The EU’s multiannual financial framework (MFF), of which the latest runs for the period 2014-2020, sets out the annual amounts that can be spent on various policy areas.
The MFF ensures that EU spending remains both predictable and stays within agreed limits. It allows the EU to plan over the medium term rather than from year to year, resulting in more effective policies. This is as important for the EU as for the beneficiaries of its spending.
The MFF is both an expression of the EU’s political priorities and a budgetary planning tool. The EU’s annual budget must respect the ceilings agreed in the MFF.
The MFF is proposed by the European Commission and then discussed in the Council, as well as in the European Parliament (EP). To be adopted, the EP’s consent and unanimity in the Council are required.
The MFF is accompanied by an agreement between the EU institutions to implement budgetary discipline and to cooperate on budgetary matters.
Source: EUR Lex Glossary