Which countries gain or lose from the National and Regional Partnership Fund?

One of the ideas stressed in the Commission’s presentation of the CAP budget proposal in the next MFF is that the €296 billion ring-fenced for CAP income support is a minimum amount. Member States will be able to add to that from their overall ceilings in the National and Regional Partnership Fund (NRPF) when they design their National and Regional Partnership Plans. While correct in theory, there will also be huge demands for these resources from other sectors. In this post, I assess the likelihood that Member States might be willing to top up the minimum amounts for CAP income support from their overall NRPF allocation.

The Commission has published a Fact Sheet giving details of the overall allocation to Member States of the resources provided to the NRPF in the 2028-2034 MFF under the NPRF Regulation. These amounts are calculated in accordance with the complicated formula set out in Annex 1 to that Regulation. The overall size of the Fund over the seven-year period is €865 billion of which €783 billion will be allocated to the NRP Plans.

Within that amount, a minimum of €296 billion has been ring-fenced for CAP income support interventions (for discussion and definitions, see my previous post on this blog). I calculated there that, if Member States only allocate this minimum funding to the CAP, there would be a reduction of 15% in current prices in the amounts available for CAP income support in the next MFF.

It is possible for Member States to allocate additional resources to the CAP from the NRPF resources they receive. There is already a presumption and requirement that they will finance Co-operation measures (LEADER, EIP projects) as well as AKIS interventions from the NRPF separate from the ring-fenced CAP income support resources. The question is how willing might Member States be to allocate even further resources to top up the CAP income support allocation?

As noted in my previous post, we do not yet know how the minimum ring-fenced amount of €296 billion will be distributed across Member States. The Annex XVIII to the NRPF Regulation which will contain these figures does not have any numbers in the version published so far. It is possible that the minimum funding requirement for CAP income support for some Member States may fall by less than 15% and for other Member States by more. The exact outcome might affect the incentive for an individual Member State to allocate additional funds for CAP income support or not.

Instead, in this post we look at the national allocations for Member States in the NRPF in the 2028-2024 MFF and compare those allocations with what each Member State was allocated for the shared management programmes replaced by the NRPF in the 2021-2027 period. The outcomes can be used to indicate how squeezed Member States will be in continuing programmes in the next MFF compared to the current one. The bottom line is that there will likely be intense competition for funds within the NRPF and the likelihood of attracting additional resources for CAP income support measures must be seen as very small.

How countries fare

The numbers for each Member State are shown in Table 1 but first some remarks must be made on the construction of the table.

For the NRPF, the Fact Sheet breaks down the total allocation into three categories: the General Allocation; migration, security and home affairs; and the Social Climate Fund. The allocation for migration, security and home affairs, like CAP income support, is ring-fenced within the Fund and amounts to €34.2 billion. The Social Climate Fund expenditure is separately funded. This leaves the General Allocation amount as €748.9 billion to be divided between what were previously the cohesion, social, agricultural, fisheries and just transition funds. We can add that the allocation to the home affairs group is also a minimum amount, so in practice this priority can also compete for funding within the General Allocation. Within this group, cohesion and agricultural funding are the two heavyweights.

Further, we must remember that a new priority has joined this club and will demand a share of resources, namely defence and security. The NRPF is expected to fund new defence capabilities and preparedness. This can include reinforcing the the Union’s defence industrial base and military mobility, as well as strengthening the Unions’ preparedness, protecting critical energy and transport infrastructure, and strengthening cybersecurity. For example, considerable investment will be needed to develop the dual use Trans-European Transport Network to allow for largescale movements of troops and heavy equipment and material at short notice. This will require considerable infrastructural investment which will squeeze resources from the traditional five pre-allocated funds covered by the General Allocation heading.

We can now look at the final column in Table 1 which shows how countries have fared under the new allocation formula for the NRPF. For the EU overall, the General Allocation heading in the NRPF maintains the level of funding previously allocated to the five shared management funds in current price (€749 billion compared to €753 billion). Keep in mind that this funding must now be stretched further to also cover defence and preparedness. In addition, some countries do better and others do worse.

Broadly, the new allocation formula distributes funds to Member States that is close to what they previously received from the five shared management funds but still with some marked differences. Four countries have lost 5% or more of the funds previously allocated to the five shared management funds: Czechia (-9.3%), Slovenia (-7.2%), Portugal (-5.5%), and Cyprus (-5.0%).

Five countries gain slightly with increases of 3% or more. Luxembourg tops the list but the amount of resources involved is tiny so this is more a statistical result. Apart from Luxembourg, the four countries that will see positive increases in their General Allocation funding are Greece (4.4%), Bulgaria (4.3%), Romania (4.2%) and Croatia (+3.2%). The broad picture is that the new allocation formula shifts resources somewhat to the countries of central and eastern Europe.

Conclusions

Within the NRPF, the CAP is in competition with other spending priorities including cohesion, fisheries, social, just transition, home affairs and defence. Although the total allocation to these priorities has been maintained in current prices in the proposed MFF, the addition of the defence priority is going to squeeze the resources that are available to fund the other priorities. This will be a difficult act for Member States to manage. The prospect that Member States will allocate additional resources to CAP income support measures is thus not impossible to imagine, but must be seen as rather unlikely.

This post was written by Alan Matthews.

Photo credit: Alan Matthews