fund (the European Council and Parliament rejected a Commission proposal to include it in the EU budget).
Covers the administrative expenditure of all the European institutions, pensions and EU-run schools for staff members' children ("European Schools").
Temporary heading which includes compensatory payments relating to the latest expansion of the EU.
The EU budget has 2 types of amounts:
There are also 2 types of expenditure ceiling:
The financial framework breaks down commitment appropriations (amounts committed but not paid) into broad categories (headings and subheadings), with a ceiling set for each.The current financial framework has 6 headings
For commitment appropriations – the sum of the individual heading ceilings.
For payment appropriations (actual amounts to be paid) – the annual ceiling is based on the sum of payments scheduled for each category of commitment appropriations.
The ceiling for payment appropriations are also expressed as a percentage of the EU's estimated GNI (based on expected GNI development).
This percentage is updated every year on the basis of the latest available GNI forecasts in the framework of the technical adjustment of the financial framework for the following years. This makes it possible to check whether the EU's total estimated expenses (payments) are within the ceiling set by own resources decision also expressed as a percentage of GNI (1,23%).
The budget is not allowed to exceed the ceiling of own resources.
It means that the total payments ceilings in the financial framework are always lower than the own resources ceiling. The margin between own resources ceiling and the ceiling for payment appropriations allows the financial framework to be tweaked, to cover unforeseen expenses.
However, the budget itself must not exceed the limit set by own resources.
More details? Financial framework in figures