The European Court of Auditors (ECA) has warned that the proposed European Fund, which would include the Common Agricultural Policy (CAP), may risk "increased complexity".

The EU’s financial watchdog has today (Tuesday, February 24) published its views on the draft laws which, if passed, will govern almost half of the EU's proposed €2 trillion 2028-2034 budget.

Last July, the European Commission outlined its proposal to establish "the European Fund" which would bring together many formerly separate funds, including agriculture and cohesion along with defence.

It would be the single largest part of the commission's proposed next long-term EU budget or Multi-Annual Financial Framework (MFF).

The proposed fund would have a budget of €865 billion, almost 44% of total EU spending in the period.

The fund would be delivered through national plans for each member state, and is accompanied by a proposal for a new way of measuring performance and tracking EU spending.

The commission also proposes to supplement this fund with up to €150 billion in loans to member states.

The aim of the proposal, according to the commission, is to simplify the implementation of the EU budget, while increasing flexibility to respond to unexpected challenges and crises.

Auditors

Both the European Council and the European Parliament asked the ECA to give its independent expert advice on the commission’s proposal.

The auditors noted that these proposals "fundamentally change the way EU spending is planned, managed and scrutinised".

"The integration of different funds combines policies with different objectives, timeframes and delivery rationales, which could make it more complex, and require trade-offs between priorities," they said.

They warn that member states may struggle to address all EU objectives satisfactorily through their national plans, while tailoring interventions to regional and national development needs.

While the proposal promises greater simplification, the auditors believe this may be mainly at commission level, and the administrative burden on member states, regions and beneficiaries may be no lighter.

The auditors warn that overloading a single instrument with multiple layers of objectives, safeguards and reporting requirements may "increase complexity, weaken accountability and undermine effective implementation".

European fund

The ECA said under the proposed fund payments to member states depend on their achieving milestones and targets rather than on costs being reimbursed, as at present.

"It is therefore vital for these milestones and targets to beprecisely defined, so that it is clear when they are actually achieved," they said.

"There should also be sufficient safeguards to ensure that cost estimates are robust.

"The commission may not be able to provide the European Parliament and the Council with sufficient assurance that the funds have been managed soundly.

"It should therefore establish effective control and audit requirements, and lead to explicit financial consequences for non compliance with EU and national laws," the ECA added.