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European Commission has officially proposed recently a draft of the 7-year multi-annual financial framework, MFF as the EU-27 common budget for 2028-34. It is structured along main categories of expenditures (‘headings’) and providing maximum amounts for each of them (“ceilings”). The Commission draft also includes a ‘flexibility instrument’ providing additional funds over some urgent expenses; all the MFF final headings will be specified in a regulation after about two year’s of discussions.
Background
The EU’s next MFF has been finally made public this July in typically EU bureaucracy’s fashion: i.e. quite feasible on the paper, but chaotic and politically oriented in essence (the latter is in view of finding supporters for the draft’s approval).
With the present MFF draft, the Commission has started the next two years of fierce negotiations: the budget needs the sign-off of all EU countries and the European Parliament by 2027.
But even at the recent initial stage of the MFF presentation in the Parliament, “the wave of criticism arrived”: some said that the budget was either too big (the frugal states like Germany), not big enough (like the Socialists group in Parliament), and/or undemocratic (as the whole European Parliament’s meaning), as well as disappointing “everyone from farmers to regions to the climate to the disabled”, notes Politico Brussels (17.07.2025).
As to the headline figures, the Commission’s “assembled budget” reached almost” €2 trillion; though a piece of that will go to paying back the EU’s post-Covid debts; hence, the MFF-programs themselves affiliate about €1.8 trillion.
The headings of the proposed MFF correspond to the major areas of common integration activities financed by the EU-wide budget: e.g. more specifically the Europe’s economic, social and territorial cohesion, agriculture, rural and maritime progress, as well as security, competitiveness, social prosperity and well-being, including the “Global Europe” program and the EU administration’s expenses.
The MFF composition
The long-term budget’s draft includes five headings:
= Heading 1 (with a budget of about one trillion euros), which encompasses, e.g. the National and Regional Partnership Plans (NRPP), aimed to promote the member states’ economic, social and territorial cohesion, sustainable development and competitiveness, as well as the Union’s security, while supporting agriculture, rural and maritime prosperity, Frontex, Europol and other decentralised agencies related to this heading. In addition, it includes a fixed annual amount for the repayment of NextGenerationEU program.
= Heading 2 (with a budget of € 589.6 billion), includes the European Competitiveness Fund and Horizon Europe; it also includes key programs to support the Union’s cross border connectivity (Connecting Europe Facility program), preparedness and response to crises, including health (Union Civil Protection Mechanism+), as well as Europe’s cross-border education flagship program Erasmus+, and the new ‘AgoraEU’ program aimed to support culture, media and civil society organisations.
= Heading 3, that amounts to € 215.2 billion, hosts Global Europe, as well as the Common Foreign and Security Policy and Overseas Countries and Territories (including Greenland) assistance.
= Heading 4, which includes expenditures for the European Public Administration and will amount to a stable share of 6% of the MFF.
= The “flexibility instrument” would allow the Union to react to new and unexpected needs with funds over the expenditure ceilings, such as a special reserve to be available to support Ukraine.
As to the MFF flexibility, the Commission underlines that it will be easier to redirect funding within and across headings and programs to provide financial support where it is most needed. A significant share of the next MFF will not be pre-programmed or pre-planned, so that emerging needs can be addressed swiftly and effectively.
The mentioned “flexibility instrument” will bring to the EU budget additional capabilities to address unforeseen circumstances that require additional resources.
In case of severe crisis, a new extraordinary Crisis Mechanism will be available, offering loans to the member states. The activation of this mechanism will be decided by the Council; the implementation of this tool will ensure institutional balance including through involvement of the European Parliament.
Winners and losers
According to Politico, there are already winners and losers in the battle over the MFF.
= Thus, among expected losers are:
= farmers – i.e. in the present MFF, the Common Agricultural Policy, CAP acquired about €386.6 bn; in the new one only €300 bn has been set aside for agriculture; usually CAP has been in a separate heading, in the new MFF it has been merged with another funding position – “National and Regional Partnership Plans.”
= taxation burden – Commission proposed three new taxes targeting electric waste, large companies and tobacco products (e.g. cigarettes and cigars); these goods are currently taxed by individual countries, which keep the revenues for themselves. The aim is to generate about €25-30 billion per year used to repay EU joint recent pandmic’s recovery debt.
= Whereas among winners are the following sectors:
= nature and biodiversity – the heading is expected to be absorbed into a broader “climate and environment” target that would amount to 35 percent of the MFF, reaching about €700 bn. The new target would include all six EU-wide environmental objectives, such as climate and biodiversity, circular economy and pollution prevention. The LIFE funding program for the environment and climate action has also been absorbed into the “National and Regional Plans,” as well as the €410 billion “Competitiveness Fund” that bundles several existing funding programs. The EU is already facing an estimated €37 billion annual biodiversity funding gap, according to the European Commission, notes Politico.
= Electricity bill payers – under the new MFF proposal, the EU intends to dramatically support the process of modernizing the Union’s electricity grids and bring down power prices. The Connecting Europe Facility (the fund used to upgrade infrastructure and invest in new technologies) will see its energy budget rise to €30 billion from present €6 billion. Additionally, grids will get to tap into a massively expanded €410 billion competitiveness fund in a bid to reduce wastage and slash bills for industry and households, comments Politico.
= Digital technologies (DT)- the Commission wants to multiply financial support for digital technologies by a factor of five, which would bring digital funds to €54.8 billion in the next budget. The increase will affect such areas where the EU is already investing considerable funds for research, innovation and transformative technologies, most notably artificial intelligence. Thus, the DT’s target becomes an integral “complex-pillar” of a new, comprehensive Competitiveness Fund, which has a headline figure of €410 billion.
= Defense and military mobility- the proposal of the Commission is to allocate at least €131 billion for defense and space, which means “five times what we have today” said Commission President. Commission wants to set aside €17.7 bn for military mobility: on paper, notes Politico, that looks like a major win compared with the €1.7 bn military mobility budget in the current budget; in reality, it falls well short of the €75 bn or even €100 bn needed. While parts of the civilian transport budget may support dual-use infrastructure (and additional defense funds might be tapped), the military needs would be only partially addressed. Besides, the Commission proposed that the future Connecting Europe Facility (the EU’s funding program for infrastructure), should total €81.4 bn and about €51 bn would be earmarked for transport.
= Cities and regions – the EU’s cohesion funding scheme is meant to boost growth in the poorer regions and reduce inequality; this MFF heading currently accounts for more a third of the budget. But again, the MFF proposal for cohesion funding is addressed through the mentioned National and Regional Partnership Plans developed by national governments. However, Commission is promising that the poorest regions in the EU will receive €218 bn; “but no such guarantees have been made… prompting fears that the overall amount allocated for regional development will be smaller than under the current budget”, which is bad news for cities and rural areas that rely on cohesion cash to finance everything from roads to public libraries, argue Politico.
= Finally, Eastern countries and Ukraine – the EU’s Eastern member states, as well as the regions bordering Ukraine, Russia and Belarus, will receive more funds than the others to meet both their security and economic needs. Although the EU was desperate to find additional revenues, it did not include the revenue from an already-planned extension of the EU emissions trading scheme to buildings and road transport in its proposal for new sources of revenue.
General reference and citations from: https://www.politico.eu/article/european-commission-budget-ursula-von-der-leyen-ukraine-research-defense-technology-agriculture/ (17.07.2025).
Driving prosperity via competitiveness, research and innovation
A new European Competitiveness Fund, worth € 409 bn, will assist investment in strategic technologies and, finally, benefit the entire Single Market. The fund, operating under one rulebook, is not only offering a single gateway to funding applicants, but simplifying and accelerating the EU-wide private and public investment. It will focus its support on four areas: – clean transition and decarbonization; – digital transition; – health, biotech, agriculture and bio-economy; and – defence and space.
Commission press release “An ambitious budget for a stronger Europe: 2028-2034” (16.07.2025), in: https://ec.europa.eu/commission/presscorner/detail/en/ip_25_1847 and a dedicated website at: https://commission.europa.eu/strategy-and-policy/eu-budget/long-term-eu-budget/eu-budget-2028-2034_en
The MFF perspectives
The decision on the future MFF and the suggested revenue system will be discussed by the EU-27 member states. The adoption of the perspective MFF regulation requires unanimity, following the consent of the European Parliament. However, some elements of the revenue side (notably the new own resources) also require unanimity in the Council and approval by the EU-27 states in accordance with the respective constitutional requirements.