On 16 July, the European Commission presented a proposal for the next Multiannual Financial Framework (MFF). The draft foresees an increased total budget of around two trillion euros for the period from 2028 to 2034, including the repayment of the NextGenerationEU coronavirus recovery programme. The increase is not to be financed through higher contributions from the Member States but through new own resources. For this purpose, the European Commission proposes taxes on tobacco products and electronic waste, corporate levies, as well as levies within the framework of the EU’s Carbon Border Adjustment Mechanism (CBAM) and Emissions Trading System (ETS).

Restruc­turing of the MFF

The aim of the proposal is to strengthen Europe’s competitiveness and to secure strategic investments for the future. This is reflected in the changed structure of the proposed budget, which is oriented around four central policy areas: investments and reforms through national and regional partnership plans (865 billion euros), promoting European competitiveness through a new Competitiveness Fund (409 billion euros including Horizon Europe), strengthening Europe’s role in the world (200 billion euros), and protecting citizens and building crisis resilience (around 100 to 110 billion euros).

National and regional part­ner­ship plans

As a means of strategic simplification, the number of individual programmes is to be significantly reduced compared to the current budget. Under the new partnership plans, 14 previously independent programmes are to be merged, including the Cohesion Fund, the Common Agricultural Policy (CAP), and the European Social Fund Plus (ESF+). While the ESF+ will no longer be maintained as a separate item, the European Commission’s proposal stipulates that 14 percent of the partnership plans – around 100 billion euros – be earmarked for social purposes. This roughly corresponds to the level of the current ESF+. In this way, the implementation of the European Pillar of Social Rights is to be promoted through investments in high-quality jobs, skills development, social inclusion, and housing.

Compet­i­tive­ness Fund

The new Competitiveness Fund is intended to secure the EU’s competitiveness in strategically crucial areas – from decarbonisation to digitalisation and artificial intelligence, to space and defence. The health economy, biotechnology, and bioeconomy are also identified as priority investment fields. The Fund replaces previously overlapping programmes and aims to ensure more efficient use of funding through uniform rules, simplified and accelerated procedures, and reduced reporting obligations. Private capital is also to be mobilised, not least through financing instruments such as InvestEU.

Europe’s role in the world

Through the “Global Europe” instrument, the EU aims to strengthen its foreign policy capacity and respond more specifically to geopolitical challenges. This area includes traditional development cooperation, humanitarian aid, and targeted support for candidate countries for EU accession, including Ukraine. The funds are to be used flexibly to respond to crises and changing global needs – for example, through regional partnerships, sectoral reform support, or investments in resilience and climate protection. A global pillar is also envisaged, for example for investments in global health, cybersecurity, or international climate and ocean policy.

Building crisis resilience

To strengthen internal security and crisis preparedness, the European Commission plans a significant expansion of civil protection and health emergency preparedness. The revised EU Civil Protection Mechanism UCPM+ – into which the existing EU4Health programme is to be integrated – is to be equipped with more than 10 billion euros to ensure better cross-sector coordination and to address existing capacity gaps in emergency response. For example, key capacities – including strategic stockpiling – are to be established and maintained at EU level across sectors and regions. Investments via the partnership plans and the Competitiveness Fund are also intended to contribute to crisis prevention and preparedness at regional, national, and European levels.

Next steps

According to Article 312 of the Treaty on the Functioning of the EU, the MFF is adopted by the Council in the form of a regulation. This regulation requires unanimity in the Council as well as the consent of the European Parliament, which is why the Commission’s current proposal marks the start of interinstitutional negotiations. In initial reactions, the European Parliament has expressed criticism of the design of the planned partnership plans, warning that they could reduce democratic control over EU spending. There has also been opposition from the Member States. Germany and France, among others, have rejected the proposed budget increase and the plan to finance it through new own resources.