Draft annual EU budget 2022 - Questions and answers 09.06.2021: 1. What are the priorities of the draft budget for 2022? The EU budget is the centrepiece of the Union's recovery efforts, aiming to get Europe back on track following the COVID-19 pandemic and its consequences.

1.  What are the priorities of the draft budget for 2022?



The EU budget is the centrepiece of the Union's recovery efforts, aiming to get Europe back on track following the COVID-19 pandemic and its consequences.



The budget for 2022 aims to boost the recovery from the coronavirus pandemic, to put Europe on the path towards a sustainable future, to protect and create jobs. This means tangible support for people in need, companies and hard-hit sectors, reinforcement of the single market and assistance for regions and Member States.



The combined EU budget 2022 and NextGenerationEU will make available €311 billion in funding to help rebuild and modernise our continent, fostering the green and digital transitions, and making sure we create a stronger and more resilient Europe, which plays a strong role in the world.



In parallel, the EU budget will continue to support Europe's political priorities, whose contribution to a sustainable recovery is more relevant than ever. The Commission remains committed to the six headline ambitions set out by President von der Leyen: the European Green Deal; a Europe fit for the digital age; an economy that works for all; promoting our European way of life; a stronger Europe in the world and a new push for democracy. The budget for 2022 will enable the Commission to deliver on these priorities.






2.  How does the draft budget for 2022 relate to NextGenerationEU?



NextGenerationEU will give the EU budget the additional firepower necessary to respond decisively to the urgent challenges caused by coronavirus pandemic. It is being put in place for a temporary period to be used for crisis response and recovery measures.



The funds it will generate will be channelled through the EU budget to support investment and reform priorities, and will reinforce programmes that are key to the recovery. It will also fund actions to build resilience for the future, for example, through an enhanced RescEU as part of the EU Civil Protection Mechanism.



To finance NextGenerationEU, the Commission will borrow up to €807 billion on the capital markets. To obtain the necessary funding under optimal financial terms, the Commission will be using a diversified funding strategy. The funds will be disbursed via grants or loans, either through the Recovery and Resilience Facility or through several EU budget programmes which receive top-ups from NextGenerationEU.






3.  What are commitments and payments?



Commitments are the total volume of contractual obligations for future payments that can be made in a given year. Commitments must then be honoured with payments, either in the same year or, particularly in the case of multi-annual projects, over the following years.



Payments are the actual money paid in a given year from the EU budget to cover commitments of current and previous years.



For instance, when the EU decides to co-fund the building of a bridge, the total amount which the EU agrees to cover is a commitment. The bills for the work done are the payments that are paid over the coming years in line with the implementation life cycle of the project.



The commitment is made in year N. The payments from the EU budget may follow in the same year N, but also in year N+1, N+2, N+3, etc., depending on when the invoices are reimbursed.





4.  What is an external assigned revenue?



The EU budget is governed by the principle of universality. This means that there is no direct link between the source of the revenue collected (for instance the VAT or the GNI resources) and the expenditure that it finances.



There is an exception to this rule and this is the assigned revenue, meaning specific revenue, which is collected to finance specific expenditure.



The types of existing external and internal assigned revenue are listed in Article 21 of the Financial Regulation – the rules governing how the EU budget is spent.






5.  When will the funds under NextGenerationEU become available?



The Commission has announced it plans to start borrowing to finance the recovery under NextGenerationEU in June.



Based on preliminary estimates, the Commission intends to issue around €80 billion of long-term bonds in 2021, to be topped up by tens of billions of euro of short-term EU-Bills to cover the remaining financing requirements.



The exact amount of both EU-Bonds and EU-Bills will depend on the precise funding needs, and the Commission will revise its initial assessment in the autumn.



With its approach, the Commission will be able to fund, over the second half of the year, all planned grants and loans to Member States under the Recovery and Resilience Facility, as well as cover the needs of the EU policies that receive NextGenerationEU funding.





6.  What happens next?

Following adoption by the College, the European Commission submits the draft 2022 EU budget to the European Parliament and the Council, which take the final decision together.



The Council usually adopts its opinion on the budget by the end of July, and the European Parliaments announces its official position in the autumn.



A specific Conciliation Committee is convened, usually in late autumn, to reconcile the positions of the Parliament and the Council. It has to agree within 21 days on a common budget, which both institutions should afterwards approve. This year, the period runs between 26 October and 15 November.

Press remarks by Commissioner Hahn on the draft annual EU budget for 2022 and on EU budget performance reporting




Ladies and Gentlemen,


Just a moment ago, the College adopted the draft budget for 2022 as well as Annual Management and Performance Report of 2020 and I have the honour to immediately present it to you.


It is important to keep in mind where we are.


The COVID-19 pandemic has disrupted our lives and has overturned all previous assumptions about economic activity and public spending.


But today, we can see the light at the end of the tunnel. The vaccination campaign has given people new hope. Europe's societies are gradually reopening, and the economy is doing better. One of the results from this is that we are here today after 1.5 years.


We are however not out of the woods yet: the Union's continued response to the crisis and the recovery remain essential.


We must also implement the necessary measures for the twin crucial challenges for the Union: the digital and green transition.


Additionally, in an uncertain world, the Union must maintain its focus on international cooperation, security and defence in line with its values, and play an increasing role externally.


All these priorities are clearly reflected in our draft budget.


The draft budget for 2022 is fully aligned with the multiannual financial framework agreement, which provides a stable framework for economic and social recovery and digital and green transition.


The combined strength of the long-term budget and NextGenerationEU amounts to an unprecedented EUR 2 trillion in current prices over the 2021-2027 period.


Let me now provide you with some – I would say – rather impressive figures for 2022.


A total of EUR 311 billion in commitments would be available in 2022 to provide financing of the EU priorities and policies.


The EU budget would contribute with EUR 167.8 billion in commitment appropriations (this is an increase of 2.2% compared to 2021 without the impact of the Brexit Adjustment Reserve in draft amending budget 1/2021), whereas NextGenerationEU would allow to make commitments of about EUR 143.5 billion in grants.


The proposed level of payments of EUR 169.4 billion is exactly an increase of 2% compared to this year and is adequate to cover our budgetary needs both for the payment of the outstanding commitments and for the new programmes.


Together with the EUR 78 billion of expected NGEU payments – corresponding to the annual amount of borrowing, almost EUR 250 billion will be available to boost the recovery of the EU economy in 2022.


To generate the funding for NextGenerationEU, the Commission will start borrowing as early as June 2021 in a couple of days, using a mix of long-term bonds and short-term EU-Bills.


The first bond issuance will be organised with the institutions included in its Primary Dealer Network as announced almost a week ago last Monday. Two more transactions are foreseen to take place before the start of the summer.


This is now the start of the NGEU implementation phase, which we have prepared.


Before I conclude, let me turn to our performance and policy mainstreaming.


In 2014-2020, the Union invested EUR 216 billion in reaching the climate objectives, exceeding the overall target by 20.15%. We can all be proud of this result!


In the 2021-2027 MFF, we are reinforcing the mainstreaming approach. All basic acts include a recital on climate and biodiversity. Major programmes include specific targets for their indicative contribution, to allow us to reach the 30% target for the budget and NextGenerationEU over the entire programming period.


Notably, the Recovery and Resilience Facility has targets for the percentage of expenditure that should go towards the twin green (37%) and digital (20%) transition.


The Commission intends to fund 30% of NGEU through green bonds issuance. This could amount to up to EUR 250 billion, establishing the EU as one of the largest issuers of green bonds globally. Actually this will lead to doubling of green bonds across the globe, as a result of the Commission taking this approach.


We have also come forward today with a communication about the performance framework for 2021-2027, as well as with the Annual Management and Performance Report.  


The Commission will continue to put performance front and centre in the Union's budget. Today's Communication on the performance framework for this MFF shows that a sound framework to assess how the EU budget contributes to the EU's political objectives, is crucial to ensure effective and coherent policy action.


The Annual Management and Performance Report 2020 sets out how EU funding has been used in 2020, including for the COVID-19 response. Also here I refer to all the figures being laid down in the press release. The report demonstrates the substantial contribution of the EU Budget 2020 to alleviate the damaging impact of the COVID pandemics.


To conclude, the draft budget 2022 is an ambitious proposal respecting fully the MFF agreement. Together with NextGenerationEU, it provides a huge boost to the European economy, promotes green and digital transition, and also helps our neighbours and partner countries. Because we are toegether in the fight against the pandemic and future challenges to come.


Finally, I would say we are in a far more comfortable situation compared to last year when we were still negotiating the MFF and did not have the Own Resources Decision in place. This is all now in place and we will start rolling out all our instruments to become more resilient. Budget 2022 reflects all this.


We have come a long way in the past year. Let's now provide the necessary support to speed up Europe's recovery.






    Balazs UJVARI, Claire JOAWN