Financial Perspective 2007-2013
Delegations will find attached a final comprehensive proposal from the Presidency on the Financial Perspective 2007-2013.
This proposal is in three parts:
Part I: expenditure
Part II: revenue
Part III: review.
These three parts are complementary and inseparable. This means that the principle of nothing is agreed until everything is agreed continues to apply.
THE NEW FINANCIAL PERSPECTIVE ‑ GENERAL
1. The new Financial Framework should provide the financial means necessary to address effectively and equitably future internal and external challenges, including those resulting from disparities in the levels of development in an enlarged Union. It should, in parallel, attest to determined efforts towards budgetary discipline in all policy areas within a general context of budgetary consolidation in the Member States. Policies agreed in accordance with the Treaty should be consistent with the principles of subsidiarity, proportionality and solidarity. They should also provide added value.
2. The new financial perspective should cover the seven years between 2007 and 2013 and be drawn up for a European Union comprising 27 Member States on the working assumption that Bulgaria and Romania will join the Union in 2007. The amounts allocated to Romania and Bulgaria in their respective Accession Treaties will be respected.
2bis The European Council has treated the Financial Perspective 2007-2013 as an overall negotiation package including expenditure, revenue and the review clause. The European Council shall ensure the global nature of this agreement.
3. Expenditure under the new Financial Perspective should be grouped under 5 headings designed to reflect the Union's political priorities and providing for the necessary flexibility in the interest of efficient allocation of resources. Where a heading is divided into sub‑headings, these will have the same status as separate headings.
4. In the light of the above, the maximum total figure for expenditure for EU 27 for the period 2007‑2013 is € 862,363 million in appropriations for commitments, representing 1,045% of EU GNI. The breakdown of appropriations for commitments is as described below. The same figures are also set out in the table contained in Annex I which also sets out the schedule of appropriations for payments. All figures are expressed using constant 2004 prices. There will be automatic annual technical adjustments for inflation.
5. The European Council takes note of the resolutions from the European Parliament on the Financial Perspective which were adopted on 8 June and 1 December 2005.
Renewal of the Interinstitutional Agreement
6. The current financial framework and Interinstitutional Agreement (IIA) have largely succeeded in their objective of ensuring financial discipline, the orderly evolution of expenditure and smooth budgetary procedures. The new agreement to be established between the European Parliament, Council and Commission will have to pursue the same objectives and should allow for the degree of flexibility needed to strike a satisfactory balance between budgetary discipline and efficient resources allocation. For the purposes of sound financial management, the institutions will ensure as far as possible that, with the exception of sub‑heading 1b, sufficient margins are left available annually beneath the ceilings for the various headings and sub‑headings. Moreover, this renewed agreement should also be used to update and simplify the various existing agreements and joint declarations concerning budgetary matters.
7. Building on the institutional dialogue to date, the European Council calls on the Council, on the basis of a common position and subject to acceptable terms being attainable, to reach agreement with the European Parliament and Commission on a new IIA reflecting the outcome of these conclusions. In this context, the European Council takes note that the Commission will make concrete proposals in order to increase the flexibility of the financial framework.
HEADING 1A) — COMPETITIVENESS FOR GROWTH AND EMPLOYMENT
8. The level for sub‑Heading 1a) should provide adequate financing for initiatives taken at the European level in support of and in synergy with action by the Member States to contribute to the goals of the Lisbon Strategy. These are grouped under the following five broad objectives: research and technological development, connecting Europe through EU networks, education and training, promoting competitiveness in a fully‑integrated single market, and the social policy agenda. Nuclear de‑commissioning will also be financed under this sub‑Heading, and the financial consequences of this commitment shall be drawn in line with the Treaties of Accession. The level of commitments, which represents 7,5% annual real growth compared to 2006, should not exceed:
SUB-HEADING 1a) (Million euros, 2004 prices)
9. On the basis of these levels of commitments, the European Council invites the Council, together with the European Parliament as appropriate, to come to a timely agreement through the legislative procedure on the content and appropriate funding of the instruments pertaining to this sub‑Heading in the light of the various priorities expressed by the Member States.
10. In allocating funding within this heading particular priority should be given to delivering a substantial and progressive enhancement of the EU's research effort, which is generally recognised to be one of the most promising and effective drivers of innovation and growth. The European Council believes that EU funding for research should therefore be increased such that by 2013 the resources available are around 75% higher in real terms than in 2006. This research effort, as reflected principally through the 7th Framework Programme, has to be based on excellence while ensuring balanced access for all Member States. Due account will also be taken of some priority projects within the Trans-European Networks.
11. The European Council invites the Commission in cooperation with the European Investment Bank to examine the possibility of strengthening their support for Research and Development by up to a maximum of € 10 billion through a financing facility with risk‑sharing components to foster additional investment in European research and development, particularly by the private sector.
11bisIn order further to promote nuclear safety in the Union, the European Council calls on the Budgetary Authority to ensure that the following amounts are allocated for nuclear power plant decommissioning during the next Financial Perspective:
- € 375 million for V-1 Jaslovske Bohunice in Slovakia
- € 865 million for Ignalina in Lithuania
- €210 million for Kozloduy in Bulgaria from 2007 to 2009
12. The European Council agrees that a Globalisation Adjustment Fund will be established, designed to provide additional support for workers made redundant as a result of major structural changes in world trade patterns, to assist them with their re-training and job search efforts. Activation of the Fund will be subject to strict criteria relating to the scale of economic dislocation and its impact on local, regional or national economies, which the European Council invites the Council to establish on the basis of a proposal from the Commission. The maximum amount of expenditure from the Fund shall be up to € 500 million per year. No specific financial provision for the Fund will be made in the Financial Perspectives. Instead it should be financed through underspends against the budget ceilings established in these conclusions (defined in commitments terms) and/or from funds which are de-committed.
HEADING 1B) — COHESION FOR GROWTH AND EMPLOYMENT
13. The operation of cohesion policy will have contributed significantly over the current financial perspective period to fulfilling the Treaty aim of reducing disparities between the levels of development of the various Member States and regions. The recent enlargement, and the one to come, have considerably increased the economic and social disparities at both regional and national level, thus underscoring the need to maintain the goal of achieving economic and social cohesion firmly at the centre of the Union's policy objectives over the next financial perspective period.
14. Accordingly, there should be an appropriate concentration of structural and cohesion fund assistance on the least developed regions and Member States while providing for satisfactory transitional arrangements in particular for those contributing most to such a concentration. Actions supported by cohesion policy should be focused on investment in a limited number of priorities organised around three Objectives: Convergence; Regional competitiveness and employment; Territorial cooperation.
Supporting growth and employment
15. As part of the Union's overall objective of promoting competitiveness and creating jobs, and of working towards meeting the objectives of the Lisbon agenda, the European Council agrees that targets will be set for expenditure under both the convergence and regional competitiveness and employment objectives for policies which contribute directly to this end. These targets will be 60% for the convergence objective and 75% for the regional competitiveness and employment objective, applied as an average over the entire period. These provisions shall not apply to Member States that acceded to the Union in or after 2004, reflecting their specific development needs.
16. The European Council invites the Commission to present proposals establishing a list of those categories of expenditure considered as contributing towards these targets, as well as arrangements providing for the full involvement of Member States with a view to ensuring that specific national circumstances will be taken into account.
17. A number of reforms will improve the delivery of structural funds, by encouraging a more strategic approach to programming, bringing about greater decentralisation of responsibilities and enhancing management and control systems. In this connection, the work of the Cohesion Fund will be integrated into the programming of structural assistance to ensure greater coherence among the various Funds.
Overall level of allocations
18. The appropriate level of commitment appropriations to be entered in the financial perspective for the structural funds and the Cohesion Fund shall be:
SUB-HEADING 1b) (Million euros, 2004 prices)
Pursuing the goal of achieving economic and social cohesion in the enlarged Union will require a level of financial commitment for 2007‑2013 of 0.37% of EU‑27 GNI.
19. 81.9% of these funds (252,234 million euros) will be allocated to the Convergence objective, of which 24.4% (61,518 million euros) for the Cohesion Fund and 4.9 % (12,487 million euros) for the "phasing out" regions and Member States.
15.7% (48,386 million euros) of these funds will be allocated to the Regional competitiveness and employment objective, of which 21.4% (10,368 million euros) to the "phasing in" regions.
The Territorial co-operation objective will be allocated 2.4% (7,500 million euros) of these funds.
20. Total transfers from funds supporting cohesion to any Member State, including those funds transferred to the new Rural development and Fisheries instruments, should not exceed the percentages of Member States’ GDP set out in paragraph 40 below, in order to pay regard to the finite capacity of Member States to utilise effectively the resources available.
Definition of the different objectives and eligibility
Definition of the Convergence Objective
21. The Convergence Objective shall be aimed at speeding up the convergence of the least‑developed regions and Member States.
22. The regions eligible for funding from the structural funds under this Objective are the current NUTS  level II regions whose per capita GDP, measured in purchasing power parities and calculated on the basis of Community figures for the period 2000‑2002, is less than 75% of the EU 25 average.
23. The Member States eligible for funding from the Cohesion Fund shall be those whose per capita GNI, measured in purchasing power parities and calculated on the basis of Community figures for the period 2001‑2003, is less than 90% of the EU 25 average and which have a programme for meeting the economic convergence conditions referred to in Article 104 of the Treaty.
Definition of the Regional Competitiveness and Employment Objective
24. This Objective shall be aimed at strengthening regions' competitiveness and attractiveness as well as employment. The respective contributions of the European Regional Development Fund (ERDF) and European Social Fund (ESF) shall be fixed by the Member States in consultation with the Commission.
25. The entire territory of the Community shall be eligible, with the exception of the regions eligible for funding from the structural funds under the Convergence Objective and the regions covered by transitional arrangements, subject to the limits set out in paragraph 40.
Definition of the European Territorial Cooperation Objective
26. This Objective aims at strengthening territorial cooperation at the cross‑border, trans‑national and inter‑regional levels and at establishing cooperation networks and furthering the exchange of experience at the appropriate territorial level.
27. The regions eligible for cross‑border cooperation financing shall be all NUTS level III regions along the internal land borders, certain NUTS level III regions along the external land borders and all NUTS level III regions along the maritime borders separated, as a general rule, by a maximum of 150 kms, taking into account potential adjustments needed to ensure the coherence and continuity of the cooperation action.
28. The list of eligible trans‑national regions will be drawn up by the Commission following close consultations with Member States.
29. The entire territory of the Community shall be eligible for the financing of inter‑regional cooperation and cooperation networks and exchange of experience.
Allocation method for convergence regions
30. The specific level of allocations to each Member State should be based on an objective method and calculated as follows:
Each Member State's allocation is the sum of the allocations for its individual eligible regions, the latter calculated on the basis of relative regional and national prosperity and the unemployment rate according to the following steps:
(i) determination of an absolute amount (in euros) obtained by multiplying the population of the region concerned by the difference between that region's GDP per capita (PPS  ) and EU 25 average GDP per capita (PPS);
(ii) application of a percentage to the above absolute amount in order to determine that region's financial envelope; this percentage is graduated to reflect the relative prosperity, as compared to the EU 25 average, of the Member State in which the eligible region is situated, i.e.:
· 4,25% for regions in Member States whose level of GNI per capita is below 82% of the Community average
· 3,36% for regions in Member States whose level of GNI per capita is between 82% and 99% of the Community average
· 2,67% for regions in Member States whose level of GNI per capita is over 99% of the Community average
(iii) to the amount obtained under step (ii) is added, if applicable, an amount resulting from the allocation of a premium of € 700 per unemployed person, applied to the number of persons unemployed in that region exceeding the number that would be unemployed if the average unemployment rate of all the EU convergence regions applied.
31. The level of funds determined by the application of these parameters will include that part to be transferred to Heading 2 (cf. paragraph 63).
Allocation method for the Cohesion Fund
32. The total theoretical financial envelope is obtained by multiplying average per capita aid intensity of € 44,7 by the eligible population. Each eligible Member State's a priori allocation of this theoretical financial envelope corresponds to a percentage based on its population, surface area and national prosperity, and obtained by applying the following steps:
1) calculation of the arithmetical average of that Member State's population and surface area shares of the total population and surface area of all the eligible Member States; if, however, a Member State's share of total population exceeds its share of total surface area by a factor of 5 or more, reflecting an extremely high population density, only the share of total population shall be used for this step;
2) adjustment of the percentage figures so obtained by a coefficient representing one third of the percentage by which that Member State's GNI per capita (PPS) exceeds or falls below the average GNI per capita of all the eligible Member States (average expressed as 100%).
33. In order to reflect the significant needs of new Member States in terms of transport and environment infrastructure, the share of the Cohesion Fund will be set at one third of the total financial allocation (structural funds plus Cohesion Fund) for the new Member States on average over the period. For the other Member States, their financial envelope results directly from the allocation method described in paragraph 32.
34. Member States' eligibility for the Cohesion Fund will be reviewed in 2010 on the basis of data relating to the EU-25.
Allocation method for the Regional Competitiveness and Employment Objective
35. The share of each Member State concerned is the sum of the shares of its eligible regions, with the latter determined according to the following criteria, weighted as indicated: total population (weighting 0,5), number of unemployed people in NUTS Level III regions with an unemployment rate above the group average (weighting 0,2), number of jobs needed to reach an employment rate of 70% (weighting 0,15), and number of employed people with a low educational level (weighting 0,10), low population density (weighting 0,05). The shares are then adjusted according to relative regional prosperity (for each region, increase or decrease of its total share by +5%/-5% according to whether its GDP per capita is below or above the average GDP per capita for the group). The share of each Member State shall not however be less than three‑quarters of its share in 2006 of combined funding under Objectives 2 and 3.
Allocation method for the Territorial Cooperation Objective
36. The allocation of resources between the beneficiary Member States (including the contribution of the ERDF to the cross‑border strand of the European Neighbourhood and Partnership Instrument and the Instrument for Pre‑accession) is determined as follows:
·for the cross‑border component, on the basis of the population of the NUTS level III regions in terrestrial and maritime border areas, as a share of the total population of all the eligible regions. Contributions provided from Heading 4 should be allocated simultaneously;
·for the transnational component, on the basis of the total population of the Member State, as a share of the total population of all the Member States concerned.
The shares of the cross‑border, transnational and inter‑regional cooperation components are 77%, 19% and 4% respectively.
37. In the interest of equity and to allow the process of convergence to be completed, transitional arrangements will be put in place.
38. The following categories of region and Member State are concerned:
(a) the regions which would have been eligible for Convergence objective status had the eligibility threshold remained at 75% of average EU‑15 GDP, but which lose eligibility because their nominal per capita GDP level will now exceed 75% of the new (lower) EU‑25 average (the so‑called "statistical" effect). These regions will be "phased out" of the Convergence objective;
(b) the regions currently eligible for full Objective 1 region status which cease to be eligible in the next financial perspective period because natural growth has brought their per capita GDP level to over 75% of the EU‑15 average, corresponding to over 82,19% of the new EU‑25 average ("growth" effect). These regions will be "phased into" the Regional competitiveness and employment objective;
(c) the Member States currently eligible for funding from the Cohesion Fund and which would have continued to be so had the eligibility threshold remained at 90% of average EU-15 GNI, but which lose eligibility because their nominal per capita GNI will now exceed 90% of the new (lower) EU-25 average. These Member States will be "phased out" of the Cohesion Fund element of the Convergence objective.
39. The allocations under these phasing out/in arrangements will result from the application of the following parameters:
(a) for the r