The Multiannual Financial Framework (MFF) sets out the EU's long-term spending priorities and limits.
The annual EU budget is €142bn (2014 figures) – a large sum in absolute terms, but only about 1% of the wealth generated by EU economies every year.
Unlike most EU countries' national budgets, the EU budget covers a longer period – at least 5 and usually 7 years. Within this period – the multiannual financial framework – EU governments and the European Parliament cap annual EU spending in several areas (‘headings’).
The money from the budget is spent where it makes more sense to pool resources, rather than acting as individual countries – for example building better transport, energy and communications connections between member countries, improving the environment across the continent, making the European economy more competitive globally, and helping European scientists and researchers join forces across borders, for the good of Europe as a whole.
Deciding how much the EU will spend – and on what – is a democratic process. Based on the ceilings in the 7-year framework budget (multiannual financial framework), the EU adopts a budget every year, as follows:
The main part of the EU budget supports growth and jobs. A significant portion is also spent on European agriculture and rural development.
Top spending areas (2014)
EU budget pays for research and innovation
44.9% – smart and inclusive growth in the EU, broken down into:
41.6% – production of safe and secure food supplies, innovative farming and efficient and sustainable use of land and forests.
How is the EU budget spent according to the main budget headings? (2014 figures)
Within the EU
Examples of programmes & their budget in 2014:
EU budget 2014 by financial framework heading
Outside the EU
As a major global player, the EU has certain obligations to the outside world: promoting economic and social development, keeping the peace and helping victims of disasters and conflict.
Aid from the EU budget to countries outside the bloc breaks down into 3 main groups:
Examples of programmes in 2014:
About 94% of the budget funds real activities on the ground in EU countries and beyond. Each of the 508 million Europeans benefits in one way or another from the EU budget. It helps millions of students, thousands of researchers, cities, regions and NGOs.
About 6% of the budget. This includes administrative costs for all the institutions (mainly the European Commission, Parliament and EU Council) as well as the translators and interpreters needed to make information available in all of the EU’s official languages.
The largest institution, the Commission, recently cut staff numbers by 1% as part of a reform package expected to save €8bn by 2020, ultimately reducing headcount by 5%, while at the same time increasing working hours.
Updated in November 2014
This publication is part of the 'European Union explained' series