How to speak EU budget: A recovery glossary

Don’t know your REACT-EU from your RescEU? POLITICO has you covered with this handy cheat sheet.

What the hell are they on about?

Discussions on the EU’s finances were already difficult enough to navigate, and then the corona crisis hit. Now the European Commission has come up with a revamped budget proposal and bolted on a brand new recovery fund.

And not even a global pandemic or historic recession can stop the Commission from inventing a dizzying array of new budget buzzwords to accompany its old favorites, and make sure nobody quite knows what they’re agreeing to.

As leaders meet over videoconference on Friday, POLITICO’s got you covered on the opaque world of new budget vocabulary.

MFF: When your mom is your best friend forever. Also the name of the EU’s seven-year budget. The Multiannual Financial Framework will run from 2021 to 2027 and the Commission wants it to be worth €1.1 trillion.

Recovery Instrument: Taking inspiration from Jack and the Beanstalk, the Commission wants countries to donate some beans and by 2024 they are going to grow into a magical crop worth €750 billion. Dutch Finance Minister Wopke Hoekstra doesn’t like beans. A major point of contention is that the Commission would raise money on the markets for this pot of cash — and EU countries will be responsible for paying it back over decades.

Next Generation EU: Star Trek series starring Ursula von der Leyen as Jean-Luc Picard. And a phrase used by the Commission to describe the €750 billion Recovery Instrument (see above).

Recovery and Resilience Facility: This may sound like a good place to book into the morning after a night at Moeder Lambic or an EU budget summit. In fact it’s a €560 billion part of the Recovery Instrument, aimed at supporting reforms and public investment. Not to be confused with the Recovery and Resilience Plans, the investment proposals that countries will have to draw up and agree with the EU in order to access the money.

Allocation keys: Not Alicia’s sister. These are the formulas that govern how the recovery money is distributed. They’re proving highly controversial: Get ready to brush up on ratios of inverse GDP and historical unemployment data.

Negotiating Box: Not an actual box. And if it was, it would be full of fudge. A document prepared by the president of the European Council outlining a possible EU budget compromise.

Traditional policies: The classics. Cohesion spending — intended to fund regional development — and the Common Agricultural Policy, which traditionally have made up the bulk of EU budget spending.

REACT-EU: Because if there’s one thing the EU is good at, it’s reacting quickly! Another part of the Recovery Instrument, REACT-EU would, under the Commission proposal, provide €50 billion in extra cohesion funding to member countries in 2021-2022. A further €5 billion would be available in the 2020 budget.

RescEU: A cold remedy. Also, an EU-funded program that allows the bloc to provide assistance such as emergency medical aid when a member country asks for help during a disaster.

Health4EU: Showing they’re down with the kids, the Commission is tapping into 1990s SMS lingo with this one. It may have echoes of an R&B group or a defunct mobile phone shop but it is in fact a €9.4 billion plan to beef up health services and increase European cooperation.

Frugal Four: Rubbish Marvel film. Austria, Denmark, Sweden and the Netherlands are the four in question and the least likely to buy a round of drinks in the pub. Used to be known as the “one percenters” for advocating a budget the equivalent of 1 percent of the bloc’s Gross National Income post-Brexit, as well as reductions to their budget contributions.

Visegrad Four: Sworn enemies of the Frugal Four. An alliance of the Czech Republic, Hungary, Poland and Slovakia. While this group meets frequently to coordinate on EU policy issues, including the budget, behind the scenes they are not always on the same page. Slovakia in particular is generally more open to compromising with western European countries.

Own Resources: Please give us more money! In Brussels-speak, Own Resources is often shorthand for a proposal for new sources of income for the EU budget, such as a digital tax or tax on big companies. Officially, all sources of income for the EU budget are own resources, and transfers from national budgets to the EU’s coffers are known as a GNI-based Own Resource — because each country contributes based on the size of its Gross National Income, with Germany the biggest payer.

Own Resources ceiling: Please give us more money part 2! The Commission wants to use the so-called headroom (not to be confused with 1980s digital icon Max Headroom) — the gap between the legal maximum amount of money that the EU budget can ask for from member states and what it actually spends — as a guarantee to raise money for the Recovery Instrument. The Berlaymont wants this ceiling to rise from 1.2 percent of GNI to 2 percent.

Rebates: The ghost of Margaret Thatcher lives on. Sometimes known as corrections, rebates are reductions to what countries pay into the EU budget. Thatcher famously negotiated a discount for the U.K., demanding “our money back,” but the majority of EU states now believe the system should be abolished. However, those countries that receive discounts — like the Netherlands — are fighting hard to keep them.

Conditionalities: Or, we’ve got our eye on you, Poland and Hungary. The idea that receiving EU money should be contingent upon certain criteria. Germany, France, Finland and the Netherlands are among the countries pushing for the distribution of EU money to be linked to respect for democratic norms. Then there’s Italy: northern states want to make sure one condition for accessing money is that economic reforms are actually implemented.

Andrew Gray and Laura Greenhalgh contributed to this article.

This article is part of POLITICO’s coverage of the EU budget, tracking the development of the seven-year Multiannual Financial Framework. For a complimentary trial, email [email protected] mentioning Budget.