EPSO Budget & Financial Management: What the FRMCQ Tests

There Is No Budget Notice — Read That as an Opening

Start with the honest position. There is no open EPSO competition for Budget & Financial Management, and none is announced. If you searched for one and found nothing, you found the truth.

That is not a reason to close the tab. EU budget knowledge is one of the most reusable things a candidate can hold. It shows up in the field-related MCQ of Finance and Audit tracks, in Public Administration and Law competitions where the budgetary procedure is treated as institutional knowledge, in the EU knowledge component of generalist AD5 selections, and in the CAST Permanent Finance profile, which stays open on a rolling basis. It is also stable: the MFF regulation and the Own Resources Decision have not changed since December 2020, so what you learn now will still be correct when a Notice does appear.

Candidates who wait for a Notice before opening a legal text have four to eight weeks between publication and testing. Candidates who already know the difference between a commitment appropriation and a payment appropriation spend those weeks on the specifics of the Notice instead. That is the whole argument for reading this now.

For how field-related MCQs are structured across every specialist track, see our guide to the EPSO specialist competitions FRMCQ.

The Format You Are Preparing For

The field-related MCQ used across specialist tracks is 30 questions in 40 minutes, with 15 correct answers to pass. Eighty seconds per question, which is enough to read a question about the own-resources ceiling and not enough to reason your way from first principles to a figure you never learned.

Under the current EPSO model the field-related MCQ is the ranking instrument. Reasoning tests are pass-or-fail gates that do not feed your final score. That changes what "good enough" means: on the reasoning gates you need the threshold, and on the field-related MCQ you need every mark you can get.

Block 1 — The Multiannual Financial Framework

The Legal Base Is the Question

Article 312 TFEU is where a surprising share of MFF questions live, and they are usually procedural rather than numerical.

The MFF ensures that Union expenditure develops in an orderly manner and within the limits of its own resources. It is established for a period of at least five years, and the annual budget must comply with it. The Council adopts the MFF regulation under a special legislative procedure, acting unanimously after obtaining the consent of the European Parliament, given by a majority of its component members. The European Council may, unanimously, authorise the Council to act by qualified majority instead — a bridging clause that has never been used.

Three details in that paragraph are the answer to three different questions: at least five years, not seven; Council unanimity, not qualified majority; Parliament consent, not ordinary legislative procedure.

The current framework is Council Regulation (EU, Euratom) 2020/2093 of 17 December 2020, published in OJ L 433 I of 22 December 2020. It runs seven years from 1 January 2021, and its legal bases are Article 312 TFEU together with Article 106a of the Euratom Treaty.

The Ceilings Table

Annex I of Regulation 2020/2093 sets annual ceilings for commitment appropriations by heading, plus a single annual ceiling for payment appropriations, all in 2018 prices. Total commitments for 2021-2027 come to 1 074 300 million euro.

The headings you should be able to name in order, with their seven-year commitment totals from Annex I:

Heading 3 carries a sub-ceiling established without prejudice to flexibility between the two pillars of the Common Agricultural Policy: transfers between the European Agricultural Fund for Rural Development and direct payments are laid down in the relevant legal act, and the MFF is adjusted accordingly through the annual technical adjustment.

Note what heading 7 tells you. The entire administrative cost of every EU institution over seven years is 55 852 million euro against total commitments of 1 074 300 — around 5 %. If you are ever asked to reason about the relative weight of EU administration, that ratio is the anchor.

The Transition Rule

The Commission was to present a proposal for a new MFF before 1 July 2025. Under Article 312(4) TFEU, if a new framework is not adopted before the current one expires, the ceilings corresponding to the last year of the existing MFF continue to apply. There is no budgetary cliff at the end of an MFF — the final year's ceilings simply roll forward. Questions like to present the cliff as the plausible-sounding option.

Block 2 — Own Resources

The Categories

Council Decision (EU, Euratom) 2020/2053 of 14 December 2020 on the system of own resources, published in OJ L 424 of 15 December 2020, repealed Council Decision 2014/335/EU, Euratom. Revenue constituting own resources falls into these categories:

• Traditional own resources — levies, premiums, additional or compensatory amounts, Common Customs Tariff duties and other duties on trade with third countries, customs duties on products under the expired ECSC Treaty, and sugar sector contributions.
• VAT-based own resource, simplified in the 2020 Decision after repeated criticism from the Court of Auditors, the Parliament and Member States that the previous method was overly complex.
• GNI-based own resource, the balancing item.
• Plastic — national contributions proportional to the quantity of non-recycled plastic packaging waste in each Member State, introduced as a first step towards new own resources.

Member States retain 25 % of traditional own resources they collect, by way of collection costs.

The Two Ceilings

This is the highest-yield pair of numbers in the whole field:

• Total own resources allocated to cover annual appropriations for payments: not more than 1.40 % of the sum of all Member States' GNIs.
• Total annual appropriations for commitments entered in the budget: not more than 1.46 % of the sum of all Member States' GNIs.

A sufficient margin must be preserved under these ceilings so the Union can cover all financial obligations and contingent liabilities falling due in any year. The ceilings were raised when the European Development Fund was integrated into the Union budget.

Corrections and What Comes Next

Following the European Council of 17 to 21 July 2020, Denmark, the Netherlands, Austria, Sweden and Germany benefit from lump-sum corrections to their annual GNI-based contributions for 2021-2027. Germany's inclusion is the detail candidates get wrong — the older rebate story features four countries, and the recovery context added the fifth.

The same conclusions set out a roadmap for further own resources: Commission proposals on a carbon border adjustment mechanism and a digital levy in the first semester of 2021 with a view to introduction by 1 January 2023, a revised proposal on the EU Emissions Trading System possibly extended to aviation and maritime, and work in the course of the 2021-2027 MFF towards other own resources which may include a financial transaction tax.

Two cautions. First, that is a political roadmap recorded in a recital, not adopted law — a question asking what own resources exist has a different answer from one asking what was envisaged. Second, under the fourth paragraph of Article 311 TFEU the Council adopts implementing measures for the own resources system, covering the calculation and budgeting of the annual balance and the arrangements for controlling and supervising collection. And the Decision itself entered into force only once approved by all Member States in accordance with their constitutional requirements — own resources decisions require national ratification, unlike ordinary EU legislation.

Block 3 — NextGenerationEU and the Borrowing

Three dates and one percentage carry most of the NextGenerationEU questions.

The Commission received an exceptional and temporary empowerment to borrow on capital markets to address the consequences of the COVID-19 crisis. Legal commitments of programmes financed by these additional resources were to be made by 31 December 2023. Repayment of the principal must start before the end of the MFF 2021-2027 period, with due regard to the Article 314 TFEU procedure. All liabilities incurred must be fully repaid at the latest by 31 December 2058.

The percentage: amounts due in any given year for repayment of principal may not exceed 7.5 % of the maximum amount of 390 000 million euro to be used for expenditure. The schedule must respect sound financial management and achieve a steady, predictable reduction of liabilities.

Approval of payments under the Recovery and Resilience Facility is subject to the satisfactory fulfilment of the relevant milestones and targets set out in the national Recovery and Resilience Plan. Not on spending having occurred — on milestones being met. That distinction is the point of the instrument, and it is what a well-written question will test.

Funds borrowed to provide loans to Member States are repaid using sums received back from those Member States; funds used for non-repayable support, financial instruments or provisioning of budgetary guarantees are repaid from the Union budget. The Commission must inform Parliament and Council regularly about its debt management strategy, publish an issuance calendar with expected dates and volumes, and communicate a plan of expected principal and interest payments.

Block 4 — The Annual Budget Procedure

Article 310: The Principles

All items of revenue and expenditure are included in estimates drawn up for each financial year and shown in the budget. The annual budget is established by the European Parliament and the Council in accordance with Article 314. And the sentence that generates the most questions of all: the revenue and expenditure shown in the budget shall be in balance. The EU budget cannot run a deficit.

Implementation of expenditure requires the prior adoption of a legally binding Union act providing a legal basis. And under Article 310(4), the Union may not adopt any act likely to have appreciable budgetary implications without assurance that the resulting expenditure can be financed within the limit of its own resources.

Article 314: The Mechanics

The conciliation stage is where the examinable detail sits.

If the Council informs Parliament within ten days of the draft being forwarded that it has approved all Parliament's amendments, the Conciliation Committee does not meet. Otherwise the Committee convenes: members of the Council or their representatives and an equal number of members representing Parliament. Its task is to reach agreement on a joint text within twenty-one days of being convened — by qualified majority of the Council members and by a majority of the representatives of Parliament. The Commission takes part and takes all necessary initiatives to reconcile positions.

Ten days, twenty-one days, equal composition, two different voting rules on the two sides of the table. Learn those four facts as a block.

Under Article 323 TFEU, the Parliament, Council and Commission must ensure that financial means are available for the Union to fulfil its legal obligations towards third parties — which is why maximum flexibility is built into the MFF regulation.

Block 5 — Flexibility, and Where the Money Moves

This is the block candidates skip and questions like.

Compliance. Parliament, Council and Commission must comply with the annual expenditure ceilings in Annex I during every budgetary procedure and when implementing the budget. Where necessary, MFF ceilings are lowered to ensure compliance with the own resources ceiling.

Technical adjustment. Each year, ahead of the procedure for year n+1, the Commission revalues ceilings and overall figures at year n+1 prices, calculates the margin available under the own resources ceiling, and calculates the amounts available under the Single Margin Instrument.

Single Margin Instrument. From 2022 it comprises: margins left available below the commitment ceilings of year n-1, made available above the ceilings for 2022-2027; amounts equivalent to the difference between executed payments and the payment ceiling of year n-1, adjusting the payment ceiling upwards; and additional amounts above the ceilings, provided they are fully offset against margins in one or more headings.

Flexibility Instrument. An unused annual amount may be used up to year n+2. Portions from previous years are used first, in order of age. Any portion from year n not used by year n+2 lapses. Three rules, all examinable, all easy to invert.

Solidarity and Emergency Aid Reserve. Finances assistance for major disasters covered by the European Union Solidarity Fund, and rapid responses to emergency needs inside or outside the Union — natural and man-made disasters, humanitarian crises involving large-scale public health, veterinary or phytosanitary threats, and situations of particular pressure at the external borders.

Competition fines. An amount equivalent to revenue from fines imposed under Regulations 1/2003 and 139/2004, entered in the budget of year n-1 under Article 107 of the Financial Regulation and net of the amount under Article 141(1) of the UK Withdrawal Agreement, is available for additional allocations to the programmes listed in Annex II — from 2022 to 2027, following a distribution key. Antitrust and merger fines are recycled into Horizon Europe, InvestEU, Erasmus+, EU4Health and the other programmes on that list.

Revision. In unforeseen circumstances the MFF may be revised in compliance with the own resources ceiling, and as a general rule any revision proposal is presented and adopted before the start of the budgetary procedure for the year concerned. The MFF is also revised in the event of an accession to the Union, and — a clause that surprises people — in the event of the reunification of Cyprus.

Large-scale projects. A maximum of 13 202 million euro in 2018 prices is available from the budget for 2021-2027 for large-scale projects.

Assigned revenue within the meaning of the Financial Regulation is not taken into account by the MFF. Under Article 7 of the Financial Regulation, all revenue and expenditure of the Union and of Euratom is included in the general budget, including expenditure resulting from decisions taken unanimously by the Council after consulting Parliament in the framework of Article 332 TFEU.

Five Places Candidates Lose Marks

Not a list of mistakes to fear — a list of distinctions worth building once, properly.

Commitments and payments. Every ceiling, every total, every flexibility instrument exists in two versions. Before answering any numerical budget question, check which one it asks about. If a question gives you a figure and asks whether it is within the ceiling, the first move is identifying whether you are in the 1.46 % world or the 1.40 % world.

Adoption procedures. The MFF is Council unanimity plus Parliament consent. The own resources decision needs national ratification on top. The annual budget goes through Article 314 with a Conciliation Committee. Three different routes for three different instruments, and options will offer you the wrong one for the right instrument.

Roadmap versus law. Recitals describing what the European Council concluded, invited or envisaged are not the operative provisions. A question about what own resources the Union has is answered by the categories in Article 2; a question about a carbon border adjustment mechanism as an own resource is answered from a recital, and the answer is conditional.

Ceilings versus totals. The MFF fixes annual ceilings by heading. Annex I also shows seven-year totals. A ceiling is a maximum, not a plan, and the budget adopted each year sits below it.

Where numbers are expressed. MFF figures are in 2018 prices, revalued annually through the technical adjustment. A figure in current prices for a later year will not match Annex I, and both can be correct.

How to Study This Field

Read Articles 310 to 325 TFEU first. They are a few pages and they frame everything else: the balance rule, the annual procedure, own resources, the MFF, budgetary discipline.

Then read Regulation 2020/2093 end to end. It is genuinely short, and its Annex I is the source of the ceiling questions. Then the Own Resources Decision, which is shorter still.

Treat the Financial Regulation as a reference, not a reading. Articles 7, 107 and 220 recur in the MFF regulation itself, which is a fair signal of where to start.

Then practise under time. Eighty seconds per question is the constraint that turns knowledge into a score, and it is the part that cannot be read into existence. You can build the budget block on EU-now in twenty-minute sessions, and ask EUgenio when a provision refuses to make sense — it answers from the same official texts cited here, and tells you when it does not have a source rather than inventing one.

References and Sources

All figures and quotations in this article come from official EU sources:

• Council Regulation (EU, Euratom) 2020/2093 — MFF 2021-2027 (OJ L 433 I, 22.12.2020)
• Council Decision (EU, Euratom) 2020/2053 — Own Resources Decision (OJ L 424, 15.12.2020)
• Regulation (EU, Euratom) 2018/1046 — Financial Regulation (OJ L 193, 30.7.2018)
• Consolidated Treaty on the Functioning of the European Union — Articles 310 to 325
• Regulation (EU) 2019/516 — GNI Regulation (OJ L 91, 29.3.2019)
• Council Regulation (EU, Euratom) No 609/2014 — making available own resources
• European Commission — EU Budget

Where this article describes what a question is likely to test, that is our editorial judgement based on the format of published field-related MCQs — not text from any Notice of Competition. The legal provisions, figures and dates are quoted from the instruments listed above.