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Financial perspectives form the framework for Community expenditure over a period of several years. They are the product of an interinstitutional agreement between the European Parliament, the Council and the Commission and indicate the maximum volume and breakdown of the foreseeable Community expenditure. They are adjusted annually by the Commission to take account of prices and the trend in Community GDP.
However, it should be borne in mind that the financial perspectives are not a multiannual budget, since the annual budgetary procedure remains essential to determine the actual amount of expenditure and the breakdown across the various budget headings.
To date, three interinstitutional agreements of this kind have been concluded, in 1988, 1992 and 1999, respectively:
The 2000-2006 financial perspectives form part of a new interinstitutional agreement, which is the main feature of the Agenda 2000 financial package. This agreement, which received political endorsement at the Berlin Summit in March 1999, should enable the Union to enlarge and strengthen its policies, while remaining within a rigorous financial framework.
The financial perspectives establish the reference framework for a seven-year period (2000-2006). Although they cannot incorporate expenditure linked with new accessions before they take place, they nevertheless have three features that are interesting in terms of enlargement:
An overall effort to achieve budgetary discipline will enable the current ceiling on expenditure of 1.27% of Community GDP to be maintained.
A new interinstitutional agreement on the financial perspectives for the period 2007-2013 is being negotiated.
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