Yesterday the European Parliament discussed the 2023 EU budget, a discussion that will shape the conciliation process with the Council, scheduled from 25 October to 14 November. If negotiators reach an agreement within the next three weeks, the budget for 2023 should receive formal approval around year-end, in November or December.
It should be noted that the 2023 budget marks the second year of the current multiannual framework for 2021-2027, while simultaneously closing the payments from the preceding framework for 2013-2020 under the n+3 rule. This dual timing underscores the budget’s role in bridging two financial perspectives and ensuring a smooth transition for funding flows.
Concerns about the budget structure
During the debate, three serious reservations about the current 2023 budget were voiced. The first major issue concerns the level of payment appropriations, which remain too low. With 2023 being the second year under the 2021-2027 framework and the final year for settling payments from 2013-2020, the budget needs sufficient headroom to honor obligations as they arise. A shortfall would risk unpaid bills and reputational damage to the EU, a failure that would be particularly regrettable given prior experiences from 2014-2016.
There is concern that the allocations for payments have been planned conservatively. This raises questions about whether enough resources will be available to cover all needs, especially in heading 2a. The margin for free payment appropriations was reduced after a correction letter from the European Commission on 5 October, shrinking from over 5.5 billion euros to about 3.3 billion euros, a reduction of more than 2.2 billion.
In addressing these concerns, the Speaker pressed Budget Commissioner Johannes Hahn, who attended the plenary, to consider the implications of insufficient payment appropriations. The message was clear: insolvency would not reflect well on the European project.
Inflation and its impact
The second concern centers on inflation forecasts. The latest estimates show a rate above 10 percent, with a peak anticipated in the spring following the heating season and possibly several percentage points higher. This scenario affects all budget lines, especially the indexation of staff salaries across EU institutions for the coming year. While the final budget set the wage indexation at 6.9 percent, a July proposal had suggested 8.6 percent.
Rising inflation can drive wage pressures, potentially triggering a second round of price increases as workers seek to protect living standards in the face of higher costs of living.
The third concern relates to means for Ukraine. The proposals in the European Commission’s amendment were not enough to significantly boost resources for countries hosting refugees. The ongoing Russian aggression has stressed energy infrastructure and heating in major cities, and a fresh wave of refugees could arrive as winter approaches. Poland, for instance, has already borne nearly 9 billion euros in costs for refugee relief, highlighting the strain on host nations and the need for meaningful EU support beyond symbolic figures in 2023.
The overall view is that the 2023 budget should better reflect current pressures, including energy-related needs and refugee assistance, while maintaining the EU’s ability to meet its payment obligations without risking delays or arrears.