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Financial Framework

Since 1988, the EU annual budgets have been defined within the multiannual financial frameworks in order to ensure tighter budgetary discipline and to improve the functioning of the budgetary procedure and interinstitutional cooperation. The financial framework which ended in 2006 was agreed for a period of 7 years (2000–06) by the Interinstitutional Agreement (IIA) of 6 May 1999 on budgetary discipline and improvement of the budgetary procedure. It was the third financial programming period after those of 1988–92 and 1993–99. The current financial framework was agreed for another period of 7 years (2007–13) by the IIA of 17 May 2006 on budgetary discipline and sound financial management.

Structure

Financial frameworks consist of headings (some of them broken down into subheadings) with annual limits (ceilings) for commitment appropriations set for each heading/ subheading. The sum of the ceilings of all headings gives the total ceiling of commitment appropriations. A corresponding estimate is then established for the annual ceiling of payment appropriations.

Total annual ceilings are expressed in millions of euro and in percentage of the gross national income of the EU (EU GNI). The total annual ceiling of payment appropriations in percentage of EU GNI is compared to the reference own resource ceiling (1.23 % of EU GNI).

The corresponding margin for unforeseen expenditure performs a dual role. First, it leaves a safety margin to ensure that (within the limit of the own resources ceiling) the resources available to the EU would not be reduced as a consequence of a lower-thanforecast economic growth rate. Second, it allows the various ceilings of the financial framework to be revised so as to cover any unforeseen expenditure which arises.

Technical adjustment

Under the terms of the IIA, at the beginning of each budgetary procedure the Commission carries out the technical adjustment of the financial framework in order to take into account inflation and the trend in EU GNI growth. As financial frameworks are originally expressed in constant prices, they have to be adjusted to the most recent economic environment before the preliminary draft budget for the following year is established.

In the 2007–13 financial framework, calculations in constant prices were made using a fixed rate of 2 % per year as a deflator, so that amounts in current prices could be deducted automatically. Consequently technical adjustments now no longer amend prices, but only amounts expressed in percentage of EU GNI. The last technical adjustment was made for 2013, in April 2012 (see Table 2 in Annex 1). The 2000–06 financial framework is no longer modified by technical adjustments.

Revision and adjustment

Following the agreement on financing required for the European Global Navigation 1 Satellite System GNSS programmes (EGNOS–Galileo), the financial framework for 2007–13 was revised in December 20071.

An adjustment also occurred together with the technical adjustment made for 2009 in order to take account of implementation (pursuant to point 48 of the IIA)2.

Following the agreement on financing required for the European economic recovery plan, the financial framework for 2007–13 was revised in May3 and in December4 2009.

An adjustment of the financial framework (pursuant to point 17 of the IIA) occurred in the framework of the technical adjustment for 2011 in April 20105.

The latest revision of the financial framework, which addressed additional financing needs of the ITER project, was adopted on 13 December 20116.

1 Decision 2008/29/EC of the European Parliament and of the Council of 18 December 2007.
2 Decision 2008/371/EC of the European Parliament and of the Council of 29 April 2008.
3 Decision 2009/407/EC of the European Parliament and of the Council of 6 May 2009.
4 Decision 2009/1005/EU of the European Parliament and of the Council of 17 December 2009.
5 COM(2010) 160 of 16 April 2010.
6 Decision 2012/5/EU of the European Parliament and of the Council of 13 December 2011.