Inflation, interest rates and loan repayments: Renew Europe sounds the alarm on the EU budget situation
The sharp rise in reimbursement costs for the recovery plan is putting a strain on the European budget. This is the warning shot, sent in the form of a report adopted today by the Parliamentary Committee on Budgets (BUDG) with the full support of Renew Europe. While the recovery plan has made it possible to revive our economy in an unprecedented way and to take a giant step in the construction of Europe, its repayment terms have changed significantly since its launch in 2021. Interest rates have thus gone from 0.55% to more than 3% this year, whereas at the time we were counting on an increase limited to 1.15% until 2027.
At the time, Member States put a red line on the cap on Europe's ability to reimburse by refusing to take reimbursement costs out of ordinary expenditure. The consequence is that the coverage of the debt burden could now be done to the detriment of common policies such as Erasmus, and prevent the financing of new initiatives, in particular in favour of chips, essential to the strategic autonomy of the EU. The considerable delay taken by the Member States in creating new own resources to repay the loan, despite their commitment to do so, further complicates the situation.
It is high time that the European Commission proposes to revise the Multiannual Financial Framework, already eroded by high inflation, in order to take these costs out of the general EU budget. Renew Europe also urges the Council to take responsibility so that the EU can honour its debts while financing EU policies and priorities.
Valérie HAYER (Renaissance, France), Renew Europe coordinator within BUDG and European Parliament rapporteur for own resources, said: “The States have committed themselves to ensuring that the reimbursement of the European recovery plan is carried by the large polluters, importers of foreign CO2 and those who do not pay their fair share of tax. That's the deal. No cuts in Erasmus, in the CAP or other programs. Let’s go ahead."
Fabienne KELLER (Renaissance, France), shadow rapporteur for Renew Europe for the 2024 budget within BUDG and parliamentary rapporteur for the 2023 budget of the European Parliament, added: "Since the beginning of this mandate we have shown that the European Union was the relevant scale to deal with the crises and major challenges to come. We have demonstrated this in the face of the pandemic, the war in Ukraine, with the ecological and digital transition and investment in young people. If we want to live up to our ambitions, we must have a budget accordingly, without cutting essential programs. This is why I call on the Commission to revise the Multiannual Financial Framework as soon as possible”.