On December 10-11, 2020 the European Council overcame the veto imposed by Poland and Hungary on the approval of the Multiannual Financial Framework (MFF 2021-2027) and the Next Generation EU recovery package.

Thanks to the mediation of the German Presidency of the Council, in fact, the Heads of State and Government have reached a political compromise on the criteria that will be the basis for the activation of the new mechanism that will condition the European funding to the respect of the rule of law by the Member States.
The deal reached at the European Council complements the agreement concluded on November 10, 2020 between the Council and the European Parliament on the allocation of the new multiannual budget: €1.074 billion, with further €16 billion to be added for strenghtening the main EU flagship programs. Together with Next Generation EU - worth €750 billion - the total budget will reach €1.800 billion. A total of 30% of the resources must be allocated to climate action and the protection of biodiversity.
After receiving the green light from the Council, the multiannual budget was finally approved by the European Parliament on December 16. The Council will now have to formally approve the MFF regulation and the interinstitutional agreement, which will then be published in the EU Official Journal and enter into force on January 1st, 2021. The national parliaments of the 27 Member States will also have to ratify, in accordance with their internal constitutional rules, the decision on increasing the EU's own resources, which is essential to enable the Commission to borrow to finance the recovery plan.

In the meantime, the EU Council and Parliament are concluding the trilogues on the regulations establishing the 2021-2027 European programmes and funds. The political agreements reached will need to be technically transposed within their respective legal texts. Formal approval by the two co-legislators is expected in the first weeks of 2021.
In this regard, on the front of EU programmes directly managed, on December 7 the negotiators concluded the agreement on the InvestEU regulation. This instrument - designed to promote strategic, sustainable and innovative investments and address market failures, sub-optimal investments or their gap in certain sectors - will benefit from an EU budget guarantee of € 26.2 billion, divided into four areas of intervention, with the aim of mobilizing up to €400 billion of additional investment.
On December 10, an agreement was reached on the regulation of Horizon Europe, the new EU framework programme dedicated to research and innovation. With a budget of €95.5 billion, it will introduce important innovations, such as the establishment of the European Innovation Council (EIC), EU research missions and broader synergies with other existing European programmes and funds.
The agreements on the new Erasmus+ programme and the European Solidarity Corps were reached on December 11. Erasmus+, the flagship programme for education, training, youth and sport in Europe, will focus more on inclusion and will have a broader scope, allowing adults enrolled in training to also participate in mobility programmes. Inclusion will also be central in the case of the European Solidarity Corps, dedicated to youth volunteering activities, while the age limit for working in the humanitarian sector will be raised to 35.
On December 14 an agreement was reached on the regulation of the new European Defence Fund. The instrument - which will receive around €7.9 billion - will promote cooperation between companies, research players and Member States, also encouraging the participation of SMEs, in order to develop cutting-edge defense technologies.
Negotiations have also been completed for the Digital Europe programme. With a capacity of €8.2 billion, the instrument will focus on key areas such as the development of high-performance computing (€2.2 billion), artificial intelligence (€2.1 billion), cybersecurity infrastructure and technologies (€1.7 billion), and advanced digital skills (€580 million).
The agreement on the Creative Europe programme confirmed the allocation of more than €2.4 billion for the benefit of the European cultural and creative sectors. In this framework, the media sector will be supported for the first time through actions aimed at promoting media literacy, pluralism and media freedom.
Finally, with regard to the new EU4Health programme, the agreement reached on December 14 confirmed the proposal to allocate 20% of the total funds foreseen - worth € 5.1 billion - to the prevention of diseases and health promotion, to support the creation of a European health data space and to strengthen the national health systems in the event of future outbreaks. 

With regard to European programmes under shared management, negotiations on the Common Provisions Regulation were concluded on December 1, 2020. It will govern eight funds/programs, including those for cohesion policy, such as the European Regional Development Fund (ERDF) and the European Social Fund (ESF+). The regulation defines EU co-financing rates for different European regions, some important practices of administrative simplification and economic governance, and horizontal principles to be respected to access funding.
On December 3, it was the turn of the agreement on the Regulation for the European Territorial Cooperation (Interreg). The Interreg programme - endowed with €8 billion - will finance cross-border cooperation (72.2% of the total), transnational cooperation (18.2%), interregional cooperation (6.1%) and for the first time projects for the outermost regions (3.5%).
On December 8, an agreement was finalized on the detailed regulation that will govern the ERDF and the Cohesion Fund. The ERDF, which will have to allocate at least 30% of its resources to the green transition, will include for the first time a European Urban Initiative for sustainable development and an Interregional Innovation Investment Initiative (I3), concerning the areas of S3 strategies for intelligent specialization.
Finally, with reference to the Common Agricultural Policy (CAP), negotiators already agreed in November 2020 on the extension of the current rules until the end of 2022 - pending the entry into force of the CAP reform, scheduled for 2023 - and the distribution to European farmers of €8.07 billion of Next Generation EU as of January 1, 2021.

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