Social Europe

  • EU Forward Project
  • YouTube
  • Podcast
  • Books
  • Newsletter
  • Membership

Cohesion and progressivity: the Multiannual Financial Framework and Just Transition

Dencho Georgiev, Tatiana Houbenova-Delisivkova and Irena Ilieva 5th March 2020

The European Council failed to agree last week on a new budget. The optimum MFF cannot emerge from zero-sum bargaining.

Multiannual Financial Framework MFF cohesion
Dencho Georgiev

The legislative proposals on the new Multiannual Financial Framework and the Just Transition Fund pose a threat to the fundamental objectives of economic, social and territorial cohesion and solidarity among member states. They also contravene such values as equality, democracy and the rule of law, enshrined in the treaties of the European Union, which constitute the contrat social among the peoples of Europe.

Cohesion is much more than just one of the internal policies of the EU. It is one of the fundamental objectives listed in article 3 of the Treaty on European Union. And article 175 of the Treaty on the Functioning of the European Union requires that the ‘formulation and implementation of the Union’s policies and actions and the implementation of the internal market … shall contribute’ to its achievement.

Multiannual Financial Framework MFF cohesion
Tatiana Houbenova-Delisivkova

An important contributor to inequality in previous MFFs has been the Common Agricultural Policy, with its discriminatory system of payments to beneficiaries, with national co-financing by new member states only. This has increased inequalities and has not contributed to cohesion.

And a major problem with the legislative proposals for the new MFF is that once again not all policies and actions envisaged comply with article 175 TFEU. The proposed Just Transition Fund is about to become another major factor for divergence among member states. The underlying problem is that with its proposals the European Commission appears to strive for juste retour, rather than the solidarity among member states prescribed by article 3 TEU.

MFF
Irena Ilieva

Progressive financing

To solve the problem of compliance with EU objectives and values, a reform of the finances of the union is needed. This would eliminate, or at least reduce, the regressive features of the system and introduce progressivity in the financing of the various EU policies and actions.



Don't miss out on cutting-edge thinking.


Join tens of thousands of informed readers and stay ahead with our insightful content. It's free.



On the revenue side, in the union’s system of ‘own resources’, progressivity could be introduced for member states’ contributions, based on gross national income (GNI), with a coefficient which would reflect the percentage deviation of the respective member state from EU average GNI per capita.

Such a change, however, would require unanimity in the Council of the EU, which is unlikely to be achieved. Efforts to make the system simpler and fairer should, therefore, concentrate on countering the attempts by the commission to make the system more regressive by reintroducing rebates on some member states’ GNI-based contributions.

Moreover, the proposed new categories of own resources would not contribute to the achievement of the policy goals claimed and would not compensate the loss of revenue following ‘Brexit’, as is sometimes suggested. These new own resources—by reducing the share of the GNI-based resource, which is simpler and much fairer than the newly proposed ones—would only make the system more regressive.

Ensuring compliance

On the expenditure side—the financing of EU policies and actions—a suitable way of ensuring compliance with the objective of cohesion and with the requirements of article 175 TFEU would be a combination of EU funding with progressive national co-financing, respectively increasing or decreasing in proportion to the deviation of the given member state from EU average GNI per capita.

For example, the financing of the CAP, which still accounts for a large part of EU expenditure, could be made to comply with article 175 TFEU by introducing progressive national co-financing by member states with a per capita GNI above some threshold, such as the 90 per cent threshold of protocol 28 TFEU on economic, social and territorial cohesion. Such progressive national co-financing should be introduced for direct payments, which should be the same for farmers in all member states, and for rural development.

If the Just Transition Fund and other funds of the new MFF are to be truly just and comply with article 175 TFEU, they should provide for progressivity. Progressivity could be ensured by replacing the complicated and disguised regressivity of the allocation method of the Just Transition Fund by a simple and genuinely progressive mechanism, based again on the respective member state’s deviation from EU average per capita GNI.

Political bargaining

Progressivity should not be the result of case-by-case discretionary decisions by EU bodies nor of political bargaining among member states. It should apply automatically in the form of ‘progressive automatic stabilisers’, so as to help overcome economic inequalities among the member states and thereby progressively reduce and eliminate the amounts of—and, ultimately, the need for—financial transfers between them.

In order to comply with the rule of law, there should be no discretionary decisions by the commission or by other bodies on the distribution of funding. The allocations among member states (or to beneficiaries within them) should be fixed in advance in the MFF—for the various programmes and overall—and there should be no ‘flexibility’ to move funding between member states. Funding not used by a member state should not be returned to the EU budget but should remain available to that state in the next budgetary period, including for other policies or programmes.

The Green Deal seems to pose more problems than it can solve, especially for cohesion. Even with an increase of the MFF to 1.3 per cent of EU gross domestic product (as the European Parliament proposes), the prospect seems to be that cohesion will fall victim to the MFF and the Green Deal.

It is to be regretted that progressivity, which could be a solution to the problems of cohesion, is not a topic under consideration by the group of the Friends of Cohesion. Member states of that group could try to rescue cohesion by making a proposal in the council—for example by using the procedure of article 241 TFEU—to introduce progressivity in the 2021-27 MFF. As the challenge of reducing the gaps between the centre and the periphery and effective compliance with article 175 TFEU—indeed, compliance with core objectives and values of the EU—cannot be achieved without progressivity, the European Parliament could add it to the conditions for accepting the MFF.

Dencho Georgiev, Tatiana Houbenova-Delisivkova and Irena Ilieva

Dencho Georgiev is guest professor at the Centre for Economic Law and Governance of the Vrije Universiteit Brussels and vice-president of the Bulgarian Association of International Law. Tatiana Houbenova-Delisivkova is a professor at the Economic Research Institute at the Bulgarian Academy of Sciences and president of the Union of Economists in Bulgaria. Prof Irena Ilieva is director of the Institute for the State and the Law at the Bulgarian Academy of Sciences.

Harvard University Press Advertisement

Social Europe Ad - Promoting European social policies

We need your help.

Support Social Europe for less than €5 per month and help keep our content freely accessible to everyone. Your support empowers independent publishing and drives the conversations that matter. Thank you very much!

Social Europe Membership

Click here to become a member

Most Recent Articles

u42198344ce 92c9 4f54 9a14 edee35fb9221 3 Europe’s Quest for Technological Sovereignty: A Feasible Path Amidst Global RivalriesChristian Reiner and Roman Stöllinger
u4219834670ab 1 Reclaiming Sutan Sjahrir: The Quiet Moral Core of Democratic Socialism in Southeast AsiaDeny Giovanno
u421983467 4b96 a2b4 d663613bf43e 0 A Fair Future?  How Equality Will Define Europe’s Next ChapterKate Pickett
u42198346742 445d 82f2 d4ae7bb125be 2 A Progressive Industrial Policy for the Global South: A Latin American PerspectiveJosé Miguel Ahumada and Fernando Sossdorf

Most Popular Articles

u4219834676 bcba 6b2b3e733ce2 1 The End of an Era: What’s Next After Globalisation?Apostolos Thomadakis
u4219834675 4ff1 998a 404323c89144 1 Why Progressive Governments Keep Failing — And How to Finally Win Back VotersMariana Mazzucato
09d21a9 The Future of Social Democracy: How the German SPD can Win AgainHenning Meyer
u421983462 041df6feef0a 3 Universities Under Siege: A Global Reckoning for Higher EducationManuel Muñiz

Eurofound advertisement

Ageing workforce
The evolution of working conditions in Europe

This episode of Eurofound Talks examines the evolving landscape of European working conditions, situated at the nexus of profound technological transformation.

Mary McCaughey speaks with Barbara Gerstenberger, Eurofound's Head of Unit for Working Life, who leverages insights from the 35-year history of the European Working Conditions Survey (EWCS).

Listen to the episode for free. Also make sure to subscribe to Eurofound Talks so you don’t miss an episode!

LISTEN NOW

Foundation for European Progressive Studies Advertisement

Spring Issues

The Summer issue of The Progressive Post is out!


It is time to take action and to forge a path towards a Socialist renewal.


European Socialists struggle to balance their responsibilities with the need to take bold positions and actions in the face of many major crises, while far-right political parties are increasingly gaining ground. Against this background, we offer European progressive forces food for thought on projecting themselves into the future.


Among this issue’s highlights, we discuss the transformative power of European Social Democracy, examine the far right’s efforts to redesign education systems to serve its own political agenda and highlight the growing threat of anti-gender movements to LGBTIQ+ rights – among other pressing topics.

READ THE MAGAZINE

Hans Böckler Stiftung Advertisement

WSI Report

WSI Minimum Wage Report 2025

The trend towards significant nominal minimum wage increases is continuing this year. In view of falling inflation rates, this translates into a sizeable increase in purchasing power for minimum wage earners in most European countries. The background to this is the implementation of the European Minimum Wage Directive, which has led to a reorientation of minimum wage policy in many countries and is thus boosting the dynamics of minimum wages. Most EU countries are now following the reference values for adequate minimum wages enshrined in the directive, which are 60% of the median wage or 50 % of the average wage. However, for Germany, a structural increase is still necessary to make progress towards an adequate minimum wage.

DOWNLOAD HERE

S&D Group in the European Parliament advertisement

Cohesion Policy

S&D Position Paper on Cohesion Policy post-2027: a resilient future for European territorial equity

Cohesion Policy aims to promote harmonious development and reduce economic, social and territorial disparities between the regions of the Union, and the backwardness of the least favoured regions with a particular focus on rural areas, areas affected by industrial transition and regions suffering from severe and permanent natural or demographic handicaps, such as outermost regions, regions with very low population density, islands, cross-border and mountain regions.

READ THE FULL POSITION PAPER HERE

ETUI advertisement

HESA Magazine Cover

With a comprehensive set of relevant indicators, presented in 85 graphs and tables, the 2025 Benchmarking Working Europe report examines how EU policies can reconcile economic, social and environmental goals to ensure long-term competitiveness. Considered a key reference, this publication is an invaluable resource for supporting European social dialogue.

DOWNLOAD HERE

Social Europe

Our Mission

Team

Article Submission

Advertisements

Membership

Social Europe Archives

Themes Archive

Politics Archive

Economy Archive

Society Archive

Ecology Archive

Miscellaneous

RSS Feed

Legal Disclosure

Privacy Policy

Copyright

Social Europe ISSN 2628-7641

BlueskyXWhatsApp