The financial perspective forms the framework for Community expenditure over a period of several years. It is the product of an interinstitutional agreement between the European Parliament, the Council and the Commission and indicates the maximum volume and the composition of the foreseeable Community expenditure. It is adjusted annually by the Commission to take account of prices and the development of Community GNP. However, it should be noted that the financial perspective is not a multi-annual budget, since the annual budgetary procedure remains essential to determine the actual amount of expenditure and the breakdown between the different budget headings.

To date, three interinstitutional agreements of this type have been concluded, the first in 1988, the second in 1992 and the third in 1999:

•the 1988-1992 financial perspective (Delors I package);
•the 1993-1999 financial perspective (Delors II package);
•the 2000-2006 financial perspective.

The financial perspective 2000-2006 is part of the new Interinstitutional Agreement which is the cornerstone of the Agenda 2000 financial package. This Agreement, which received political endorsement at the Berlin summit in March 1999, should enable the Union to take in new members and at the same time strengthen its policies while keeping to a rigorous financial framework.

The financial perspective establishes the reference framework for a period of seven years (2000-2006). Although it cannot incorporate expenditure linked to new accessions before they take effect, it does, nonetheless, have three features that are interesting in terms of enlargement:

•agricultural funding is extended to encompass a new rural development policy, veterinary measures, a pre-accession agricultural instrument, and a margin left available for enlargement;
•the allocation for the Structural Funds destined for the fifteen Member States will be gradually reduced from 2002 onwards by concentrating the priorities on a more limited number of regions. Structural operations also comprise a new pre-accession instrument;
•the amount allocated for external action is increased by 2% per year so as to cover the increase in pre-accession aid under the Phare programme. In addition, the allocations provided for pre-accession aid (Phare, Ispa and Sapard) will remain unchanged irrespective of the number of applicant countries which will become members of the European Union during the period 2000-2006. Resources can thus be concentrated on the countries in greatest need.

Lastly, budgetary discipline will make it possible to maintain the current ceiling on expenditure, 1.27% of the Community's GNP, until 2006.

See:

•Agenda 2000
•Economic and social cohesion
•Enlargement
•Programme of Community aid to the countries of Central and Eastern Europe (Phare)
•Pre-accession strategy

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