EUROPEAN COMMISSION

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COM(2024) 401 final

REPORT FROM THE COMMISSION

TO THE EUROPEAN PARLIAMENT, THE COUNCIL AND THE COURT OF AUDITORS






































Annual Management and Performance Report for the EU Budget - 2023 financial year

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Annual Management and Performance Report for the EU Budget – Volume I – 2023 financial year

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Annual Management and Performance Report for the EU Budget – Volume II – Annexes – 2023 financial year

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Annual Management and Performance Report for the EU Budget – Volume III – Technical annexes – 2023 financial year

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Annual Management and Performance Report for the EU Budget

2023 financial year

Volume I

Contents

The EU budget delivers on priorities in times of crisis    

Revised recovery and resilience plans driving targeted reform and investment    

Effective tools ensure that the EU budget is well-managed and safeguarded    

The conditionality regime continues to contribute to the protection of the EU’s financial interests    

Management conclusion    

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The EU budget delivers on priorities in times of crisis

Introduction

This Commission’s term has been marked by a string of unprecedented crises requiring fast and effective solutions to protect people’s lives and livelihoods in the European Union. 2023 was yet another significant year, in which the EU continued to meet the aspirations of its citizens and to address challenges as they emerged. At the same time, the European Commission stayed the course on the six priorities set out at the beginning of its term and devised comprehensive solutions, especially in relation to the twin green and digital transitions.

The EU is equipped with its most powerful long-term budget ever, along with the landmark NextGenerationEU recovery plan. This plan is at the heart of the EU’s response to the consequences of the COVID-19 pandemic. It is also driving the economic transformation of the EU.

The NextGenerationEU recovery plan for Europe is the EU’s EUR 807 billion programme to support the economic recovery from the impact of the COVID-19 pandemic and build a greener, more digital and more resilient future ( 9 ). The Recovery and Resilience Facility makes up 90% of the budget of NextGenerationEU. The facility is a performance-based financing instrument that gives Member States the flexibility to design and implement reforms and investments that best serve their national needs, as also identified at the EU level, in full respect of the objectives of the green and digital transformations.

As the EU recovered from the effects of the pandemic and continued building a more competitive and resilient economy, Russia’s war of aggression in Ukraine intensified in 2023, with a wide range of devastating consequences. The geopolitical situation deteriorated further after the terrorist attacks by Hamas on Israel on 7 October, followed by a full-blown war in Gaza that has had a catastrophic impact on the humanitarian situation there. The EU budget and NextGenerationEU have enabled the EU to support Ukraine and to address the consequences of the wars in Europe and the Middle East, including the disruption of energy markets and high inflation, along with natural disasters and humanitarian crises.

Although the EU budget has played a strong and effective role in addressing unexpected crises in recent years, there is a limit to what it can do. In 2023, not even halfway through the current multiannual financial framework, the framework’s flexibility was being depleted. Therefore, to ensure that the EU budget had the most essential funding to be able to deliver on shared priorities and needs, the European Commission proposed a targeted revision of the multiannual financial framework. This led to an agreement in February 2024 on the midterm revision of the EU’s long-term budget. This included, for the first time ever, a revision of its expenditure ceilings.

In line with the priorities identified by the Commission, this allows the EU to provide stable support to Ukraine in the coming years, to continue addressing migration and external challenges and to strengthen Europe’s competitiveness and sovereignty by means of the Strategic Technologies for Europe Platform, among other initiatives. However, the midterm revision of the multiannual financial framework did not include the proposed increase in the ceiling on administrative expenditure (known as heading 7), which was meant to address the substantial additional tasks for the EU administration and the pressure caused by rising inflation.

Overview of the midterm revision of the EU’s long-term budget for 2021-2027

Source: European Commission

Maintaining support for Ukraine

In 2023, the EU budget continued to provide support to Ukraine in the face of Russia’s unprovoked and unjustified war of aggression and its illegal annexation of parts of Ukrainian territory. By the end of the year, the EU and its Member States had made available close to EUR 85 billion in overall assistance to Ukraine and its people since the start of the war. This includes EUR 25.2 billion in macrofinancial assistance, including an unprecedented support package of EUR 18 billion of highly concessional loans for Ukraine in 2023 alone through the Macro-Financial Assistance Plus instrument. On top of that, around 100 000 tons of in-kind assistance under the EU Civil Protection Mechanism worth around EUR 300 million have been provided to Ukraine turning this into the longest, the largest and the most complex EU Civil Protection Mechanism operation to date. In addition to support from the EU budget, assistance, including military assistance, to Ukraine from the EU and its Member States totalled over EUR 27 billion, including EUR 6.1 billion from the European Peace Facility.

Macrofinancial assistance is a type of financial aid provided by the EU to help partner countries that are facing serious financial difficulties to stabilise their economies and make the necessary reforms. These funds are helping Ukraine to continue to pay wages and pensions; to keep essential public services running, such as hospitals, schools, and houses for relocated people; and to restore critical infrastructure. In addition, these funds are also helping Ukraine to carry out institutional reforms, such as anti-corruption and judicial reforms, that are crucial to the country’s progress.

In addition to the macrofinancial assistance provided to Ukraine, the EU made available funds from cohesion policy to Member States to welcome those fleeing from war in Ukraine. The Cohesion’s Action for Refugees in Europe and Flexible Assistance to Territories packages were proposed in 2022 to provide the necessary flexibility in cohesion-policy funding rules. By the end of 2023, these measures made available EUR 15.3 billion for social integration programmes, healthcare, food, basic assistance and job market orientation. Activities that were supported included language courses, education, social services and childcare.

EU budget contributions to help Ukraine and Member States face the consequences of the war 
in 2022 and 2023

Allocations to Ukraine and Member States to face the consequences of the war from the EU budget and outside the EU budget for the European Peace Facility in 2022 and 2023..

(*) Support under cohesion policy refers to flexibility offered through the Cohesion’s Action for Refugees in Europe and Flexible Assistance to Territories packages, covering a combination of amounts invested (or reprogrammed) and liquidity lines made available to Member States.

(**) Horizon Europe, EU4Health, European Instrument for International Nuclear Safety Cooperation, Common Foreign and Security Policy.

Source: European Commission.

In 2023, Moldova and Ukraine became participating states of the  EU Civil Protection Mechanism  – the European solidarity framework that helps countries hit by disasters. In response to the disastrous destruction of the Nova Kakhovka dam in June 2023, the EU mobilised immediate assistance to Ukraine in various ways: via its Civil Protection Mechanism, through the deployment of its rescEU reserves and via its humanitarian partners.

Russia’s deliberate blocking of grain exports via the Black Sea, by targeting grain silos and agricultural infrastructure in Ukraine and limiting the export of agricultural goods and fertilisers, led to a worsening of the world food security crisis. To tackle this, the EU, its Member States, Moldova and Ukraine, together with international financial institutions set up the EU–Ukraine Solidarity Lanes in 2022 to get grain blocked in Ukraine out to the rest of the world. This work continued in 2023. As Ukraine plays a crucial role in the global supply of cereals and oilseeds, the war has created great uncertainty and volatility on these markets. Russia’s blocking of Ukraine’s usual export routes has also led to an increase in Ukrainian exports to neighbouring EU Member States. Therefore, in 2023, the EU introduced two support packages. More than EUR 156.3 million was provided from the common agricultural policy agricultural reserve to support those farmers most affected in the five Member States neighbouring Ukraine. In a third support package, the European Commission mobilised an additional EUR 330 million of funding to be allocated to EU farmers in other Member States impacted by high input costs and specific problems, caused in particular by the Russian war of aggression. The EU also disbursed EUR 2.8 billion in 2023 to address food insecurity and to promote sustainable food systems globally.

A major global financial effort will be required to rebuild Ukraine once the war is over. The EU is already contributing substantially to boosting the country’s resilience. Ukraine is also gradually benefiting more from its integration into existing EU programmes, such as the single market programme, the LIFE programme, Erasmus+, Horizon Europe, the Connecting Europe Facility and the creative Europe programme. The EU has also suspended Ukraine’s financial contribution obligation for its association to EU programmes for as long as the country’s financial challenges caused by the war remain. However, much more support will be needed in the medium to long term to re-establish the foundations of a free and prosperous country, anchored in European values and properly integrated into the European and global economies, and to support Ukraine on its way towards EU membership.

To help Ukraine in its recovery, reconstruction and modernisation efforts, the EU has launched a new support mechanism for 2024-2027. The Ukraine Facility is a dedicated instrument that will allow the EU to provide Ukraine with up to EUR 50 billion in stable and predictable financial support during this period, including up to EUR 17 billion in non-repayable support and up to EUR 33 billion in loans. The facility underlines the EU’s commitment to supporting Ukraine in the face of Russia’s ongoing war of aggression and on its path towards EU membership. It will provide direct financial support and accession assistance to Ukraine and establish a specific investment framework. To finance the loans to Ukraine, the EU will issue bonds on the financial markets until the end of 2027. Ukraine has committed to implementing its recovery and reform plan and to upholding democratic mechanisms.

Aims of the Ukraine Facility

The European Commission and Ukraine will need to protect the EU’s financial interests by combating fraud, corruption and conflicts of interest. To this end, in 2023, Ukraine cooperated with the European Court of Auditors and the European Anti-Fraud Office, appointed the new head of its Specialised Anti-Corruption Prosecutor's Office (a post that had been vacant since August 2020) and adopted a national anti-corruption strategy and its related implementation programme. Moreover, in March 2024, Ukraine joined the EU anti-fraud programme, which is handled by the European Anti-Fraud Office.

The EU’s response to the Middle East crisis

In addition to the enduring war in Ukraine, the terrorist attacks by Hamas against Israel on 7 October 2023 and Israel’s ensuing military action in Gaza have have led to a drastic deterioration in the geopolitical landscape and caused a humanitarian catastrophe in Gaza. This has also increased the risk of escalation in the region. Emphasising that there is no justification for terror, the European Commission has condemned Hamas in the strongest possible terms for the terrorist attacks.

With the rise in antisemitic and anti-Muslim hate speech and hate crime experienced in autumn 2023, the European Commission mobilised the Internal Security Fund to provide EUR 30 million to help Member States protect public spaces and places of worship. Seriously concerned by the deteriorating humanitarian situation in Gaza, the European Commission quadrupled its humanitarian aid, mobilising more than EUR 100 million in 2023, and has been working on overcoming access restrictions in providing humanitarian support to the Palestinian people, in order to guarantee a sustained, regulated and robust flow of aid, working together with several Member States and international partners.

EU humanitarian support to the Palestinian people in 2023

Source: European Commission

Strengthening the EU’s security and defence capabilities

Given the increasingly unstable geopolitical situation and the need to reinforce the EU’s ability to provide security and protection across the continent, the European Commission has been stepping up security and defence efforts. 2023 saw the enactment of two key initiatives aimed at strengthening the EU’s defence industry.

1.The Act in Support of Ammunition Production, backed by a budget of EUR 500 million, aims to improve and expedite the EU’s ammunition and missile production. 31 projects covering five areas (explosives, powder, shells, missiles, and testing and reconditioning certification) were selected to assist European industry in increasing its ammunition production and readiness. It is a direct response to the European Council’s March 2023 call to urgently deliver ammunition and, upon request, missiles to Ukraine, along with helping Member States to refill their stocks.

2.Complementing this, the European Defence Industry Reinforcement through Common Procurement Act, with a budget of EUR 310 million, will motivate EU Member States, for the first time ever, to jointly purchase critical defence products from the EU defence industry.

Moreover, the European Defence Fund, with a budget of EUR 8.9 billion under the 2021-2027 multiannual financial framework ( 10 ), provides essential support to defence research and development in the EU. It has provided over EUR 2.9 billion for 101 collaborative research and development projects across Member States in 2021 and 2022, with EUR 1.2 billion allocated in 2023. Furthermore, under the military mobility allocation of the Connecting Europe Facility, EUR 808 million was awarded in 2023 to support the transport of troops and equipment across the trans-European transport network, investing in infrastructure that can be used for both civil and military purposes.

Strenghtening partnerships globally

In 2023, the EU and its Member States together remained the world’s largest provider of official development assistance. To advance sustainable development goals globally and to strengthen Europe’s role in the world, the Commission also moved forward in 2023 with the Global Gateway strategy which draws from financial resources of the EU budget and from the Member States. The EU made significant progress in rolling out the Global Gateway – launching 225 new flagship projects across Africa, Latin America, the Caribbean, Asia, the Pacific, the Western Balkans and the Eastern and Southern Neighbourhoods for 2023 and 2024. At the Summit of the EU and the Community of Latin American and the Caribbean States in July 2023, the EU launched the Global Gateway Investment Agenda which is expected to mobilise over EUR 45 billion in the that region by 2027. The EU is also progressing with the implementation of the EUR 150 billion Africa–Europe Global Gateway Investment Package and new Team Europe initiatives.

The long-awaited Post-Cotonou Agreement known as Samoa Agreement was signed in November 2023 with 64 partner countries marking the beginning of a revitalised EU-Organisation of African, Caribbean and Pacific States partnership. Strategic partnerships on mutually beneficial raw materials value chains were concluded with Argentina, Chile, the Democratic Republic of Congo, Greenland, and Zambia in 2023, in addition to the previously agreed ones with Namibia, Kazakhstan, Ukraine and Canada.

Supporting border control and addressing migration pressure

The migration pressure at the EU’s external borders remained significant in 2023. Over 1 million people applied for asylum in the EU in 2023, marking a significant increase of 20% compared to 2022. To address this challenge, Member States have made use of the Asylum, Migration and Integration Fund to improve reception facilities, particularly for children. Additionally, they have prioritised integration support for migrants, focusing on vulnerable groups such as unaccompanied minors. The fund has also played a vital role in supporting Member States facing arrivals of displaced people from Ukraine fleeing the war who were granted temporary protection under the temporary protection directive. Emergency assistance was also mobilised following the surge in migrant arrivals on Lampedusa in September 2023, when more than 6 000 migrants landed on the Italian island in only 3 days.

In February 2023, the European Council called on the European Commission to prioritise funding measures that strengthen control of the EU’s external borders. The Border and Visa Instrument’s Thematic Facility was used in 2023 to invest nearly EUR 448 million in boosting Member States’ border management capabilities. This included tackling the instrumentalisation of migrants at the borders with Belarus and Russia, supporting Bulgaria and Romania in facing increased pressure on the Western Balkans route, strengthening the operational capacity of the European Border and Coast Guard Agency and optimising border controls in several Member States.

Continuing to deliver on the Commission’s long-term priorities

To deliver on the promises made in 2019, the College of Commissioners has steered work during its mandate to meet six headline ambitions. The world has undergone radical changes since 2019, however. The crises of recent years have profoundly shaken deeply anchored certainties, including on the role of the EU, on economic and solidarity models and on the rules-based multilateral international order. But the headline ambitions still hold – in many areas more so than ever, for the benefit of the EU and its citizens Throughout 2023, the European Commission continued to deploy major policy and legislative initiatives to achieve the long-term priorities.

The EU budget is the EU’s most powerful tool for delivering on its common policy agenda and investing in projects of EU added value. Through its programmes, the EU budget, directly or indirectly, supports the EU’s internal and external policies. In 2023, a large number of EU programmes under the 2014-2020 and 2021-2027 long-term budgets continued to deliver results to the public. Total commitment appropriations for the long-term EU budget in 2023 amounted to almost EUR 182 billion, and those for NextGenerationEU amounted to nearly EUR 238 billion.

Multiannual financial framework: 2023 EU budget commitment appropriations by budget heading (million EUR)

Source: European Commission

The EU budget focuses on delivering long-term value to the EU. All EU funding programmes have continued to make progress towards their performance targets. They promote the EU’s sustainability and prosperity. For example, the budget is essential to delivering on the twin green and digital transitions. In 2023, a record EUR 160 billion ( 11 ) is estimated to be dedicated to mainstreaming climate objectives, EUR 20 billion on mainstreaming biodiversity objectives and EUR 79 billion on digital priorities.

EU budget and NextGenerationEU allocation to horizontal priorities in 2023 (percentage of total budget and estimated amounts in million EUR)

Source: European Commission.

Annex 1 to this report provides a full summary of the EU budget’s performance in 2023. It first presents aggregate information about the overall implementation of the EU budget and its various spending programmes. It then focuses on how the EU budget supported the European Commission’s headline ambitions listed above. It draws from the annual activity reports and programme performance statements ( 12 ) of the Commission’s departments to provide concrete and telling examples of the EU budget’s performance. This includes key policy developments and support provided to Ukraine under various spending programmes. The annex also describes how the European Commission tracks and reports on what is spent on specific policies and horizontal priorities (‘mainstreaming’) through the EU’s programmes. This concerns, in particular, the financing of initiatives with objectives relating to the climate, biodiversity, gender equality and the sustainable development goals. Information on the contribution of the EU budget to the European Commission’s priority of promoting the digital transition is also provided.

Revised recovery and resilience plans driving targeted reform and investment

In 2023, the Recovery and Resilience Facility continued to support economic recovery and reforms in the Member States. The focus was on the revision of the Member States' recovery and resilience plans to accommodate changed circumstances and new challenges (e.g. inflation and Russian aggression against Ukraine), which led to an additional allocation of EUR 147.2 billion to Member States, to be used by 2026, split into EUR 21.6 billion in grants and EUR 125.5 billion in loans. This resulted in a total amount allocated of EUR 648 billion, EUR 357 billion grants and EUR 291 billion loans, allocated at the end of 2023.

A key feature of the revision was the addition of specific REPowerEU chapters aimed at addressing the challenges and disruptions in the energy market caused by Russia’s war of aggression in Ukraine. A total of 31 revisions to plans were adopted in 2023 with the support of the Technical Support Instrument, 23 of which included REPowerEU chapters ( 13 ). These approved REPowerEU chapters included more than EUR 60 billion for reforms and investment to save energy, substitute fossil fuels and address immediate security-of-supply needs, while reducing dependency on Russian fossil fuels. The REPowerEU chapters have also further increased the ambitions of the Recovery and Resilience Facility regarding the green transition. With the 27 revised recovery and resilience plans, more than 42% (EUR 275 billion) of the total Recovery and Resilience Facility allocation will finance investments and reforms supporting the green transition, including energy efficiency, renewable energy, electricity grids and other green investments. By December 2023, a total of EUR 1.5 billion had already been transferred from the total Innovation Fund’s contribution to REPowerEU actions for the period 2023 - 2026, set at EUR 12 billion.

Key climate and energy commitments for 2026 under the Recovery and Resilience Facility

In 2023, the European Commission disbursed a total of EUR 75 billion (including EUR 28.7 billion in loans) corresponding to payment requests from Member States, along with additional pre-financing payments of EUR 7.1 billion. This brought the total disbursements by the end of 2023 to EUR 220.8 billion, divided into EUR 141.6 billion in grants (40% of the total EUR 357 billion allocated for grants under the Recovery and Resilience Facility envelope) and EUR 79.2 billion in loans (27% of the total EUR 291 billion allocated for loans under the envelope).

The Recovery and Resilience Facility is making a difference in the lives of EU citizens. Its major achievements include the following ( 14 ).

·Green transition. By the end of 2023, thanks to the facility, annual energy consumption had been reduced by 28.2 million megawatts and more than 530 000 refuelling and recharging stations for clean vehicles had been installed or upgraded.

·Digital transition. More than 5.6 million additional homes had gained access to very-high-capacity internet networks by the middle of 2023, and 309 million users were already using new or improved public digital services ( 15 ).

·Healthcare. Healthcare capacity has been increased, including in hospitals, clinics, outpatient care centres and specialised care centres. By the end of 2023, thanks to the Recovery and Resilience Facility, up to 45.8 million people annually could benefit from a new or modernised healthcare facility.

·Education and training. 8.7 million people had participated in education and training and 5.8 million young people aged 15–29 had received support, whether monetary or in kind (i.e. education, training and employment support), thanks to measures supported by the facility by the end of 2023.

·Support for businesses. Almost 2 million enterprises had received support – whether monetary or in kind – under the facility by the end of 2023.

The Recovery and Resilience Facility is designed to support major reforms and enhance the quality of investments in the Member States ( 16 ). The implementation of the national plans was broadly on track at the end of 2023, with progress on most milestones and targets being in line with initial expectations. While the vast majority (82%) of the milestones and targets planned to be achieved by the end of 2023 were either assessed as fulfilled by the European Commission (35%) or reported by the Member States as being completed (47%) by that time, a number of Member States need to accelerate the submission and improve the completeness of payment requests in view of the 2026 deadline. At the time of reporting, over 80% of the milestones and targets planned to be achieved by the third quarter of 2024 were reported as being on track for timely implementation. Only a minority were marked as being delayed (18%). 

The reforms triggered by the Recovery and Resilience Facility not only make the Member States more resilient in the long term, but also improve the conditions for the successful delivery of the related investment under the facility and the cohesion policy funds ( 17 ). This happens, for instance, by modernising regulatory frameworks in key sectors (e.g., digital, renewables, transport), improving permitting and public procurement procedures and strengthening the rule of law and anti-corruption safeguards. The recovery and resilience scoreboard ( 18 ) contains real-time information about the implementation of the Recovery and Resilience Facility, and information about concrete projects supported under the facility is available in an interactive map that is updated regularly ( 19 ).Building on the NextGenerationEU diversified funding strategy, the European Commission included all borrowing operations in 2023 under a unified funding approach whereby the Commission only issues EU-Bonds rather than separately denominated bonds for individual programmes. During the year, the Commission raised a total of EUR 115.9 billion through the issuance of EU-Bonds. The largest share of these funds was used to make disbursements to Member States under the Recovery and Resilience Facility. Almost EUR 12.5 billion was issued in the form of green bonds. This means the EU is well on track to becoming one of the world’s largest green bonds issuers. In December, the European Commission published the first NextGenerationEU green bond allocation and impact report, which confirms the EU’s commitment to sustainable finance.

Further information on the implementation and management of the Recovery and Resilience Facility is provided in Annex 3 to this annual management and performance report.

Effective tools ensure that the EU budget is well-managed and safeguarded

The European Commission attaches great importance to making the best possible use of taxpayers’ money. It is fully committed to ensuring that funding reaches the intended beneficiaries at the right cost and in compliance with the applicable rules. To achieve this objective, the Commission relies on a number of tools that have proved to be fit for purpose over the years, and have also proved to work in relation to the new challenges encountered by the EU.

A robust chain of accountability

The European Commission’s governance system and chain of accountability are tailored to its unique structure and role. The College of Commissioners is politically responsible for managing the EU budget. It delegates the day-to-day operational management to the 51 authorising officers by delegation ( 20 ), who manage and steer their departments and are accountable for the share of the EU budget implemented in their department.

The annual activity reports transparently demonstrate how the authorising officers by delegation have obtained the assurance that resources assigned to them have been used in accordance with the principle of sound financial management and that the control procedures in place give the necessary guarantees concerning the legality and regularity of the underlying transactions. If the authorising officers by delegation identify weaknesses, they may qualify their declaration of assurance with reservations.

The assurance is built on: (1) an assessment of the internal control system, including anti-fraud measures; (2) the results of the controls carried out and their assessment of the risks to which their department is exposed and the mitigating measures taken; (3) the preventive and corrective measures they have applied as a result of the controls they have carried out, together with the Member States in the case of shared management; (4) the observations and conclusions of the internal auditor and of the European Court of Auditors; and (5) the mitigating measures taken to address the weaknesses identified, i.e. the high-level risk areas.

An internal control framework and measures to fight fraud that are continuously updated

The European Commission’s internal control framework is crucial to ensuring the effectiveness, efficiency and economy of its operations, along with their legality and regularity. This is especially true in a context of scarce resources and an increasing number of priorities. In 2023, the Commission continued to adapt its internal control framework as needed, for instance to implement the Recovery and Resilience Facility, build on the experience gained, further fine-tune and develop specific audit and control strategies, and publish new guidance documents for the Member States. In view of the implementation of the new programmes for the 2021-2027 period, other audit and control strategies have also been revised to take into account the new features and technological evolutions. Based on the departments’ self-assessment, the Commission considers that its internal control systems are functioning well, with a few weaknesses identified for which mitigating measures are in place.

On the fight against fraud, the European Commission revised its anti-fraud strategy action plan and further promoted the use and effectiveness of the early detection and exclusion system, which aims to prevent and tackle fraud. Based on the Commission’s proposal, the political agreement by the co-legislators on the recast of the financial regulation includes a proportionate extension of the scope of application of the early detection and exclusion system, to better protect the EU budget from fraud and irregularities. The legislator also agreed to Member States´ compulsory feeding of key data into a single integrated information technology system for data mining and risk scoring to access and analyse data on the recipients of EU funding and allow the identification of contracts and recipients that might be susceptible to risks. Important political initiatives, in particular on ethics and the fight against corruption, were also put in place in 2023, in particular a Commission proposal for a directive to combat corruption by means of criminal law and a joint communication proposing to establish a regime of sanctions against serious acts of corruption committed outside the EU ( 21 ).

Control results that confirm the EU budget is well protected

As part of their control strategies, within the internal control framework, the European Commission and the Member States perform hundreds of thousands of checks every year to prevent, detect and correct errors and weaknesses in the control systems. For shared management, the Commission relies on the checks carried out by the national authorities and supervises them with its own controls and audits where necessary, in line with the single-audit principle, which rationalises audit and control and minimises the audit burden on beneficiaries. This is similar for indirect management, where the Commission relies on implementing partners’ checks, whereas for direct management it is the Commission itself that performs the controls. For the Recovery and Resilience Facility, checks and controls are performed according to a clear division of responsibilities between the European Commission and the Member States.

As a result of these controls and audits, preventive and corrective measures totalling EUR 3 836.7 million were implemented in 2023. EUR 2 399.1 million is the amount of errors prevented, as a result of controls and audits carried out before payments take place, and EUR 1 437.6 million is the amount of corrections implemented by the Commission and the Member States, as a result of controls and audits carried out after payments take place.

Based on these controls and audits, the European Commission estimates the risk at payment, measuring the risk that payments made are not legal and regular. It has remained stable since 2020, at 1.9%. This is close to the materiality threshold of 2%. This is consistent with the fact that expenditure still mostly relates to the 2014-2020 programming period and, in the case of agriculture, that the vast majority of expenditure is still related to the 2014-2022 programming period ( 22 ). This shows that the approach to internal control has remained robust, even in the specific context of the last several years.

The European Commission also determines a risk at closure, estimated at 1% for 2023 (also similar to previous years). This represents the remaining level of error at the end of the programming cycle after all controls and all corrections have been implemented. Given the multiannual character of the funding programmes, the Commission, together with Member States in the case of shared management, makes a substantial effort to perform controls after payment and to make corrections until the closure of the programmes. These efforts are reflected in the estimated risk at closure.

Risk at payment and closure for the European Commission for the 2016-2023 period

Source: European Commission, 2017-2023 annual management and performance reports for the EU budget.

Based on all the controls and audits carried out, the European Commission has detailed and robust evidence of the differentiated risk level for the EU budget’s expenditure. This evidence is detailed down to the level of programmes for cohesion policy and down to the level of paying agencies for natural resources. This allows the Commission to split expenditure into three risk categories based on the risk at payment: low (below 2.0%), medium (between 2.0% and 2.5%) and high (above 2.5%). This in turn makes it possible to address and correct weaknesses precisely in the segments of expenditure where they occur and to focus action where it is deemed necessary.

This also allows the European Commission to present a nuanced picture of the managed expenditure. Horizon 2020 and cohesion policy as a whole carry a risk at payment above 2%, and natural resources (as a whole) and administrative expenditure are low risk. However, the majority of cohesion policy programmes are low and medium risk, and the Commission is able to report precisely which programmes in which countries have a risk at payment above 2% ( 23 ). Similarly, for expenditure for natural resources that are low risk in general, and more specifically for direct payments, the Commission is able to identify paying agencies that are high risk ( 24 ). Furthermore, it identifies market measures and rural development measures in the high-risk segment. Where the risk at payment is above the materiality threshold, including cohesion policy, the Commission applies corrective measures with the objective of bringing the level of error to below 2%

European Commission categorisation of expenditure into higher-, medium- and lower-risk segments, as a percentage of the total of relevant expenditure for 2023

Source: The European Commission’s annual activity reports for 2023.

The European Commission’s risk at payment is based on a control approach that is specific to its role. The Commission’s duty as manager of the EU budget is, on a multiannual basis, to prevent errors and, if necessary, to correct them, recover funds unduly spent and address identified weaknesses. The Commission’s approach differs from the European Court of Auditors’ audit approach, as it comes from a management perspective, provides more detailed information and is multiannual.

The Commission reports transparently on expenditure with a high level of risk that is deemed to be material, with significant weaknesses in the management of funds or with reputational risks. This is done in the annual activity reports through reservations qualifying the declaration of assurance. For 2023, there are 14 reservations with a total financial impact of EUR 1 291 million, 0.8% of the total expenditure. Reservations are a keystone in the accountability chain. They outline the challenges and weaknesses encountered and are systematically accompanied by a description of the measures envisaged to address them. Appropriate financial corrections are also applied.

Root causes of errors

•Ineligible costs in cost claims

•Non-compliance with EU or national rules (procurement, State aid, etc.)

•Ineligible participants

•Missing supporting documents

Mitigating measures    

•Continuous update of control strategies

•Simplified cost options

•Awareness actions    

•Guidance    

•Training    

•Digital solutions

The European Commission also uses appropriate measures to address the main weaknesses identified through its controls, taking into account the recommendations made by the European Parliament, the internal auditor and the Court of Auditors.

The Commission also takes into account the lessons learned, in particular on simplification measures, when designing new regulations. This was done, for instance, for the legal bases for the 2021-2027 programming period, and will continue when preparing the next programming period. As explained above, the impact of such provisions will increase in the years to come, when more expenditure has taken place under this programming period.

Based on the above, the European Commission considers that the budget as a whole is effectively protected. This is confirmed by the internal auditor’s overall opinion ( 25 ), in which she considered that, in 2023, the Commission put into place governance, risk management and internal control procedures, which taken as a whole, are adequate to give reasonable assurance over the achievement of its financial objectives, with the exception of those areas of financial management over which authorising officers by delegation have expressed reservations in their declarations of assurance.

Transparent reporting

The European Commission reports transparently on the operational and budgetary implementation of the funds it is managing. This is done through a wide range of reports and publicly accessible databases, some examples of which are given in the box below.

·The Commission’s integrated financial and accountability reporting brings together comprehensive information on the implementation, performance, results, sound financial management and protection of the EU budget. It includes the final consolidated accounts, this Annual Management and Performance Report, the long-term forecast of future inflows and outflows, the annual internal audit report and the report on the follow-up to the discharge.

·In their annual activity reports, the authorising officers by delegation of all 51 Commission departments report on the progress achieved towards their objectives in implementing the funds. They report on the control results, the weaknesses identified in the internal control systems and the measures taken to address them. They transparently mention in their declaration of assurance the reservations for high-risk expenditure or revenues.

·The Financial Transparency System web portal is open to those members of the public who are interested in finding out who received funding from the EU budget and the European Development Fund and how much they received, along with the commitments for entities entrusted to manage the EU budget under direct and indirect management.

·The NextGenerationEU green bonds dashboard provides a real-time overview of the measures financed by the NextGenerationEU green bonds and related expenditure. These data demonstrate that the Commission is issuing green bonds in line with the highest standards and the best market practices. In December 2023, the Commission published the first NextGenerationEU green bond allocation and impact report. It shows how the proceeds from green bonds have been used and disclosing the first assessment of the climate impact of the measures financed by them.

·Kohesio ( 26 ), the public platform for visibility and transparency of cohesion policy funds, includes the lists of operations published by all the Member States in line with applicable regulatory provisions and is now available in all 24 EU languages. In May 2024, Kohesio contained information on nearly 2 million projects and some 630 000 beneficiaries supported by the European Regional Development Fund, the Cohesion Fund and the European Social Fund, amounting to over EUR 500 billion in total investment. In 2023, Kohesio won the Ombudsman Award for Good Administration in the category ‘Open administration’.

·In natural resources, transparency of information is achieved at Member State level through the development and management of national systems and, as applicable, databases accessible through the internet, for example for the identification of land parcels for the agricultural funds, and the regular publication of the beneficiaries for agriculture  and maritime, fisheries and aquaculture funds. This was reinforced in 2023 with a new online catalogue of common agricultural policy initiatives ( 27 ), which provides a transparent overview of all strategic plans under the policy and related interventions, including the planned result indicators and outputs dashboard and financial allocation to the common agricultural policy specific objectives dashboard.

·For the Recovery and Resilience Facility, a new section has been added in the scoreboard on the implementation of the facility, displaying the data reported by Member States on the 100 final recipients that receive the largest amount of funding under the facility. The Commission has also published methodological notes on the scoreboard to transparently explain the pillar tagging methodology and the methodology to calculate disbursements for each pillar.

For the Recovery and Resilience Facility, control results confirm the satisfactory fulfilment of all milestones and targets for the payments made in 2023

For the Recovery and Resilience Facility, the Commission has put in place a dedicated control environment. This control set-up ensures on the one hand that the Member States put in place an effective control system for the protection of the EU’s financial interests, as per the requirements of the regulation, and on the other that the payments to the Member States are legal and regular, meaning that the milestones and targets underlying the payments are satisfactorily fulfilled.

All of the audit and control milestones and targets ( 28 ) have been assessed as fulfilled for all of the Member States that had received a first payment by the end of 2023 and for which such milestones and targets had been added to the national recovery and resilience plan. Particular attention was paid to the achievement of the milestones and targets added in relation to the Member States’ arrangements to ensure the protection of the financial interests of the EU. Some Member States also made follow-up commitments to ensure compliance with the requirements in respect of management and control systems. The Commission took the opportunity of the revision of the recovery and resilience plans in 2023 to add new audit and control milestones where this was deemed necessary ( 29 ). Member States cannot receive payments, except for pre-financing, as long as these milestones and targets are not fulfilled.

By the end of 2023, the Commission had carried out systems audits in all of the Member States to make sure that they had put in place and were maintaining sufficiently robust national control systems. The Commission identified a variety of situations regarding the audited bodies. Similar to 2022, the main deficiencies related to the lack of sufficient coordination and supervision by the coordinating bodies, incomplete anti-fraud strategies, missing elements in the fraud risk assessments, the need to improve the controls carried out to prevent conflicts of interest, low participation in training organised to raise fraud awareness and deficiencies in the reporting of irregularities to the European Anti-Fraud Office. The Commission also carried out an assessment of the Member States’ compliance with their obligation to check regularly that the financing provided has been properly used in accordance with applicable rules, including compliance with rules for public procurement and State aid, where applicable. The outcome was positive.

In relation to legality and regularity, the Commission’s control results confirm the satisfactory fulfilment of all the milestones and targets for the payments made in 2023. These results are based on the Commission’s careful assessment ( 30 ) of the evidence provided by the Member States to substantiate the fulfilment of milestones and targets, along with the management declarations and audit summaries accompanying each payment request submitted and paid in 2023. This allowed a very small number of milestones and targets ( 31 ) to be identified that had not been achieved at the time the payment requests were submitted, and for which suspensions of payments were applied in accordance with the methodology on payment suspensions adopted in February 2023 ( 32 ), for a total amount of EUR 890 million. This assessment was completed by on-the-spot audits ( 33 ) after the payment had taken place.

The responsible authorising officer by delegation reported that he had reasonable assurance of the legality and regularity of the payments made in 2023 for the Recovery and Resilience Facility, based on the results of the controls carried out. In addition, based on clearly established criteria, the Commission concluded that 22 payments made in 2023 were considered to be at a low level of risk of error, and one was considered at a medium level of risk. In addition, regarding the compliance of the use of fundings received with all applicable rules, and the obligation to correct cases of cases of fraud, corruption, conflict of interest, or serious breach of an obligation resulting from the financing and loan agreements, only one Member State was found to be at a high level of risk (for the correction aspect) but as the case was not deemed material, no reservation was issued. All other Member States were assessed at either a medium level of risk or a low level of risk.

The conditionality regime continues to contribute to the protection
of the EU’s financial interests

Since 2021, with the entry into force of the conditionality regulation ( 34 ), the EU budget has had an additional layer of protection in cases where breaches of the principles of the rule of law in the Member States affect or seriously risk affecting EU financial interests in a sufficiently direct way. The rule of law is one of the founding values of the EU, and respect for it is also key for the sound financial management of the EU budget and the effective use of EU funding. The conditionality regulation complements other tools and procedures to protect the EU budget, for example checks and audits or financial corrections under sectoral rules, including those put in place by the Recovery and Resilience Facility regulation ( 35 ) and by the common provisions regulation ( 36 ) governing several EU funds, or investigations by the European Anti-Fraud Office.

The conditionality regulation allows the EU to take measures to protect the EU budget, for example through the suspension of payments or financial corrections. Where the conditions set by the conditionality regulation are met, the Commission must propose that the Council adopt appropriate and proportionate measures in relation to the Member State concerned. The Council decides on the adoption of measures by qualified majority. If measures are adopted, only the Member State concerned should be affected: the relevant EU programmes should continue to be implemented. The final recipients and beneficiaries of EU funding must be protected, and the Member State remains bound to fulfil its obligations, including that of paying the final recipients.

In 2023, the European Commission continuously monitored the situation in all 27 Member States and also followed up on the ongoing case of Hungary. In December 2022, the implementation of the conditionality regulation led to the adoption of the first Council implementing decision with measures to protect the EU budget from breaches of the principles of the rule of law, in the case of Hungary. The Council decided to suspend 55% of the commitments for three programmes in relation to cohesion policy, which corresponds to around EUR 6.3 billion for 2021-2027. The Council also prohibited entering into new legal commitments with public interest trusts, or entities maintained by them, under any EU programme directly or indirectly managed by the Commission in view of the risks of conflicts of interests in those trusts and entities. During the procedure, Hungary committed to adopting a number of remedial measures. However, in the light of the Commission’s assessment, the Council considered that the remedial measures notified by Hungary, taken as a whole, as adopted and in view of their details, and the ensuing uncertainty about their application in practice, did not put an end to the identified breaches of the principles of the rule of law. In December 2023, in line with the conditionality regulation, the Commission reassessed the situation in Hungary and concluded that the protective measures adopted by the Council should remain in place ( 37 ).

In a process under the common provisions regulation, the Commission previously considered that Hungary did not fulfil the horizontal enabling condition on the required respect of the Charter of Fundamental Rights of the European Union because of several concerns, including on judicial independence. This led to the Commission blocking reimbursement of expenditure under the common provisions regulation. In 2023, after a number of exchanges with the Hungarian government and a thorough assessment, the Commission considered that Hungary had taken sufficient measures for the Commission to consider the horizontal enabling condition on the charter fulfilled as regards issues relating to judicial independence. Following this decision, a portion of the funds under the common provisions regulation became unfrozen. Parts of the funding are still not reimbursable, however, as other issues under the horizontal enabling condition on the Charter of Fundamental Rights and under thematic enabling conditions remain unaddressed.

Management conclusion

Against a backdrop of unprecedented challenges, continued close cooperation between the Commission and co-legislators remains essential. As was true for the pandemic, Russia’s war of aggression against Ukraine has made a robust EU-level response both necessary and justified from the perspective of adding value over and above national responses, and on the condition that it is well coordinated.

The Commission ensures that the EU budget serves citizens. Thanks to the effective tools in place and the proactive management of the EU budget, the Commission has been able to deliver on its policy objectives and respond to multiple unforeseen challenges. The Commission has provided its beneficiaries, implementing partners and the Member States with the appropriate flexibility, while ensuring sound financial management and maintaining an appropriate level of assurance on the management of the EU budget.

All authorising officers by delegation have provided reasonable assurance, although this has been qualified with reservations where appropriate. The annual activity reports demonstrate that all Commission departments have put in place solid internal control systems and provide evidence of the actions taken to improve cost-effectiveness, further simplify the rules and adequately protect the budget from fraud, errors and irregularities.

The internal auditor, in her overall opinion, considered that, in 2023, the Commission put into place governance, risk management and internal control procedures that, taken as a whole, are adequate to give reasonable assurance over the achievement of its financial objectives, with the exception of those areas where reservations were issued in the declarations of assurance.

On the basis of the assurances and reservations in the annual activity reports, taking into account the opinion of the internal auditor, the College of Commissioners adopts this Annual Management and Performance Report for the EU Budget – 2023 financial year and takes overall political responsibility for the management of the EU budget.

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(1) ()    The annual discharge procedure is the procedure through which the European Parliament and the Council give their final approval on the budget implementation for a specific year and hold the Commission politically accountable for the implementation of the EU budget ( https://ec.europa.eu/info/about-european-commission/eu-budget/how-it-works/annual-lifecycle/assessment/parliaments-approval_en ).

(2) ()     Article 318 of the Treaty on the Functioning of the European Union.

(3) ()    Article 247(1)(b) and (e) of Regulation (EU, Euratom) 2018/1046 of the European Parliament and of the Council of 18 July 2018 on the financial rules applicable to the general budget of the Union, amending Regulations (EU) No 1296/2013, (EU) No 1301/2013, (EU) No 1303/2013, (EU) No 1304/2013, (EU) No 1309/2013, (EU) No 1316/2013, (EU) No 223/2014, (EU) No 283/2014, and Decision No 541/2014/EU and repealing Regulation (EU, Euratom) No 966/2012, OJ L 193, 30.7.2018, p. 1, ELI: http://data.europa.eu/eli/reg/2018/1046/oj  (financial regulation).

(4) ()    Article 247 of the financial regulation.

(5) ()    Article 246 of the financial regulation.

(6) ()    Article 247(1)(c) of the financial regulation.

(7) ()    Article 118(8) of the financial regulation.

(8) ()    Article 261(3) of the financial regulation.    

(9) ()    Council Decision (EU, Euratom) 2020/2053 of 14 December 2020 on the system of own resources of the European Union and repealing Decision 2014/335/EU, Euratom, OJ L 424, 15.12.2020, ELI: http://data.europa.eu/eli/dec/2020/2053/oj . EUR 807 billion in current prices, EUR 750 billion in 2018 prices.

(10) ()    This amount includes a reinforcement of approximately EUR 1.5 billion in the context of the midterm revision of the multiannual financial framework. The current programming 2021-2027 for the European Defence Fund is EUR 7.3 billion in current prices. EUR 1.5 billion will afterwards be redirected from the European Defence Fund to support the proposal for a regulation establishing the European Defence Investment Programme.

(11) ()    Based on budgetary commitments.

(12) ()    Each year, the departments of the Commission report on the performance against their objectives in their annual activity reports, which are published on the Europa.eu web portal. The departments also contribute to the programme performance statements (see Annex 4 to this annual management and performance report online), which provide an annual overview of the performance information for all EU spending programmes in the 2021-2027 period.

(13) ()    Recovery and Resilience Plans were revised to include REPowerEU chapters or to take into account objective circumstances, thus the number of revisions exceeded the total number of plans (i.e. some Member States had two revisions).

(14) ()    This information is based on data reported by the Member States in the context of the biannual reporting on the common indicators. More information and data are available from the recovery and resilience scoreboard ( https://ec.europa.eu/economy_finance/recovery-and-resilience-scoreboard/index.html ).

(15) ()    The same person can use the service multiple times, in which case they would be counted multiple times.

(16) ()    Member States also benefit from the Technical Support Instrument to design and implement reforms, including those set out in the recovery and resilience plans.

(17) ()    Further enhancing the investment enabling conditions required under cohesion policy.

(18) ()     https://ec.europa.eu/economy_finance/recovery-and-resilience-scoreboard/index.html .

(19) ()     https://commission.europa.eu/business-economy-euro/economic-recovery/recovery-and-resilience-facility_en#rrf-supported-projects-in-the-member-states .

(20) ()    The term ‘authorising officers by delegation’ covers Directors-General of Commission departments and heads of executive agencies, offices, services, task forces, etc. Article 74(1) of the financial regulation states that: ‘The authorising officer shall be responsible in the Union institution concerned for implementing revenue and expenditure in accordance with the principle of sound financial management, including through ensuring reporting on performance, and for ensuring compliance with the requirements of legality and regularity and equal treatment of recipients.’

(21) ()    Proposal for a directive of the European Parliament and of the Council on combating corruption, replacing Council Framework Decision 2003/568/JHA and the Convention on the fight against corruption involving officials of the European Communities or officials of Member States of the European Union and amending Directive (EU) 2017/1371 of the European Parliament and of the Council, COM(2023) 234 final of 3 May 2023; Joint communication to the European Parliament, the Council and the European Economic and Social Committee on the fight against corruption,  JOIN(2023) 12 final of 3 May 2023.

(22) ()    As extended by Regulation (EU) 2020/2220 of the European Parliament and of the Council of 23 December 2020 laying down certain transitional provisions for support from the European Agricultural Fund for Rural Development (EAFRD) and from the European Agricultural Guarantee Fund (EAGF) in the years 2021 and 2022 and amending Regulations (EU) No 1305/2013, (EU) No 1306/2013 and (EU) No 1307/2013 as regards resources and application in the years 2021 and 2022 and Regulation (EU) No 1308/2013 as regards resources and the distribution of such support in respect of the years 2021 and 2022, OJ L 437, 28.12.2020, pp. 1–29, ELI:  http://data.europa.eu/eli/reg/2020/2220/oj .

(23) ()    In 2023, reservations were made in relation to 43 programmes in 17 Member States and the United Kingdom for both the 2014-2020 and the 2021-2027 programming periods.

(24) ()    In 2022, reservations were made in relation to 33 paying agencies in 17 Member States and the United Kingdom.

(25) ()    See Annex 2, Section 3.2 ‘Work of the Internal Audit Service and overall opinion’.

(26) ()     https://kohesio.eu/ .

(27) ()     Catalogue of common agricultural policy interventions .

(28) ()    Twenty-one out of 27 recovery and resilience plans. At the end of 2023, 14 of the 23 Member States for which the first payment had taken place since the start of the Recovery and Resilience Facility.

(29) ()    Ten audit and control milestones and targets added in seven revised recovery and resilience plans.

(30) ()    In its assessment, the Commission retains a margin of discretion as regards a limited number of circumstances where minimal deviations linked to the amounts, formal requirements, timing or substance can be accepted.

(31) ()    Seven milestones and targets were assessed as not satisfactorily fulfilled at the time of payment in three payment requests of four member states: LT, RO and PT.

(32) ()    Communication from the Commission to the European Parliament and the Council – Recovery and Resilience Facility: Two years on – A unique instrument at the heart of the EU’s green and digital transformation, COM(2023) 99 final .

(33) ()    For payment requests submitted by six different Member States.

(34) ()    Regulation (EU, Euratom) 2020/2092 of the European Parliament and of the Council of 16 December 2020 on a general regime of conditionality for the protection of the Union budget, OJ L 433, 22.12.2020, ELI: http://data.europa.eu/eli/reg/2020/2092/oj .

(35) ()    Regulation (EU) 2021/241 of the European Parliament and of the Council of 12 February 2021 establishing the Recovery and Resilience Facility, OJ L 57, 18.2.2021, ELI: http://data.europa.eu/eli/reg/2021/241/oj .

(36) ()    Regulation (EU) 2021/1060 of the European Parliament and of the Council of 24 June 2021 laying down common provisions on the European Regional Development Fund, the European Social Fund Plus, the Cohesion Fund, the Just Transition Fund and the European Maritime, Fisheries and Aquaculture Fund and financial rules for those and for the Asylum, Migration and Integration Fund, the Internal Security Fund and the Instrument for Financial Support for Border Management and Visa Policy, OJ L 231, 30.6.2021, ELI: http://data.europa.eu/eli/reg/2021/1060/oj .

(37) ()    Commission Decision of 13.12.2023 on the reassessment, on the Commission’s initiative, of the fulfilment of the conditions under Article 4 of Regulation (EU, Euratom) 2020/2092 following Council Implementing Decision (EU) 2022/2506 of 15 December 2022 regarding Hungary, C(2023) 8999 final .

EUROPEAN COMMISSION

Brussels, 19.6.2024

COM(2024) 401 final

ANNEXES

to the

REPORT FROM THE COMMISSION TO THE EUROPEAN PARLIAMENT, THE COUNCIL AND THE COURT OF AUDITORS

Annual Management and Performance Report for the EU Budget - 2023 financial year

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Annual Management and Performance Report for the EU Budget – Volume II – Annexes – 2023 financial year

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Annual Management and Performance Report for the EU Budget

2023 financial year

Volume II

Annexes

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Contents

Annex 1 – Performance achievements in 2023    

1. Performance of the EU budget

2. Priorities of the European Commission

3. Horizontal policy priorities in the EU budget

Annex 2 – Internal control and financial management    

1.Strong tools to manage the EU budget in a complex environment

2.Cost-effective controls protecting the EU budget.

3.Management assurance

Annex 3 – The Recovery and Resilience Facility    

1.The Recovery and Resilience Facility – an innovative and successful crisis-response tool

2.Control results confirm the satisfactory fulfilment of all milestones and targets for payments
made in 2023

Annex 1 – Performance achievements in 2023

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1. Performance of the EU budget

The EU budget is an essential tool to deliver on the EU’s priorities. Through its programmes, the budget supports the EU’s internal and external policies. It creates EU added value by delivering results that would not be achievable through uncoordinated national spending. EU programmes are tailored to unlock synergies, catalyse private and public funding and provide a coordinated boost to the political priorities of the von der Leyen Commission ( 1 ).

Budget implementation in 2023

In 2023, the EU’s long-term budget (the multiannual financial framework) and NextGenerationEU continued to prove its capacity to act as the anchor of the EU’s policy response to unforeseen challenges – such as Russia’s war of aggression against Ukraine, the energy crisis, supply chain disruptions, unprecedented natural disasters and humanitarian crises – while at the same time remaining instrumental to the delivery of the Commission’s priorities. To achieve this, EUR 182 billion of commitment appropriations was implemented in 2023 from the 2021-2027 EU budget to promote the EU’s sustainability and prosperity, in particular by investing in a green and digital recovery. This will allow the EU social economy to become more resilient and strengthen job creation.

Multiannual financial framework: 2023 EU budget commitment appropriations by budget heading (million EUR)

Source: European Commission.

To address the current challenges and continue to drive economic recovery, the EU budget is boosted by the temporary instrument NextGenerationEU. The Recovery and Resilience Facility is the centrepiece of NextGenerationEU and provides funding to Member States to carry out investments and reforms. From 2021 to 2026, NextGenerationEU will provide EUR 807 billion ( 2 ) of funding across several programmes and priorities, with a strong focus on the green and digital transitions. In 2023, EUR 238 billion of NextGenerationEU funds was allocated in commitment appropriations, mainly through the Recovery and Resilience Facility.

Monitoring performance

Through the use of the budget appropriations, the EU programmes continued to progress in achieving their key objectives and deliver value for all EU citizens. The progress towards the programme objectives is monitored notably by means of performance indicators.

The state of implementation varies across financial programmes. For a majority of programmes under shared management, such as the cohesion policy funds, it is still too early to make an assessment on the progress of the performance indicators towards reaching their targets, as the focus up to the end of 2023 was on finalising the overlapping 2014-2020 programmes. On the other hand, programmes under direct and indirect management are usually more advanced in the implementing cycle, and the results in 2023 already allow to make this assessment. For those indicators that can be assessed, the vast majority were considered to be on track to reach their targets by the end of the implementation of the programmes.

Breakdown of the 2021-2027 budget by progress of the underlying programmes.

The graph displays progress as measured by the share of the core performance indicators that are on track to meet their respective targets. It does not include indicators for which the results do not allow to make an assessment at this stage.

Source: European Commission.

During 2023, a large number of the EU programmes under the 2014-2020 budget continued to be implemented and to deliver results to EU citizens. A significant number of payments, totalling EUR 65.5 billion, were made in relation to these programmes during 2023. The majority of these payments were associated with the cohesion policy (including the European Regional Development Fund, the Cohesion Fund and the European Social Fund). The EU budget is fundamentally an investment-oriented budget, with a primary focus on generating long-term value for the EU. These programmes have continued to advance towards achieving their respective performance targets.

At the same time, it is vitally important that money spent actually addresses the challenges and delivers the expected results on the ground. The table below shows examples of results from the EU budget achieved under both the 2014-2020 and the 2021-2027 multiannual financial frameworks.

The performance analysis in the next section of this Annex, ‘2. European Commission’s priorities’, describes how EU programmes have contributed to the political priorities of President von der Leyen. The third section of this Annex, ‘3. Horizontal policy priorities in the EU budget’, provides information at the EU budget level on the financing of initiatives relating to climate, biodiversity, gender equality, digital transition and sustainable development goals ( 4 ). Lastly, Annex 4, ‘Programme performance statements’, provides a detailed analysis of the individual programmes and their performance, presented as a website to enhance reader friendliness.

Performance embedded in the design of the programmes

The common provisions regulation for the 2021-2027 period includes a reinforced midterm review for the European Regional Development Fund, the European Social Fund Plus, the Cohesion Fund, the Just Transition Fund and the European Maritime, Fisheries and Aquaculture Fund. That review should provide a fully-fledged adjustment of programmes based on their performance, while also providing an opportunity to take account of new challenges and relevant country-specific recommendations issued in 2024. Member States may submit to the Commission by 31 March 2025 an amended partnership agreement, taking into account the outcome of the midterm review. The review should also consider whether there is insufficient progress towards reaching the climate contribution target at national level. Moreover, the Just Transition Fund regulation requires by 30 June 2025 a review of the implementation of the Just Transition Fund, which will form the basis of a report to the European Parliament and to the Council.

2023 also marked the move of the common agricultural policy towards a performance-based delivery model. One of the main novelties of the reformed common agricultural policy, which entered into force on 1 January 2023, has been the move towards single programming. The common agricultural policy strategic plans prepared by Member States and approved by the Commission have succeeded in bringing under one single umbrella funding for income support, rural development, and market measures. The new common agricultural policy has become more strategic: 10 specific objectives have been set at the EU level, while leaving Member States the choice of interventions to best fulfil them in their strategic plans. This has allowed the policy to move closer to a performance-based delivery model, whereby all interventions are planned ex ante and linked with output indicators.

Reinforcing the reliability of performance information

The Commission continuously works to further improve its already robust processes for performance reporting. In 2023, in response to internal and external audit recommendations, the Commission enhanced its control processes for the reliability of performance information on EU financial programmes. In particular, it developed new guidance and specific requirements to be followed by the various Commission departments to report on the results of their controls in their Annual Activity Reports for 2023 (which are an important source of information for this Annual Management and Performance Report). In the first year of implementation of this strengthened control approach, various layers of quality controls indicated that departments showed a good follow-up to the new guidance and requirements. They did not report any major shortcomings with regard to the reliability of the performance information for their respective financial programmes.

2. Priorities of the European Commission

A European Green Deal

The European Green Deal was born out of this necessity to protect our planet. But it was also designed as an opportunity to preserve our future prosperity.

Ursula von der Leyen

President of the European Commission

Towards net zero greenhouse gas emissions

The summer of 2023 was the hottest ever on record in Europe. Data from the EU’s Earth observation programme Copernicus shows that March 2024 was the 10th month in a row to be the hottest on record ( 5 ). Many parts of the EU saw extreme weather, notably in the form of wildfires and floods.

The European Green Deal was born out of necessity to protect our planet. At the same time, it is also meant to preserve our prosperity, in particular by giving a clear sense of direction for investment and innovation and by making modernisation and decarbonisation go hand in hand. The green transition is a key part of EU policy and its recovery strategy, and the EU budget plays a vital role in its implementation.

In 2023, around EUR 160 billion or 38% of the EU budget was dedicated to climate mainstreaming objectives ( 6 ), with important contributions from cohesion policy, the common agricultural policy, and the Recovery and Resilience Facility. On top of this, the Innovation Fund, one of the world’s largest funding programmes for the demonstration of innovative low-carbon technologies, has committed around EUR 6.5 billion via grants for innovative projects in 22 participant EU / European Economic Area countries by 2023. In 2023, Horizon Europe, the EU’s flagship programme for research and innovation, provided 374 grants totalling an EU contribution of EUR 2.37 billion for climate, energy and mobility. It also delivered 232 grants covering EUR 1.23 billion for food, bioeconomy, natural resources, agriculture and the environment.

The Connecting Europe Facility has facilitated and financed the implementation of cross-border renewable energy infrastructure under the Cross Border Renewable Energy window with three calls for proposals between 2022 and 2023, totalling EUR 22.5 million. Furthermore, the Connecting Europe Facility funded major cross border rail connections in 2023, notably the Brenner Base Tunnel (linking Italy and Austria), Rail Baltica (connecting Estonia, Latvia, Lithuania and Poland with the rest of Europe) and the cross-border section between Germany and the Netherlands (Emmerich–Oberhausen), contributing to a more efficient, greener and smarter transport infrastructure. 

In addition, in 2023 the EU invested over EUR 540 million in alternative-fuel infrastructure through the Alternative Fuels Infrastructure Facility, which will result in 14 000 charging points and 81 hydrogen refuelling stations, along with the electrification of ports and airports.

Ensuring a fair transition

The green transition can only be successful if it happens in a fair way, leaving no one behind. To this end, the EU has established the Just Transition Mechanism. Under this funding mechanism, the Commission, by the end of 2023, adopted programmes by Member States in support of 96 territories through 70 Territorial Just Transition Plans, totalling EUR 19.7 billion.

In May 2023, the EU set up the Social Climate Fund, which will mobilise at least EUR 86.7 billion over the 2026-2032 period to support Member States’ protection, during the green transition, of the most vulnerable groups affected by the new carbon pricing to be introduced for the sectors of buildings and road transport. Moreover, the EU is funding initiatives aimed at ensuring a fairer transition via the European Social Fund Plus, which invested EUR 16.3 billion in people in 2023, supporting actions and structural reforms aimed at social inclusion, improvement of education and skills, and employment.

While investing in climate mitigation and adaptation, the EU also acted in solidarity with the countries hit by major natural disasters such as floods and forest fires. In 2023, the European Union Solidarity Fund provided assistance in the amount of EUR 755 million to Germany (floods), Belgium (floods), Romania (drought) and Italy (floods), and received new applications for support from Türkiye (earthquake), Italy (floods), Greece (floods) and Slovenia (floods).

Making use of green bonds

The Commission is financing up to 30% of NextGenerationEU by means of Green Bonds. This is expected to make the Commission the largest green bonds issuer in the world. The issuance of the first NextGenerationEU green bond took place in October 2021 and the Commission has remained active in the market ever since. In 2023, it raised over EUR 12 billion via green bonds. As of 1 August 2023, 14 Member States (compared to 7 as of 19 October 2022) had reported to the Commission EUR 21 billion worth of expenditure that is eligible for NextGenerationEU Green Bond financing. This information is continuously updated in the NextGenerationEU green bond online dashboard ( 7 ).

Helping conserve biodiversity

In 2023, around EUR 20 billion, corresponding to around 5% of the EU budget, was dedicated to the biodiversity mainstreaming objective via a variety of programmes. For instance, under the common agricultural policy, the European Commission has been helping farmers to restore, conserve and enhance biodiversity in their farms, along with preserving and maintaining landscape features. Under cohesion policy programmes, the EU is investing in biodiversity actions ranging from climate change adaptation measures to rehabilitation of industrial sites and nature protection and restoration ( 9 ).

Under the Global Europe window of the Neighbourhood, Development and International Cooperation Instrument, the Commission provided support to Africa’s Great Green Wall initiative and to new partnerships on forests, along with renewed engagement for ocean protection, including in the Mediterranean region.

A Europe fit for the digital age

Europe's strengths lie not only in digital applications. Our research and development into semiconductors is recognised the world over. We build incredible supercomputers.

Ursula von der Leyen

President of the European Commission

Developing and deploying digital technologies and investing in digital skills

The European Union has set a clear path for its digital transition and has become a global pioneer in online rights. As the future is digital, it is essential to preserve a European edge on critical and emerging technologies, and the EU budget is helping to make this happen.

The digital Europe programme supports the development and deployment of key digital technologies. Examples include high-performance computing, cloud-to-edge infrastructure, data spaces and artificial intelligence, blockchain, cybersecurity and semiconductors. The programme supports the deployment of and access to supercomputing to strengthen the competitiveness of industry and increase cybersecurity to protect critical infrastructure. Supercomputers are also of critical importance for the Destination Earth initiative, which will anticipate severe weather conditions and monitor the impact of climate change.

Digital Europe finances infrastructures, data-sharing tools and architectures. It puts in place governance mechanisms for thriving data-sharing AI ecosystems and the next generation of cloud and edge services. In 2023, artificial intelligence testing and experimentation facilities were established in the sectors of agrifood, healthcare, manufacturing and smart cities and communities. They offer highly specialised testing and validation services to artificial intelligence innovators, helping them to speed up cutting-edge solutions and bring them to the market. Common European data spaces were also set up, covering tourism, skills, manufacturing, health, mobility, smart communities, the Green Deal and agriculture. These will be a key data resource for the artificial intelligence community to train and improve their models.

Digital Europe supports activities aimed at protecting citizens and organisations against large-scale cyber-attacks. In 2023, National Coordination Cybersecurity Competence Centres have been established in each Member State to provide access to research and technological expertise in cybersecurity at the national/regional levels and ensuring cross-border cooperation.

To create a workforce that has the expertise to use these advanced technologies, Digital Europe supports the excellence of EU education and training institutions in digital areas. In 2023, over 2 500 students enrolled in the first Master programmes and short-term training courses in artificial intelligence, cybersecurity, the internet of things, blockchain, quantum computing or robotics.

To support public and private organisations in their digital transition, Digital Europe set up a network of 151 European digital innovation hubs offering services in 90% of EU regions, in particular to small and medium-sized enterprises. The hubs allow these organisations to test before investing in digital solutions and technologies, and offer financing advice or training and skills development.

Digital Europe further invested in the digitalisation of justice, interoperability and the digitalisation of public sector. For instance, large-scale pilot projects have been supported involving over 360 public authorities and private entities to pilot the European Digital Identity Wallet. 

Budget commitments for the digital Europe programme (in EUR million)

Source: European Commission

In 2023, the EU took important steps in building up a world-class supercomputer network in its Member States. The European High Performance Computing Joint Undertaking is the legal and funding entity that enables its 34 participating countries and private partners to coordinate their efforts and pool their resources to make Europe a world leader in supercomputing. In 2023, eight supercomputers went into operation, procured with the support of Horizon 2020 and the Connecting Europe Facility programmes. Three are ranked within the top 10 in terms of performance (November 2023).

The Joint Undertaking also selected a consortium led by European vendors to supply, install and maintain Jupiter, the first European exascale supercomputer (a computer capable of performing more than one billion calculations per second). In addition, the Joint Undertaking selected the Jules Verne consortium to host and operate in France the second exascale supercomputer of the Joint Undertaking. Hosting agreements were also signed with six sites across the EU (in Czechia, Germany, Spain, France, Italy and Poland) to host and operate Europe’s first quantum computers. In this context, procurement procedures were launched in Germany and Poland in 2023.

Supercomputers in the EU

Source: European Commission

Investing in artificial intelligence

The EU is on the way to becoming the global leader in safe artificial intelligence, which offers many benefits for people, businesses and governments. The EU’s AI Act, which was agreed with the co-legislators in December 2023, is the first-ever comprehensive legal framework on artificial intelligence worldwide. The European Commission has been actively supporting the development, deployment, use and take-up of trustworthy artificial intelligence in the EU.

In the 2021 review of the coordinated plan on artificial intelligence, the Commission aimed to allocate EUR 7 billion via the digital Europe programme and the Horizon Europe research programme to artificial intelligence during 2021-2027. Under Horizon and Digital Europe, the Commission has already allocated more than EUR 3 billion of EU funding for artificial intelligence research and development in the calls from 2021-2022. The target was therefore exceeded by EUR 0.5 billion per year.

The capital support through the European Innovation Council Fund (under Horizon Europe) increased significantly in 2021-2023, with over EUR 440 million committed in grants and proposed investments to companies developing or deploying artificial intelligence in various application areas. The European Innovation Council Fund is a funding and support programme under Horizon Europe that provides grants and equity investments for deep-tech start-ups and small and medium-sized enterprises. It has provided significant support for artificial-intelligence-based startups and small and medium-sized enterprises, with over EUR 550 million invested between 2018 and 2023.

In June 2023, the Commission launched 151 digital innovation hubs and four sectoral Testing and Experimentation Facilities projects. These facilities are co-funded with the Member States through the digital Europe programme with budgets between EUR 20-30 million per project, and aim to support artificial intelligence developers to bring trustworthy artificial intelligence to the market more effectively and facilitate its uptake in Europe. They focus on the following high-impact sectors: agri-food, healthcare, manufacturing and smart cities and communities.

Connecting Europeans: enhancing digital connectivity

The EU budget, including NextGenerationEU, is enhancing digital connectivity, which gives all citizens and businesses new opportunities to benefit fully from the digital single market and accelerate economic growth. The amount dedicated to connectivity, including investments in very high-capacity broadband network and 5G network coverage, is estimated to have reached EUR 14.8 billion for 2021-2023 ( 10 ).

The main contributing programmes are the Recovery and Resilience Facility (with EUR 13.6 billion), the European Regional Development Fund and Cohesion Fund (EUR 764.2 million) and the Connecting Europe Facility (EUR 397.3 million). The common agricultural policy is also playing an important role in improving broadband access in rural areas, by supporting broadband infrastructure and improved access to e-government. Broadband access in rural areas increased by 54.9 percentage points over 9 years. By the end of 2022, 72.9% of rural households in the EU had broadband access to the internet. Thanks to the European Regional Development Fund and the Cohesion Fund, 7.9 million households obtained broadband access of at least 30 megabits per second between 2014 and 2022. During the same period, 643 000 additional energy users were connected to smart electricity grids.

Investing in space technology for the benefit of people in the EU

Space technology plays an essential and increasingly important role in the daily lives of people in the EU. Satellites also provide important data in case of natural disasters, improving emergency response coordination.

In 2023, new features were deployed to enhance the resilience and competitiveness of Copernicus, in particular improvements in its offer of data access and processing tools. Galileo was upgraded to provide an even more accurate location tracking, down to 20 cm, making it three times better than competing global navigation satellite systems.

Overview of Galileo services

As Europe’s space infrastructure expands, protective measures are becoming increasingly important. The European Union Agency for the Space Programme, in cooperation with 15 Member States, champions this cause through the EU Space Surveillance and Tracking Partnership. This partnership, equipped with a complex system of space surveillance and tracking sensors, serves over 190 registered organisations, protecting more than 400 satellites from the risk of collision with space debris and other operational satellites.

An economy that works for people

We must build the physical backbone of the economy of the future in order to be competitive.

Ursula von der Leyen

President of the European Commission

Research and innovation help to make the economy work for the people

2023 was a challenging year for the EU in relation to the economy. Russia’s war of aggression against Ukraine, coupled with geopolitical tensions elsewhere, continued to impact global markets, in particular for food, energy and other raw materials. Amid this context, the European Union deployed an array of measures to ensure that its economy could resist such shocks and continue to work for people.

Research and innovation contribute to improving people’s lives and work and to enhancing productivity, competitiveness and job-rich growth. They are also crucial for providing solutions to current and future challenges, for example in terms of environment and climate. Through Horizon Europe, the EU aims to promote scientific excellence and generate new knowledge and technologies, thus contributing to advancing the EU’s general and specific objectives and policies while tackling global challenges and strengthening the European research area.

With a budget of EUR 15.3 billion for 2023, Horizon Europe saw the signature of 5 163 grant agreements totalling EUR 14.36 billion, with the average grant size increased to EUR 2.8 million. While the main work programme constitutes the bulk of Horizon Europe's budget (EUR 25.6 billion for 2021-2024), significant funding has also been allocated through other programme parts, particularly the European Research Council (with five calls in 2023 under the excellent science pillar for a total budget of EUR 2.17 billion), Marie Sklodovska-Curie Actions and the European Innovation Council. In 2023, the European Innovation Council opened funding opportunities worth over EUR 1.6 billion through its three main funding schemes: pathfinder (EUR 343 million), transition (EUR 128 million) and accelerator (EUR 1.13 billion).

In 2023, the Horizon Europe contribution through the European Partnership covered 10 active joint undertakings, under which 345 grants were signed for a total of EUR 2.9 billion. Moreover, through the EU-Mission instruments, by the end of 2023, 173 Horizon Europe grants involving 3 732 participants had been signed for a total amount of EUR 1.43 billion. Horizon Europe also supports the Sustainable Food Systems for People, Planet, and Climate and the European Partnership for Personalised Medicine, which involves more than 50 international partners and aims at advancing healthcare and promoting personalised therapy, diagnosis and prevention.

Developing and improving infrastructure across the EU

The European Union’s Cohesion Fund and the European Regional Development Fund are major driving forces behind infrastructure development across the EU, especially in regions lagging behind. 2023 was the final year of implementation for the 2014-2020 programmes. In parallel, 2021-2027 investments have started.

By the end of 2023, over 90% of funds from the 2014-2020 budget period have been invested in projects spanning various sectors. This includes transportation networks, like the Via Carpathia highway linking the Baltic, Aegean and Black Seas, or Portugal’s motorway network built partly with EU support. EU cohesion policy investments also target energy efficiency, research and innovation, digitalisation through broadband expansion and urban development initiatives. These projects have created jobs, improved connectivity and boosted living standards in less-developed regions, thus fostering economic convergence within the EU by allowing these areas to catch up with their more developed counterparts. The 2021-2027 budgetary period ensures continued support for the European Regional Development Fund and the Cohesion Fund, solidifying their role in building a more balanced, connected and sustainable Europe. The total available envelope allocated to projects in the 2021-2027 cohesion funds programming period amounts to EUR 264 billion. This includes EUR 59.1 billion to develop transport networks, clean urban transport, rail and road connections to the European cross-border transport network and cycling infrastructure. EUR 22 billion will support the energy efficiency of housing and enterprises and deep renovation of public infrastructure, and EUR 31 billion will foster digitalisation and digital connectivity.

The EU has also been investing in energy, transport and digital infrastructure via the Connecting Europe Facility, for which EUR 31.7 billion was allocated for the 2021-2027 period, including EUR 4.8 billion for 2023.

In 2023, the Commission also contributed to the design and implementation of actions of the New European Bauhaus initiative. By the end of 2023, a total of EUR 216 million had been allocated for the New European Bauhaus under cohesion policy. In June 2023, the Commission awarded the New European Bauhaus Prizes to 15 exemplary projects and fresh ideas reflecting the initiative’s values. In addition, with a budget of EUR 65 million, the projects from the first Innovative Action call of the European Urban Initiative serve as New European Bauhaus demonstrators to drive positive change in local communities and beyond. Furthermore, 20 municipalities have received technical assistance to improve the design of their projects along the New European Bauhaus values. The experiences of the selected projects were consolidated in a toolbox that can be used for planning and designing New European Bauhaus projects.

In addition, the Commission made use of targeted amendments to the 2014-2020 cohesion policy framework to help tackle the energy crisis resulting from the Russian war of aggression against Ukraine, releasing around EUR 4 billion to 11 Member States under the Supporting Affordable Energy initiative. This allowed Member States to support vulnerable households and small and medium-sized enterprises affected by energy price increases, along with short-time work and equivalent schemes.

Developing and supporting rural Europe

Rural development represents a key area of the EU’s common agricultural policy, with a dedicated European Agricultural Fund for Rural Development. The fund aims at improving the competitiveness of agriculture, achieving sustainable management of natural resources and climate action, and also supports a balanced territorial development of rural areas.

By the end of 2023, 32 managing authorities in 13 Member States had programmed EUR 638 million of the fund’s resources for financial instruments in their 2014-2022 rural development programmes. In total, EUR 443 million has been already declared as expenditure by Member States. At the same time, by the end of 2023, 12 Member States added new financial instruments in their common agricultural policy strategic plans, planning EUR 627 million of European Agricultural Fund for Rural Development financing, for a total shared Commission and Member State public budget of EUR 999 million.

Rural development activities to promote social inclusion, poverty reduction and economic development registered several achievements relating to small enterprises and jobs, such as diversification, the creation and development of small enterprises and job creation and maintenance in rural areas. This includes investments in basic services in villages, initiatives creating local jobs and diversifying farm activities. Part of these funds are dedicated to community-led local development, where local action groups decide on local development projects. In the 2014-2022 period, the European Agricultural Fund for Rural Development supported 2 784 local action groups across the EU, covering a significant part of the EU population.

There has also been progress in terms of the development of and access to services and local infrastructure in rural areas, participation in local development strategies, employment opportunities created via local development strategies, broadband expansion and better use of information and communications technology in rural areas.

Supporting investments in people

The EU has been investing in people by various means, such as the:

•European Social Fund+, the EU’s main instrument for investing in people’s employment, education and skills, along with social inclusion;

•European Regional Development Fund, which supports the infrastructure and equipment investments in employment, education and training, along with social inclusion;

•Just Transition Mechanism, proposed as part of the European Green Deal investment plan to make sure that no one and no region is left behind in the transition to a climate-neutral economy, which has a pillar focused on reskilling and upskilling of workers from the territories that face the biggest challenges in the transition towards climate neutrality;

•European Globalisation Adjustment Fund for Displaced Workers, which co-finances measures to support redundant workers in case of major restructuring events. 

Over EUR 116.8 billion (EUR 96.2 billion from the regular budget plus EUR 20.6 billion from NextGenerationEU) has been allocated to the European Social Fund for the 2021-2027 period. In concrete terms, this meant over 3 million people in training and education in 2022, over EUR 3.6 billion in loans awarded to micro or social enterprises up to December 2023, and over 10.3 million people with new qualifications by December 2022. The European Regional Development Fund allocated around EUR 8.8 billion to education, training and skills development.

The Just Transition Mechanism benefits from a EUR 20 billion allocation for the 2021-2027 period. Under the mechanism, Member States have developed Territorial Just Transition Plans, which contain an array of measures designed to promote public investment to foster sustainable development, in particular in those territories expected to suffer the greatest job losses, and in areas with industrial facilities with the highest greenhouse gas intensity. This is helping workers to redevelop their skills to thrive under a greener economy, and thus helping Member States move away from fossil fuels. For instance, with the help of a EUR 1.64 billion allocation, Czechia committed to phase out coal production by 2033.

Moreover, under the European Globalisation Adjustment Fund for Displaced Workers, about EUR 727 million has been allocated for the 2021-2027 period, including EUR 205.4 million in 2023, resulting in help being provided to thousands of workers in 12 Member States.

A stronger Europe in the world 

When I stood here four years ago, I said that if we are united on the inside, nobody will divide us from the outside. And this was the thinking behind the Geopolitical Commission. Our Team Europe approach has enabled us to be more strategic, more assertive and more united.

Ursula von der Leyen

President of the European Commission

Providing humanitarian and military assistance to Ukraine

2023 was a challenging year for the European Union. The Russian war of aggression against Ukraine continued to bring misery and hardship, with missile and drone attacks targeting energy infrastructure, and the weaponisation of global energy and food markets. Moreover, on 7 October 2023, Hamas launched an assault against Israel, leading to conflicts and a very tense situation in the Middle East. Houthi rebels in Yemen have brought disruption to shipping lanes by attacking container ships in the Red Sea.

In response, and along with its intense diplomatic efforts, by the end of 2023 the EU and its Member States had provided Ukraine and its people with nearly EUR 85 billion in assistance since the onset of Russia's war of aggression. This included EUR 25.2 billion in macro-financial aid, with EUR 18 billion allocated in 2023 through the Macro-Financial Assistance Plus instrument. Macro-financial assistance aids partner countries facing financial challenges by stabilising economies and facilitating reforms. These funds support Ukraine’s essential services, infrastructure restoration and institutional reforms, including anti-corruption and judicial initiatives.

Military assistance to Ukraine from the EU and its Member States totalled over EUR 27 billion, including EUR 6.1 billion from the European Peace Facility. Notably, a joint procurement initiative in March 2023 delivered ammunition to Ukraine, bolstering its defence capabilities. Additionally, the EU Military Assistance Mission has trained approximately 39 000 Ukrainian soldiers, marking the EU’s first instance of military training during wartime.

The EU budget also provided substantial humanitarian aid to Ukraine, totalling EUR 300 million in 2023 and EUR 785 million since February 2022, to address immediate needs and facilitate long-term recovery. Additionally, the EU and its Member States contributed with almost EUR 800 million in in-kind assistance through the Union Civil Protection Mechanism and the rescEU stockpile ( 11 ). Through its Emergency Response Coordination Centre, the EU coordinated its largest-ever civil protection operation, providing emergency assistance to affected populations. This included dispatching emergency items to Ukraine and deploying Union Civil Protection Mechanism (rescEU) assets, such as medical equipment to address critical needs. The EU Partnership Mission in the Republic of Moldova was also launched under the Common Foreign and Security Policy.

The EU's historic decision to initiate accession negotiations with Ukraine underscored its recognition of Ukraine’s alignment with EU standards. Simultaneously, the EU imposed robust sanctions against Russia in response to its aggression, targeting individuals, entities and key economic sectors. Thirteen sanctions packages have been adopted since February 2022, aimed at weakening Russia’s economy and deterring further aggression. These measures include financial sector restrictions, export banson critical technology and industrial goods to Russia, import bans meant to cut Russia’s revenue streams, and a variety of measures in the energy and transport sectors, among others. To increase their impact and prevent their circumvention, these measures are coupled with strengthened cooperation with non-EU countries.

The EU’s response to the Middle East crisis

The EU strongly condemned the brutal terrorist attacks by Hamas in Israel on 7 October 2023. While acknowledging Israel’s right to self-defence, the EU emphasised the need to protect all civilians in accordance with international humanitarian law, calling for continued, safe humanitarian access. Additionally, the EU has been collaborating with various humanitarian partners on the ground and working with regional and international partners to prevent further conflict escalation and promote a lasting peace, based on the two-state solution and relevant UN Security Council resolutions.

The escalation of violence in the Middle East led to the displacement of almost the entire Gazan population of 2.2 million people and massive humanitarian needs in all sectors, accentuated by the serious risk of famine. Violence also escalated in the West Bank, including East Jerusalem. The Commission responded by quadrupling its assistance to Palestinians to more than EUR 100 million to address the most basic needs.

In 2023, the EU, in coordination with humanitarian partners (e.g. United Nations Children’s Fund, International Committee of the Red Cross, World Food Programme), operated 32 humanitarian air bridge flights in 2023 in the context of this crisis, and 1 310 tonnes of essential supplies were mobilised. The aid includes nutritional items, shelter and logistical equipment, hygiene kits and medicines.

Strengthening European defence and security

In 2023, the EU strengthened its defence and industry through legislative initiatives and funding, including the Act in Support of Ammunition Production and European Defence Industry Reinforcement through the Common Procurement Act. The EU has also addressed security challenges by adopting its first Space Strategy for Security and Defence and updating its Maritime Security Strategy and Action Plan. These initiatives align with the EU’s broader security objectives and aim to bolster its resilience in the face of evolving threats.

The European Defence Fund is a key supporter of defence research and development in the EU. It has provided over EUR 2.9 billion for 101 collaborative projects across the Member States since 2021. In 2023 alone, the fund allocated EUR 1.2 billion to vital defence areas such as space situational awareness, countering hypersonic missiles and developing a European patrol corvette. The European Defence Fund supports innovation in the defence sector via the EU Defence Innovation Scheme, a EUR 2 billion scheme to help smaller companies, newcomers and particularly innovators.

European Defence Fund budget per category of action in 2023 (in EUR million)

Source: European Commission

The EU also supports European defence and security through initiatives aimed at ensuring a secure and sustainable supply of critical raw materials. As part of the Green Deal Industrial Plan, the Commission introduced proposals for a Critical Raw Materials Act and a Net-Zero Industry Act. These acts are designed to simplify the regulatory environment for the clean-technology sector and support the EU’s net-zero manufacturing capacity. Ensuring access to a secure and sustainable supply of these materials is vital for sectors such as defence and aerospace, amid increasing global demand and geopolitical challenges.

Promoting international partnerships and providing emergency aid across
the globe

The Commission moved forward in 2023 with the Global Gateway strategy. The strategy is deployed to make Europe stronger in the world. It is being delivered through a Team Europe approach, which brings together the EU and EU Member States with their financial and implementing institutions, along with the European Investment Bank and the European Bank for Reconstruction and Development. It also seeks to mobilise the private sector in order to leverage investments investments in a comprehensive and values-driven manner (a ‘360 degree approach’) for a transformational impact.

The Global Gateway draws from financial resources of the EU and its Member States. The EU’s contributions come from the new financial tools in the EU multiannual 2021-2027 financial framework, in particular the Neighbourhood, Development and International Cooperation Instrument – Global Europe programme, the Instrument for Pre-Accession Assistance III, the digital and international part of the Connecting Europe Facility, but also Interreg Europe, InvestEU and Horizon Europe, the EU research and innovation programme.

In 2023, the EU made significant progress in rolling out the Global Gateway – launching 225 new flagship projects across Africa, Latin America, the Caribbean, Asia, the Pacific, the Western Balkans and the Eastern and Southern Neighbourhoods. The EU also established partnerships with Latin American and Caribbean countries, including a Global Gateway Investment Agenda expected to mobilise over EUR 45 billion. Moreover, the EU formed a new partnership with the Organisation of African, Caribbean and Pacific States, signing the Samoa Agreement. The EU is also progressing with the implementation of the EUR 150 billion Africa–Europe Global Gateway Investment Package and new Team Europe initiatives. In addition, the EU signed the first Open Architecture guarantees for partner countries under the European Fund for Sustainable Development Plus, and is mobilising EUR 307 million in technical assistance to facilitate the deployment of the European Fund for Sustainable Development Plus guarantees.

With a budget of EUR 13.05 billion for 2023, the Neighbourhood, Development and International Cooperation Instrument – Global Europe programme implementation was at full speed in 2023, including the operationalisation of 166 Team Europe initiatives worldwide. Building on the European Year of Youth, the Commission implemented the Youth Action Plan in the EU’s external relations and launched the EUR 10 million Youth Empowerment Fund. It also adopted its midterm report on the EU gender action plan III, showing important progress towards ensuring that at least 85% of all actions across the Neighbourhood, Development and International Cooperation Instrument – Global Europe deliver on gender equality.

In 2023, the Commission provided assistance to around 130 countries. In the area of education, the EU funded the Global Partnership for Education, contributing to giving 2 596 000 children access to primary education and 1 192 000 children to secondary education. In the area of digital, in 2023 the Commission launched the ‘MEDUSA’ project providing high-speed internet connectivity between the European Union and North Africa. The Commission also launched Copernicus centres in Chile and Panama under the EU-LAC Digital Alliance and in Asia with the Copernicus Centre in the Philippines for better access to data and uptake.

Contributing to making a stronger Europe in the world, in 2023 the humanitarian aid programme provided life-saving emergency assistance to 114 countries across the globe and the Neighbourhood, Development and International Cooperation Instrument – Global Europe programme ensured medium- and long-term cooperation with partners countries and organisations bringing benefits to 48.4 million individuals.

The budget for humanitarian aid responded to many crisis situations in 2023. The initial budget of EUR 1.7 billion was reinforced several times throughout 2023 by a total of EUR 631.1 million, with an allocation of EUR 895.3 million for Africa, EUR 582.4 million for the Middle East and Türkiye, EUR 411.4 million for Asia, Latin America, the Pacific and the Caribbean, EUR 335.5 million for Ukraine, the Western Balkans and the Caucasus, and EUR 197.2 for non-geographical allocations. With this budget, in 2023 the Commission allocated EUR 300 million for Ukraine, EUR 100 million for Palestinians in Gaza, EUR 125 million for Sudan and EUR 149 million for Afghanistan.

Supporting our neighbourhood and candidates for enlargement

A stronger Europe in the world needs a stable and prospering neighbourhood with strong rule of law, fundamental rights, functioning democratic institutions and a market economy. The year 2023 witnessed historic developments and new dynamics in the enlargement negotiations. Following the Commission’s recommendation, the European Council decided to open accession negotiations with Moldova and Ukraine, and to grant the status of candidate country to Georgia. Moreover, the European Council stated that it will open accession negotiations with Bosnia and Herzegovina, once the necessary degree of compliance with the membership criteria is achieved. North Macedonia and Albania made smooth progress throughout the primary steps of the accession negotiations.

With the Instrument for Pre-Accession Assistance III ( 12 ), the EU is the largest donor in the enlargement region. By the end of December 2023, the Commission had committed (for annual programmes) or earmarked (for multiannual programmes) around EUR 8.68 billion out of EUR 14.162 billion available in the Instrument for Pre-Accession Assistance III funds.

In 2023 alone, the Commission committed EUR 2.5 billion through the Instrument for Pre-Accession Assistance III and made available EUR 12.6 billion of guarantee cover for European Investment Bank loans and EUR 399 million of guarantee cover under the ‘open architecture’ part of the European Fund for Sustainable Development Plus for the Neighbourhood negotiations. All investments contribute significantly to the implementation of the Economic and Investment Plans for the Eastern and Southern Neighbourhoods.

The implementation of the economic and investment plan for the Western Balkans continued in 2023, reaching a total of 59 flagship investments for EUR 8.9 billion in key railway, road and water interconnections, renewable energy, energy efficiency and power interconnectors, waste and water management, digital infrastructures, energy efficiency in the sectors of education and health, and support to the business sector. The European Union has so far contributed EUR 2.6 billion to the investments, blending grants with concessional loans and provisioning for guarantees.

In 2023, the Commission also proposed a new growth plan for the Western Balkans ( 13 ), aiming at increasing the region’s socioeconomic convergence with the EU and accelerating EU integration through targeted reforms. On 14 May 2024, the European Parliament and the Council adopted the regulation setting up the Reform and Growth Facility for the Western Balkans, which is expected to provide EUR 2 billion in grants and EUR 4 billion in loans to the EU’s partners in the region in the 2024-2027 period.

The EU has been actively supporting its neighbours in times of need. With 66 requests for assistance received and processed, along with 50 updates of requests for Ukraine (totalling 116 requests) and 24 EU civil protection missions deployed, in 2023 the Union Civil Protection Mechanism responded to floods, earthquakes and fires across Europe and the world. In response to these crises, the EU allocated an initial budget to the programme of EUR 188 million that comprised EUR 101.6 million of initial allocations, EUR 27 million of reinforcement for doubling the Union Civil Protection Mechanism (rescEU) aerial firefighting fleet during the 2024 forest fire season and EUR 59.4 million aimed at increasing aerial firefighting capacity. The devastating earthquake in Syria and Türkiye, the evacuation of EU citizens from Sudan and the magnitude of forest fires in Europe last summer triggered budgetary reinforcements of EUR 65 million, arriving at a total of EUR 253 million (excluding NextGenerationEU funds).

Promoting our European way of life

Every day, we see that conflict, climate change and instability are pushing people to seek refuge elsewhere. I have always had a steadfast conviction that migration needs to be managed. It needs endurance and patient work with key partners. And it needs unity within our Union.

Ursula von der Leyen

Addressing migration pressure and asylum

In 2023, the migration pressure at the European Union’s external borders continued remained significant, with 1 million people applying for asylum in the EU, an increase of 20% compared to 2022. A constant effort has been made to rapidly address immediate needs through operational and targeted action. In April 2024, these came to fruition when the new Pact on Migration and Asylum was agreed.

In 2023, the Commission implemented a budget of close to EUR 3 billion to support Member States in this area, mainly through three Funds:

•the Asylum, Migration and Integration Fund, 

•the Integrated Border Management Fund, and

•the Internal Security Fund.

Security, Border Management and Asylum and Migration Funds budget 2023 (in EUR million)

Source: European Commission

For the Asylum, Migration and Integration Fund, 44% of the total Member State programme allocation in 2023 was allocated towards the Common European Asylum System. This supported the creation of 750 reception places for unaccompanied minors, on top of the 1 159 places refurbished in line with the EU acquis. Moreover, 19 003 people were resettled under solidarity and fair sharing between Member States.

In the area of legal migration and integration, over 280 000 non-EU nationals have already been supported in their early integration, including temporary protection beneficiaries fleeing from Ukraine. In combatting irregular migration, over 18 000 individuals returned voluntarily to their countries with the support of the fund.

EU funding also makes a major contribution to the supporting the EU’s partnerships with countries worldwide to address the root causes of migration. With 10% of the Neighbourhood, Development and International Cooperation Instrument – Global Europe programme earmarked for actions related to migration and forced displacement, more than 190 projects are under way, worth about EUR 5.3 billion. This means for example that EUR 691 million has been devoted to actions in North Africa in 2021-23, with almost two thirds of this devoted to strengthening migration and asylum governance and management.

Together, the EU and its Member States are the world's leading donor in support to refugees, contributing to 41.8% of global funding. Over the past few years, approximately with 80% of the EU humanitarian budget has been allocated each year to projects addressing the needs of forcibly displaced persons and their host communities worldwide.

The 2023 budget allocated to the Integrated Border Management Fund followed the European Council conclusions of 9 February 2023, focusing on control of the EU external borders, and therefore included EUR 141.2 million aimed at enhancing the electronic surveillance systems at external land borders and EUR 201.1 million allocated to increase the European Border and Coast Guard operational capacity for national and EU actions to protect the EU’s external borders.

The Internal Security Fund helped the EU to respond to the deterioration of the geopolitical context and compounded security threats. The European Council conclusions of 26 and 27 October highlighted such increased risks to internal security not only in relation to terrorist attacks directed at individuals but also to critical infrastructure. The Council conclusions called to engage in concerted efforts to mobilise all relevant policy areas at the EU and Member State levels, including by ‘strengthening law enforcement and judicial cooperation, information exchange through the full use of relevant databases, protection of the external borders, fight against smugglers and close cooperation with third countries.’ The fund has supported 651 interventions in all sectors of the economy between 2014 and 2023.

Ensuring free movement within the EU

In the current challenging geopolitical and economic context, a fully functioning Schengen area is instrumental to stability, resilience and recovery. On 1 January 2023, Croatia joined Schengen as its 27th member. Moreover, on 30 December 2023 the Council, fully supported by the European Commission, took the unanimous decision to welcome Bulgaria and Romania into the area, starting with lifting controls at air and sea borders as of March 2024. The Schengen area now allows 420 million people to travel between Member States without the requirement of going through border controls.

Countries in the Schengen area (as of April 2024)

Source: European Commission

Smart borders require modern, effective and efficient management, which strikes a balance between facilitation for travellers and internal security. In 2023, the Commission finalised legislation for the implementation of the Entry/Exit System ( 14 ) and progressed with legislation to implement the European Travel Information and Authorisation System ( 15 ), including allocating EUR 25.5 million to facilitate the automatic border crossing and the revised Visa Information System ( 16 ). The systems will enhance management and control of our external borders and thus improve internal security. To increase the interoperability between information technology systems for border management, the EU has been investing EUR 0.6 billion during 2021-2027.

ERASMUS+

Erasmus+ is the EU mobility programme in the fields of education, training, youth and sport. For over 35 years, the programme has been among the most successful initiatives of the EU, profoundly enabling people, organisations and policies across Europe by fostering skills, collaboration and mutual discovery. In 2023, the programme also continued to help the EU to achieve its objectives in areas such as inclusion and diversity, active citizenship and democratic participation, along with the green and digital transitions in the EU and internationally. The Erasmus+ programme had a 2023 budget of more than EUR 3.9 billion.

The implementation of the European strategy for universities continued at full speed in 2023. The 2023 Erasmus+ calls also supported 100 000 traineeships for higher education students. The 2023 Erasmus+ calls also supported new innovative approaches to learning and teaching, including living labs, student incubators, green and digital skills, and innovators at school.

Two application rounds took place for DiscoverEU in 2023; 289 695 young people applied for a travel pass, and 71 642 were selected. In 2023, the budget for youth participation activities was reinforced, involving more than 18 400 young people. The European Youth Portal totalled 10 132 367 visits in 2023 and remained in the top 10 of the most visited europa.eu websites in 2023.

European Solidarity Corps

The EU is built on solidarity. The European Solidarity Corps finances projects giving young people the opportunity to volunteer in a range of areas, from helping the disadvantaged and delivering humanitarian aid to contributing to health and environmental action across the EU and beyond. The volunteering projects awarded in 2023 had a tight focus on inclusion and diversity with 978 awarded projects and 705 projects addressing participation in democratic life. Calls in 2023 resulted in over 4 500 applications for volunteering and solidarity projects, with 2 401 projects awarded.

Investing in European culture

The creative Europe programme is the EU’s direct fund providing support to the cultural and creative sectors, with an established budget of EUR 2.44 billion for the 2021-2027 multiannual financial framework period and EUR 334.3 million for 2023 alone. The programme aims to safeguard, develop and promote European cultural and linguistic diversity and heritage and to increase the competitiveness and the economic potential of the cultural and creative sectors, and in particular the audiovisual sector.

Creative Europe contributed to the Green Deal with the EU youth cinema: Green Deal 2024-2026, an audience development project, in 6 languages across 12 countries, aimed at fostering an environmentally conscious young community. On the green, albeit digital, side, the programme supported MIAM!, a real-time computer-generated imagery production pipeline for three-dimensional animation based on video game solutions that allows to minimise carbon impact. Moreover, a European carbon emissions calculator for audiovisual productions was funded.

Cultural projects witnessed an ever-increasing number of applications to its actions. In particular, the applications for the European cooperation projects rose from 461 proposals in 2021 to 831 in 2023 for a 78% increase.

EU cohesion policy, in particular through the European Regional Development Fund, has been supporting European regions in their efforts to add value to geographical assets and cultural and historical heritage. The 2021-2027 cohesion policy includes EU support for culture and cultural heritage that amounts to EUR 5.4 billion across 19 Member States and in territorial cooperation programmes ( 17 ).

Fighting cancer in Europe

In the frame of Europe’s beating cancer plan, in 2023, the EU4Health programme mobilised EUR 187.3 million for cancer prevention, screening and treatment, along with mental health support for cancer patients and families, and quality of life improvements for cancer survivors. The EU4Health programme itself, with an operational budget of EUR 735.8 million for 2023, includes the fight against cancer as a cross-cutting item.

In 2023, the EU4Health implementation resulted in the piloting of the inter-specialty cancer training programme developed through the completed ‘INTERACT-EUROPE’ project, the launch of the digital infrastructure supporting the European Cancer Imaging Initiative and 12 new projects aimed at beating cancer. In 2023, the Commission also published the country cancer profiles as part of the European Cancer Inequalities Registry. The actions carried out in the area of health also included the 2023 Cancer Mission call part of Horizon Europe, which saw 103 eligible proposals submitted and 13 grant agreements signed.

A new push for European democracy

Democracy is about our individual right to be heard. But democracy is also our collective responsibility. Every new generation is responsible to keep our democracy healthy. To make it more representative and inclusive. To protect it from internal and external threats.

Ursula von der Leyen

President of the European Commission

Promoting the rights and values of the EU

In 2023, democracy in the European Union faced several challenges, such as rising extremism, election interference, the spread of manipulative information and threats against journalists. Faced with that in 2023, the EU supported democracy in various ways, including reaching an agreement on the European Media Freedom Act and adopting the Defence of Democracy package in December 2023. In this package, the Commission underlines that democracy is supported under various EU programmes, including Erasmus+, the European Solidarity corps, Horizon Europe, digital Europe and creative Europe in the fields of election support, media and disinformation actions and civic space enhancement. Moreover, the pre-accession assistance programme, the cohesion policy funds and the Neighbourhood, Development and International Cooperation Instrument – Global Europe programmes provide support to civic space engagement, media and disinformation actions and election supports both within and outside Europe ( 18 ). 

Following up on the Conference on the Future of Europe, the Commission implemented in 2023 the Citizens’ Engagement Platforms, with the three European Citizen Panels providing suggestions accepted by the Commission on food waste, virtual world and learning mobility.

The EU budget has allocated over EUR 1.1 billion between 2021-2027, including EUR 214 million in 2023, to the citizens, equality, rights and values programme to promote the rights and values of the EU. This programme supports a broad range of organisations that promote and protect EU values and rights, increase awareness of rights, values, principles culture, history, laws and policies, enhance capacity and foster cross-border cooperation and mutual knowledge, understanding and trust. It also supports training and capacity-building, along with town twinning and the exchange of good practices between Member States’ authorities and bodies. Over 31.4 million people are expected to be reached by 2021-2023 projects. In 2023 alone, 262 projects worth a total of EUR 150.4 million aimed at promoting equality.

Moreover, the citizens, equality, rights and values programme enhanced civic participation at the EU level, supporting the European Citizen’s Initiative with EUR 2 million in 2023. The initiative registered its 100th proposal in 2023, entitled ‘Connecting all European capitals and people through a high-speed train network’. The programme also allowed, via procurement contracts, the organisation of workshops on ‘public campaign for combatting hate speech and hate crime’, mutual learning and exchanges of good practices on gender equality; an event on ‘30 years of citizenship rights’ and a number of Eurobarometer surveys.

Enabling young Europeans to participate in civic society and democratic life

One of the main takeaways of the European Year of Youth 2022 was that young people have a strong interest in society and want to be involved. In the second quarter of 2023, work started on a Commission communication with a set of actions that focus on how the Commission can give young people a say concerning the decisions that affect them. The 10th cycle of the EU Youth Dialogue, which is the biggest participatory process for young people in the EU, started in July 2023.

In 2023, the budget for youth participation activities was reinforced, involving more than 18 400 young people. The Commission embarked on the preparations for the European Youth Week 2024, which took place from 12 to 19 April 2024 and focused on fostering active citizenship and democratic participation among young people.

Tackling cybersecurity challenges, disinformation, and safeguarding the 2024 EU elections

In November 2023, the European Commission, together with the European Parliament and the European Union Agency for Cybersecurity, organised a cybersecurity exercise as part of a range of measures being implemented by the European Union to ensure free and fair elections in June 2024. The drill, which also involved representatives from national electoral and cybersecurity authorities, allowed participants to exchange experiences and best practices, along with enhancing their capacity to respond to cybersecurity incidents.

As part of the preparation for the 2024 EU elections, the Commission has provided support to the Network and Information Systems Cooperation Group ( 19 ) to update its Compendium on Election Cybersecurity and Resilience. This update (published in March 2024) was essential due to the rapid evolution of cybersecurity risks and threats to the integrity of elections, which include developments in deep fake audiovisual materials created by means of artificial intelligence, ‘hacktivists for hire’ and cyber-attacks and threats supported by hostile actors amid a volatile geopolitical context.

In addition, the European Digital Media Observatory and its hubs were established in 2023 to strengthen the detection and analysis of disinformation campaigns. Safer Internet Centres offered counselling and reporting services to young users across the EU, including the reporting of suspected online child sexual abuse material from the public, leading to its takedown. This complements the EU’s 2022 Digital Services Act, which aims to create a safer digital space where the fundamental rights of users are protected and to establish a level playing field for businesses.

3. Horizontal policy priorities in the EU budget

This section provides information on the financing of initiatives relating to climate, biodiversity, gender equality and sustainable development goal objectives, as provided for in point 16(d–g) of the Interinstitutional Agreement of 16 December 2020. Information on the contribution of the EU budget to the European Commission’s priority of promoting the digital transition is also provided.

Green budgeting

The Commission uses green budgeting as an instrument to enhance the transparency of the EU budget in terms of funding to support climate and environmental objectives, in line with the Paris Agreement and the European Green Deal. In March 2022, the Commission committed to further pursuing its work on green budgeting, together with the French Presidency of the Council of the European Union and several Member States.

The Commission has set the green transition as one of its key priorities for 2019-2024, as set out by President von der Leyen in her political guidelines. The European Green Deal, adopted in 2019, confirms this ambition. In line with the Green Deal, the European Climate Law, adopted in 2021, specifically prescribes that the EU should become climate-neutral by 2050 and sets an intermediate target of reducing net greenhouse gas emissions by at least 55% by 2030 compared to their 1990 levels. In addition, the Commission has proposed a reduction of at least 90% by 2040.

To underscore its commitment to its climate and environmental goals, the EU has set quantitative targets for its 2021-2027 multiannual financial framework and NextGenerationEU funding. In particular, the EU has committed to dedicating at least 30% of its multiannual financial framework and NextGenerationEU budget to climate-relevant expenditure, and 7.5% of the 2024 annual budget and 10% of the 2026 and 2027 annual budgets to protecting and enhancing biodiversity.

The EU’s green budget is established around four areas: climate adaptation, climate mitigation, biodiversity and clean air. It also includes a strong ‘do no (significant) harm’ component that covers both climate and environmental objectives. All activities have to comply with this principle, in line with the relevant legislation.

Expected green contribution (budgetary commitments)in the 2021-2027 period (million EUR) ( 20 )

Source: European Commission.

The data available for the 2021-2027 period show that the EU budget is on track to reach its 30% target for climate mainstreaming, thanks to the strong performance of the Recovery and Resilience Facility and the RepowerEU initiative, which are also contributing to clean air tracking. All the data used in this report use expected commitment appropriations.

For biodiversity mainstreaming, while the projection for 2024 is close to the target, the 2026 and 2027 targets will be more difficult to achieve. More details are available in the specific section on biodiversity below.

It is important to note that other funds managed by the Commission also contribute to the green budget priority, despite not being part of the multiannual financial framework, such as the Innovation Fund, the Modernisation Fund and the upcoming Social Climate Fund. The revenues from these funds come from the EU Emissions Trading System.

The amounts above are calculated based on commitment appropriations, as shown below.

•For direct management, estimates are prepared by each service based on the most updated data available (including data from the financial system for climate mainstreaming only). For future estimates, work programmes, sectorial targets and historical values are used.

•For shared management, past and future figures are presented on the basis of the programmes and common agricultural policy strategic plans agreed with the Member States and updated according to the annual reports.

•For indirect management, the figures are based on the existing targets and agreements with the implementing partners, along with their annual reports.

•Past expenditures are corrected every year following a quality review operated by the different services to reflect the additional information received on the project selected.

Focus on results ( 21 ) 

A focus on results is fundamental for green budget action and the EU budget in general. The results stemming from available indicators can be used to achieve more targeted spending and to improve steering of the EU budget. It can also make the green transition more efficient by improving accountability. The latter is also important in view of the need to contribute to multiple international commitments.

The focus on energy efficiency, emissions reduction and renewable energy expansion is crucial for achieving the EU’s climate neutrality goals and achieving the 2030 targets. The above results show that the Member States are diversifying their energy mix and gradually reducing their reliance on fossil fuels, thus lowering energy costs. This also results in decreased emissions of greenhouse gas, helping combat climate change, and of air pollutants.

Measuring the actual impact of NextGenerationEU investments

In December 2023 the Commission unveiled the first impact report for NextGenerationEU green bonds, which was presented at the United Nations Climate Change Conference (COP28) in Dubai. This report marks a fundamental transparency achievement, allowing us to measure the concrete climate impact of the investments financed by NextGenerationEU green bonds.

Building on the robust EU green bond framework, the report relies on detailed analyses of the milestones and targets for green-bond-financed investments under the Recovery and Resilience Facility to provide the foundation for the calculation of their climate impact, allowing to measure progress on the path to a sustainable future and ensuring a direct link between funding and climate impact.

The analysis reveals that after full implementation, NextGenerationEU green bond investments have the potential to avoid greenhouse gas emissions by a total of 44 million tonnes of carbon dioxide equivalent per year – equivalent to 1.2% of the EU’s total emissions in 2022. This number represents approximately 57% of the investments financed by green bonds, meaning that subsequent analyses and reports will present an even clearer picture of the true climate impact. While the impact of currently realised expenditure is naturally lower at the initial project stages, the report estimates a reduction equivalent to 224 143 tonnes of carbon dioxide annually. This number will increase quickly with the accelerating implementation of the Recovery and Resilience Facility.

Taxonomy

This year, for the first time, several key programmes within the ‘programme performance statements’ (Annex 4 of this report) include an analysis on their alignment with the EU taxonomy for sustainable activities. This addition provides a key starting point for future analyses of how EU spending contributes to a greener future ( 22 ). 

While the analysis of taxonomy alignment in the Recovery and Resilience Facility has been detailed previously in the context of NextGenerationEU green bond reporting, this year’s ‘programme performance statements’ broaden the scope to encompass other critical programs. This approach offers a more comprehensive view of the EU’s commitment to sustainable financing across its various initiatives.

Climate mainstreaming

Achievements

How much do we spend?

Climate contribution in the 2021-2027 period (million EUR)

Source: European Commission.

For the 2021-2027 period, the EU budget – including NextGenerationEU – is projected to contribute EUR 658 billion to climate spending, representing 34.3% of the budget envelope, surpassing the initial target of 30%.

Planned expenditure in the 2021-2027 EU budget in absolute amounts and estimated percentage of each programme envelope

Horizon Europe, InvestEU Fund, CEF – Connecting Europe Facility, including Military Mobility, Regional Policy – European Regional Development Fund and Cohesion Fund, CAP – common agricultural policy, EMFAF – European Maritime Fisheries and Aquaculture Fund, JTM – Just Transition Mechanism, NDICI – Neighbourhood, Development and International Cooperation Instrument – Global Europe, IPA III – Pre-accession Assistance.

Source: European Commission.

On the basis of available information, the EU budget is on track to fulfil both the overall 30% target and its sectoral targets for spending contributing to climate. The ‘programme performance statements’ (Annex 4 of the Annual Management and Performance Report) include a dedicated section presenting the estimated climate contribution for each programme and the actions undertaken to ensure proper financing of this priority.

Using the percentage of climate spending per programme calculated for budgetary commitments, it is possible to make an estimate for the amount of climate-related spending at the payment level, which stands at 33.9%. On this basis, Member States contributing to the EU budget can calculate their share of green budget contribution for the EU budget. This estimate excludes the Recovery and Resilience Facility, as this is financed by bonds and not by Member State contributions. In line with their sectorial regulations, the Ukrainian Facility and Western Balkan Facility will contribute to climate and biodiversity mainstreaming. The contributions will be reported as from the next reporting cycle when information is available.

Biodiversity mainstreaming

Achievements

How much do we spend?

Biodiversity contribution in the 2021-2027 period (million EUR)

Source: European Commission.

For the 2021-2027 period, the EU budget – including NextGenerationEU – is dedicating EUR 112 billion, or 6% of the multiannual financial framework, to the fight against biodiversity loss. While the projection for 2024 is close to the 7.5% target, the 2026 and 2027 10% targets will be more difficult to achieve. The Commission is working to further increase the financing in this area with the help of all stakeholders, as already done for direct management programmes such as Horizon Europe and the Neighbourhood, Development and International Cooperation Instrument. In external action, for instance, the Commission estimates confirm that the EU budget is on track to double its financing towards non-EU countries, compared to the 2014-2020 multiannual financial framework.

Biodiversity contribution comparison of the 2014-2020 and 2021-2027 periods (million EUR) ( 23 )

SPACE – Space programme, HorizonEU – Horizon Europe, ERDF+CF – European Regional Development Fund and Cohesion Fund,

CAP – common agricultural policy, LIFE programme, EMFAF – European Maritime Fisheries and Aquaculture Fund, NDICI – Neighbourhood, Development and International Cooperation Instrument. 
Source: European Commission.

It is worth noting that the common agricultural policy methodology for the 2023-2027 period has a higher level of granularity and ambition compared to the methodology used in 2014-2022, allowing for more precise and conservative estimates compared to the past. As from the draft budget 2024, the contribution of the common agricultural policy to biodiversity is estimated by the Commission through the application of EU coefficients (100%, 40% and 0%) and weighting factors (100%, 70% and 50%) that aim to reflect the differentiated contribution of each type of interventions towards the biodiversity objective. Furthermore, given the design of the common agricultural policy and the cohesion policy funds – and the financial programming of the two programmes - it is not possible to guide resources towards specific years.

In line with their sectorial regulations, the Ukrainian Facility and Western Balkan Facility will contribute to climate and biodiversity mainstreaming. The contributions will be reported as from the next reporting cycle when information is available.

Clean air

Achievements

How much do we spend?

Clean air contribution for the 2021-2027 period (million EUR)

Source: European Commission.

For the 2021-2027 period, the EU budget – including NextGenerationEU – is dedicating EUR 186 billion, or 9.7% of the multiannual financial framework, to clean air priorities. 

The European Union has been working for decades to achieve clean air, striving for levels that minimise health risks and environmental damage. Thanks to stricter regulations on emissions and integrating clean air priorities into various policies, air quality has demonstrably improved across the EU. This success is a result of collaborative efforts at all levels – EU, national, regional, and local. EU funding has also been instrumental, directly supporting clean air projects and weaving clean air goals into other investments like infrastructure development.

To ensure continued progress, the EU monitors how its funding contributes to Member States' clean air objectives. This monitoring serves a dual purpose: it helps assess the effectiveness of current funding programmes in supporting clean air policies and informs future funding allocations. The expenditure calculations now take into account the new legislative basis for the common agricultural policy and the introduction of RePowerEU.

Gender equality mainstreaming

The Commission established gender equality as a cross-cutting objective for all policy areas. The Commission’s long-standing commitment to gender equality gained new momentum with the adoption of the 2020-2025 gender equality strategy, which delivers on the Commission’s commitment to achieving a European Union of equality. It sets out policy objectives and initiatives to achieve significant progress towards a gender-equal Europe by 2025.

Since the beginning of the COVID-19 pandemic the Commission has moved decisively to develop a comprehensive set of initiatives, comprising both first-response measures and more structural measures, in the context of NextGenerationEU and the reinforced multiannual financial framework. The resulting policy response focuses on fair and inclusive recovery. It ensures that equality is at the heart of recovery, and is designed to mitigate the disproportionate impact that the crisis has had on many vulnerable groups in society, irrespective of sex, racial or ethnic origin, religion or belief, disability, age or sexual orientation.

Achievements

How much do we spend?

In line with the 2020-2025 gender equality strategy, NextGenerationEU and the 2021-2027 multiannual financial framework provide a wide range of EU funding and budgetary guarantee instruments to support initiatives promoting women’s labour market participation and work–life balance, investing in care facilities, supporting female entrepreneurship, combating gender segregation in certain professions and addressing the imbalanced representation of girls and boys in some sectors of education and training. Furthermore, dedicated funding is provided for projects benefiting civil-society organisations and public institutions that implement specific initiatives, including preventing and combating gender-based violence.

The Commission developed its methodology to measure expenditure relating to gender equality at the programme level in the 2021-2027 multiannual financial framework. In this endeavour, the Commission has benefited from fruitful exchanges with the European Institute for Gender Equality, and from constructive engagement with the European Court of Auditors in the context of their special report on gender mainstreaming in the EU budget, published in May 2021.

The methodology was used for the first time across all spending programmes for the financial year 2021, in the context of the 2023 draft budget. This was ahead of the commitments under the interinstitutional agreement accompanying the 2021-2027 multiannual financial framework, in terms of both timeline and scope. For the financial years 2022 and 2023, the methodology was used without modifications. This year, the monitoring of gender expenditure has been enhanced with the inclusion in the ‘programme performance statements’ (Annex 4 of the present report) of the gender disaggregated data available per programme.

The results of the methodology to measure expenditure relating to gender equality reflect the continuous efforts to reinforce the integration of gender mainstreaming into the EU budget. In line with the methodology, a programme may qualify for one or more gender scores based on the objectives pursued by its respective interventions. The total of the EU budget, based on the aggregation of the 2023 interventions qualifying for each score, has been allocated as shown below.

•Score 2: interventions the principal objective of which is to improve gender equality corresponded to 2% of the EU budget implemented in 2023 and were included in 13 programmes.

•Score 1: interventions having gender equality as an important and deliberate objective (but not as the main reason for the intervention) corresponded to 9% of the EU budget implemented in 2023 and were included in 16 programmes.

•Score 0*: interventions having the potential to contribute to gender equality corresponded to 20% of the EU budget implemented in 2023 and were included in 30 programmes.

•Score 0: interventions not having a significant bearing on gender equality corresponded to 69% of the EU budget implemented in 2023 and were included in 29 programmes.

In 2023, 11% of the EU budget contributed concretely to the promotion of gender equality (scores 2 and 1), while 20% has the potential to contribute (score 0*) to this objective. On the other hand, 69% of the EU budget can be considered not to have a (significant) bearing on the promotion of gender equality on the basis of the information currently available.

The 2023 results reflect the progress achieved by various programmes in terms of both implementation and reporting capacity, allowing to capture the contribution of the EU budget to gender equality at a more granular level. A key example is the Recovery and Resilience Facility. Following a Commission exercise to flag the Recovery and Resilience Facility measures that include a focus on gender equality, this year the EU budget commitments for this facility from 2021 to 2023 have been assigned scores of 2, 1 and 0, from the previous 0* score.

In 2023, the total EU budget expenditure on projects receiving gender scores 2 and 1 has increased significantly, compared to the amounts reported for 2021 and 2022 in previous years.

Contribution to gender scores 1 and 2 for 2021, 2022 and 2023 (million EUR) (*)

(*) Based on the amounts reported in the Annual Management Performance Report for the financial years 2021, 2002 and 2023.

Source: European Commission.

When looking at the share of the expenditure in each gender score, it is important to underline the impact in 2023 of the revision of the Recovery and Resilience Facility plans for the RepowerEU chapter. Excluding the measures implemented to tackle the energy crisis with the RepowerEU chapters in the Recovery and Resilience Facility, the share of implemented budget commitments would show an increase of score 2 from 2.1% to 2.5%, and score 1 from 9.1% to 11.9%. In the graph below, programmes are classified on the basis of the highest score they receive, even if only a part of the programme envelope contributes.

Number of programmes with gender equality intervention (classified by their highest score)

Source: European Commission.

Recovery and Resilience Facility

Under the Recovery and Resilience Facility ( 24 ), the 27 plans adopted contain 136 measures with a focus on gender equality. The investments fully devoted to gender equality include, for instance, the national roll-out of ‘early aid’ for socially disadvantaged pregnant women in Austria; incentives to foster female entrepreneurship in Italy; the creation of a support line for women in rural and urban areas; and the set-up of a national plan to tackle gender-based violence in Spain. Investments contributing directly or indirectly to gender equality include the improvement of working conditions for professions traditionally performed by women (e.g. the operationalisation of work cards for domestic workers in Romania); investments to boost up/re-skilling of disadvantaged groups, including girls and women (e.g. the ‘Solas recovery skills response’ programme in Ireland and the funding activities to increase the engagement of women and improving their awareness of information and communication technology career opportunities in Latvia); and investments to improve delivery of care to older people and people with disabilities, a task often taken up by women in the household (e.g. the improvement of home health care in Greece).

These crucial investments are complemented by structural reforms, supported by the Technical Support Instrument, which will have a considerable impact on gender equality. These include the reforms to close the gender pay gap in Estonia, to combat gender inequalities in Portugal, to better regulate the profession of nursing assistants in Sweden and to improve the prenatal and neonatal health screening in Bulgaria. The combination of investments and reforms is one of the main novelties of the Recovery and Resilience Facility. The interplay between gender-related investments and reforms will ensure a higher impact of the Recovery and Resilience Facility spending.

Gender-disaggregated data

This year the ‘programme performance statements’ (Annex 4 of this report), which provide detailed performance information at the programme level, have been enhanced to include the relevant gender-disaggregated information available for each programme. This includes a wide array of gender-disaggregated data aimed at improving the monitoring of the performance of the programme in relation to gender equality. For some programmes, particularly those under shared and indirect management, the availability of gender-disaggregated data is constrained by the programme regulations and the implementation agreements.

Looking ahead to the post-2027 multiannual financial framework, the co-legislators have agreed to include in the financial regulation a requirement to ensure that all data collected in relation to performance indicators of the financial programmes will be gender-disaggregated where appropriate. This is a significant step towards improving gender equality monitoring in our programmes and complements the updated ‘better regulation guidelines’, which will ensure that future ex ante impact assessments of all relevant spending programmes duly consider the effects on gender equality from the start.

Digital tracking

The digital transition is one of the top political priorities of the Commission, as identified in several strategic papers and in the Recovery and Resilience Facility, also due to it being a necessary contributor to what is known as ‘open strategic autonomy’. The digital transition implies an evolutionary and transformative process whereby the EU seeks to attain global leadership in the digital field in a fair and democratic manner. It is a key driver for the EU’s prosperity, economic recovery and resilience and a critical enabler of innovative solutions to address global challenges.

On 9 March 2021, the Commission presented its vision for the EU’s digital transformation by 2030, with a digital compass for the EU’s digital decade that evolves around four digital dimensions:

•skills,

•secure and sustainable digital infrastructure,

•digital transformation of businesses, and

•digitalisation of public services.

On 14 December 2022, the co-legislators adopted the Digital Decade policy programme, taking up the digital compass and its vision, setting up quantitative EU targets for the four cardinal points to be reached by 2030, and establishing a cooperation mechanism with the Member States to progress towards these targets.

Achievements

How much do we spend?

The 2024 stocktaking exercise of the EU spending programmes was conducted for the implementation of the 2021-2027 EU budget during the years 2021-2023. The findings of the stocktaking exercise, as presented below, show that the EU budget, including NextGenerationEU, is channelling significant contributions to all of the digital transition’s key dimensions.

This stocktaking exercise is a crucial stepping stone towards a dedicated tracking methodology for digital expenditure. The Commission’s ambition is to build on the findings of the stocktaking exercise concerning the concrete contribution of the EU budget towards the digital transition to develop a fully-fledged, robust methodology to be applied consistently across all programmes and providing a solid aggregate contribution of the EU budget towards the digital transition. The exercise is being continued this year and has given some results showing which areas the funding is dedicated to. Since not all programmes are in the position to apply the proposed methodology, the results do not yet show the complete picture.

Based on the results of the stocktaking exercise, EUR 205.5 billion of the EU budget (including NextGenerationEU) was dedicated to the digital transition from 2021 to 2023, which represents almost 17.5% of the total EU budget ( 29 ). An important part of this was contribution of the Recovery and Resilience Facility, which in the same period contributed 24% of its entire budget towards the digital transition. 

Estimated contributions to the digital transition of the EU budget programmes, in 2021-2023 (cumulatively) (*)

(*) Including NextGenerationEU, in EUR billion. 
For readability purposes, the scale is broken, as the Recovery and Resilience Facility provides more than 10 times more support to the digital transition than the next most contributing programme.

The abbreviations used stand for: RRF – Recovery and resilience facility; HORIZONEU – Horizon Europe; NDICI – Neighbourhood, Development and International Cooperation Instrument – Global Europe; DIGITALEU – digital Europe programme; ESF PLUS – European Social Fund+; JTM – Just Transition Mechanism; SPACE – EU Space Programme; CEF – Connecting Europe Facility; IPA III – Instrument for Pre-accession Assistance III; IBMF – Integrated Border Management Fund; ISF – Internal Security Fund; CREATIVEEU – Creative Europe Programme; CAP – common agricultural policy; EMFAF – European Maritime, Fisheries and Aquaculture Fund; SECURE CONNECTIVITY - EU Secure Connectivity Programme; TSI – Technical Support Instrument; ESC – European Solidarity Corps; OCT – Decision on the Overseas Association, including Greenland; RIGHTS – Citizens, Equality, Rights and Values Programme; TCC – Turkish Cypriot community.

Source: European Commission, based on the 2024 stock-taking.

Almost all programmes that are part of the EU budget contribute to the digital transition. Constraints on data availability only allowed digital-relevant expenditure for the 2021-2023 period to be tracked for 30 spending programmes (out of 48 with EU budget implemented in 2023). Among them are programmes that are likely to have substantial contributions, particularly the European Defence Fund and the union secure connectivity programme. Furthermore, the digital contribution of some programmes is likely to be largely underestimated at this stage: this is the case of the common agricultural policy and InvestEU.

In terms of thematic concentration, the EU budget is primarily supporting government and public bodies in digitalising key sectors, in particular health systems and transport. Significant efforts are also being made to support the digitalisation of businesses, to help the acquisition of digital skills (advanced and basic) and to support research and innovation, along with key advanced digital infrastructure and technologies (such as quantum computing, artificial intelligence and cloud/edge computing). More information is provided in the next section.

For shared management programmes and the Recovery and Resilience Facility, the digital contribution can be calculated for the entire implementation period of the programme, i.e. not at the individual year level. The amount presented for each year is obtained by comparing the total digital contribution over the entire implementation period to the share of the programme envelope committed for that year.

Estimated contributions to the digital transition by key digital dimensions (2021-2023) (*)

(*) Including NextGenerationEU, in EUR billion.

External actions programmes and the common agricultural policy could not be taken into account due to methodological limitations.

Source: European Commission, based on the 2024 stock-taking exercise.

Digitalisation of businesses and public services

The result of the 2024 stock-taking exercise shows that the EU budget (including NextGenerationEU) is making a significant contribution to the digitalisation of the private and public sectors. Our estimates for the years 2021 to 2023 are EUR 55.8 billion for the support of the EU budget to e-government (including the digitalisation of health and justice systems, or of the transport and energy network) and EUR 36.1 billion for the support to the digitalisation of businesses. The Recovery and Resilience Facility as well as the European Regional Development Fund and the Cohesion Fund are important contributors to these investments. In the years 2021 to 2023, 9% of the EU amounts from the European Regional Development Fund and the Cohesion Fund have been used to finance interventions that advance the digital transition, in particular supporting small and medium-sized companies and public services.

Estimated contributions of the EU budget to the digitalisation of public services (2021-2023) (*)

(*) Including NextGenerationEU.

These amounts are the result of the first stock-taking exercise conducted for the years 2021 to 2023 and exclude the external action programmes and the common agricultural policy due to methodological limitations.

Source: European Commission, based on the 2024 stock-taking exercise.

Supporting the development and deployment of digital technologies and research

From 2021 to 2023, the estimates indicate that the EU contributed EUR 29.6 billion to investment in digital capacities and deployment of advanced technologies, and EUR 26.9 billion to research, including EUR 14 billion from Horizon Europe. The main contributing programmes are the Recovery and Resilience Facility, Horizon Europe, the space programme, the European Regional Development Fund, the Cohesion Fund, the Just Transition Mechanism and the digital Europe programme.

Investing in digital skills

In the years 2021 to 2023, the EU budget including NextGenerationEU is also making a significant contribution to both basic and advanced digital skills, estimated at EUR 26.8 billion. The main programmes contributing are the Recovery and Resilience Facility (EUR 23.7 billion) and the European Social Fund+ (EUR 2.3 billion). Another important contributor was Erasmus+.

Enhancing digital connectivity

The EU budget including NextGenerationEU is contributing to enhancing digital connectivity, which will give all citizens and businesses new opportunities to benefit fully from the digital single market and accelerate economic growth. Amounts dedicated to connectivity, including investments in very high-capacity broadband network and 5G network coverage, are estimated to have reached EUR 14.8 billion for 2021-2023. The main programmes contributing are the Recovery and Resilience Facility (with EUR 13.6 billion), the cohesion policy funds (EUR 764.2 million) and the Connecting Europe Facility.

The common agricultural policy is playing a key role to improve broadband access in rural areas, by supporting broadband infrastructure and improved access to e government. Based on the latest rural development programmes, over the course of the current programming period, the common agricultural policy will have helped nearly 13 million people living in rural areas to benefit from improved access to information, communication and technological services and infrastructure.

The European Social Fund+ focuses on investment in digital skills. For example, the ‘Renewable energy new electric skills’ project addresses the need for new skills by creating training courses for electrotechnical roles. The new skills are acquired through augmented reality, which makes training more engaging and ensures that it remains relevant in a rapidly advancing digital landscape. Another example is ‘Línia Dona’, which helps disadvantaged women find work in Catalonia. The training complements job placement and includes, among others, digital skills.

Under the Connecting Europe Facility, 3 000 terabits per second of additional capacity were created by deployed backbone networks, including submarine cables. A total of EUR 450 million was awarded to 24 projects to support the digitalisation of the trans-European transport network railway network, through support to the European Railway Traffic Management System technology. The programme also supports smart electricity grids projects and contributes to the inclusiveness of outermost regions and overseas countries and territories by connecting them with up-to-date submarine backbones and ensuring that they can also benefit from advanced wireless and mobile connectivity.

Under the space programme, 3.5 billion Galileo-enabled devices were in use in 2023. The positioning accuracy performance of Galileo is three times better when compared to other global navigation satellite systems, with excellent availability. During the year, 260 000 registered users of the Copernicus climate change service had access to about 108 terabytes of quality-controlled climate data per day. Copernicus provides a wide range of Earth observation data and related model products. These models allow for forecasts and predictions to be made in certain thematic areas and are valuable content for a vast range of commercial applications, both in the professional and consumer domains.

The twin transition: exploiting synergies

The twin green and digital transitions are deeply interconnected, offering the potential to create significant synergies. The EU budget is instrumental in this process, acting as a key enabler in unlocking these synergies. It provides the necessary financial support for initiatives that align with the objectives of both transitions, thereby ensuring that the potential benefits can be fully realised. The table below illustrates some of the synergies that are being achieved with the support of the EU budget.

The EU budget and the sustainable development goals

What do we do?

The United Nations’ 2030 Agenda for Sustainable Development, with its 17 sustainable development goals and 169 targets, has given new impetus to global efforts to achieve sustainable development. The EU has played an important role in shaping the agenda, through public consultations, dialogue with partners and in-depth research. The EU is committed to playing an active role to maximise progress towards the sustainable development goals, as outlined, for example, in the communication ‘Next steps for a sustainable European future’, in the Commission staff working document ‘Delivering on the UN’s sustainable development goals – A comprehensive approach’, and recently in the first-ever EU voluntary review on progress in the implementation of the 2030 Agenda for Sustainable Development, adopted on 15 May 2023.

This lasting commitment to the UN sustainable development goals constitutes an overriding political priority for the von der Leyen Commission. Progressing towards the sustainable development goals is an intrinsic part of the President’s political programme, and an array of deeply transformative policies had already been presented in 2020, such as the European Green Deal, the Climate Law, a new industrial strategy for Europe, and continue to this day with the Green Deal industrial plan presented in 2023, the 2024 annual sustainable growth survey and the new European skills agenda, among others.

This commitment gained even greater relevance in light of the global COVID-19 pandemic and global turmoil, which provided an impetus and strengthened the need to build back better towards a more inclusive, sustainable, just and resilient future for all, leaving no one behind. Notably, the 2024 annual sustainable growth survey reaffirmed the four priorities under the European semester, namely promoting environmental sustainability, productivity, fairness and macroeconomic stability, with a view to fostering competitive sustainability. This approach is in line with the UN’s sustainable development goals, which are an integral part of the European semester and underpin Member State recovery and resilience plans under the Recovery and Resilience Facility. Therefore, the European semester will continue to be a main vehicle for monitoring and promoting progress towards the sustainable development goals, also in a context of increased attention on sustainable and inclusive well-being beyond gross domestic product.

These priorities ensure that the new growth agenda efficiently mobilises resources for the benefit of people and the planet. To this end, a holistic and balanced approach is required, in which the EU works better together with the Member States and across policy fields. Given the division of competences between the Member States and the EU, close coordination is crucial to achieving the sustainable development goals.

Looking at the current multiannual financial framework, in its 2021 communication on better regulation, the Commission adopted further policymaking improvements to ensure that our policies support the recovery and resilience of the EU and its twin green and digital transitions in the best possible way. In this context, the Commission decided to mainstream the sustainable development goals with a view to helping ensure that every legislative proposal contributes to the 2030 sustainable development agenda.

To this end, the Commission now systematically identifies the relevant sustainable development goals for each proposal and examines how the initiative supports their achievement. What is more, links to the sustainable development goals will be included throughout evaluations and impact assessments.

At the EU level, sustainable development challenges are addressed through policies and regulatory instruments. As far as the former are concerned, the EU budget, through its spending programmes, provides a significant contribution to sustainable development by complementing national budgets, in line with the principle of subsidiarity. In doing so, the design and implementation of the EU spending programmes aim to deliver on the objectives in each policy field, while promoting sustainability through the initiatives and interventions of the relevant programmes in a connected and consistent way. In particular, 46 out of 50 of the EU spending programmes contributed towards at least one sustainable development goal in 2023.

Number of programmes contributing to individual sustainable development goals

Source: European Commission.

In light of the cross-cutting nature of the sustainable development goals, and in order to ensure a holistic approach in addressing sustainable development, over 99% of the budget of EU spending programmes contribute to sustainable development goals. What is more, the vast majority of the programme (39 programmes) are designed to address multiple sustainable development goals through their policy actions. The Commission presents the sustainable development goals to which each EU programme contributes, along with examples of their contribution. This is with a view to further enhancing the reporting on the performance of its programmes and providing a deeper understanding of EU policy coherence. The infographic illustrates, in a non-exhaustive manner, the many examples of the contribution of EU programmes to the sustainable development goals.

The 2023 EU voluntary review on sustainable development goals reaffirmed that the EU budget is an effective instrument to deliver major progress on the 2030 agenda and, looking ahead, states that the EU will take further the commitment to inform on the implementation of the sustainable development goals in all relevant EU programmes.