Headings: expenditure categories
The Multiannual Financial Framework (MFF) 2014-20 is divided into the following categories of expenditure ('headings'):
Smart and Inclusive Growth
- Competitiveness for growth and jobs: includes research and innovation; education and training; trans-European networks in energy, transport and telecommunications; social policy; development of enterprises etc.
- Economic, social and territorial cohesion: covers regional policy which aims at helping the least developed EU countries and regions to catch up with the rest, strengthening all regions' competitiveness and developing inter-regional cooperation.
Sustainable Growth: Natural Resources
Includes the common agricultural policy, common fisheries policy, rural development and environmental measures.
Security and citizenship
Includes 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 such as development assistance or humanitarian aid with the exception of the European Development Fund (EDF) which provides aid for development cooperation with African, Caribbean and Pacific countries, as well as overseas countries and territories. As it is not funded from the EU budget but from direct contributions from EU Member States, the EDF does not fall under the MFF.
Covers the administrative expenditure of all the European institutions and European Schools, as well as pensions.
Temporary payments designed to ensure that Croatia, who joined the EU in July 2013, does not contribute more to the EU budget than it benefits from it in the first year following its accession.
Ceilings: the maximum annual amounts
The MFF lays down the maximum annual amounts ('ceilings') for EU expenditure as a whole and for the main categories of expenditure (headings) over the 2014-2020 period. There are two types of expenditure ceilings:
An annual ceiling for each heading, expressed in commitment appropriations (legally binding promises to spend money which will not necessarily be paid out in the same year but may be disbursed over several financial years);
An overall annual ceiling:
for commitment appropriations corresponding to the sum of each heading ceilings;
for payment appropriations: the actual amounts authorized for disbursement in a given year. As a rule, budgeted amounts correspond to the sum of payments scheduled for each category. The annual payment appropriations must be covered entirely by total annual revenue.
The overall ceiling is also expressed as a percentage of the EU's estimated GNI. This percentage is updated every year on the basis of the latest available GNI forecasts in order to check that the EU's total estimated level of payments is compatible with the maximum amount of own resources which the EU may raise during a year (1.20 % of the EU's GNI).
The difference ('margin') between budgeted payment appropriations and the annual payment ceiling and the margin between the budgeted commitment appropriations and the expenditure ceiling per heading provide room for manoeuvre in case of unforeseen needs and emergencies.