Thread by @lucasguttenberg

The #Eurogroup has decided last night on the main features (in the form of a "term sheet") of the new #Eurozone budget aka BICC. It clarifies some parts (not exactly for the better) but kicks the can down the road on quite some important points.
Thread:

consilium.europa.eu/en/press/press…

1/ The BICC is supposed to support public investment and reforms in member states. What exactly falls under this will be subject to "strategic guidance". My reading here would be: As long as you bring a good reason, you will get the money.

2/ Which means that the pre-allocation of funds is key: "[It] will be determined on the basis of a transparent methodology, taking into account parameters reflecting the overarching aim of the instrument and legal basis." This is Brusselese for "We have no agreement here yet."

3/ Furthermore, it says that "The available funds per country should be within an acceptable range of the contributions of that country." This is what we call "juste retour" in the context of the EU budget. But again here obviously no agreement on what an "acceptable range" is.

4/ Finally, member states will need to co-finance. But: "The national co-financing rate could vary based on a predictable and transparent commonly agreed procedure defined ex-ante involving euro area Member States." That's right, no agreement here either.

5/ So for the expenditure side, we only know that funds will be pre-allocated, a reasonable share of what countries contribute will need to flow back, and there might be variable co-financing rates. This sounds a lot like the EU budget today. And like a lot still tbd.

6/ On the financing side, most interesting is the complete absence of any reference to an intergovernmental agreement (IGA). This was supposed to open the door to allocating non-MFF-budget ressources to the BICC (see e.g. D-F contribution this February).
sven-giegold.de/wp-content/upl…

7/ Instead, it seems funds will have to come completely from within the MFF. And even though the exact size will need to be determined, it's hard to see that this will go beyond what the Commission had proposed for its Reform Delivery Tool - about 17 bn for 7 years.

8/ Last week I argued that we should judge the new budget in terms of its scalability and flexibility. On scalability, without an IGA, this looks rather grim. On flexibility, the truth is we don't really know - a lot of relevant parts remain open.

https://twitter.com/lucasguttenberg/status/1136539735395094529

9/ Where does this leave us? If I read that correctly, the #EuroSummit next week has no open issues to decide. Instead, the next round will be the Commission having to propose a legal act - and then a new fight over the details in the context of the MFF negotiations.

10/ It seems like we will get a fiscal instrument for the Eurozone. That's a good symbolic gesture. But given its likely design, I remain sceptical that it will be of any real use - while it will probably block the way for better solutions further down the road.