The European Commission on Wednesday unveiled a €1.98 trillion blueprint for spending over the period 2028-2034, firing the starting gun on what is set to be one of the EU’s toughest political battles in the coming years.
Getting everyone on board on the bloc’s seven-year budget, known as the Multiannual Financial Framework (MFF), has always been a tough task. But no previous Commission had to contend with a looming trade war threatening to batter its economy, the soaring cost of supporting Ukraine, lingering instability in the Middle East, a deepening climate crisis, and mounting pressure to restore the European economy’s faltering competitiveness.
“The next MFF will be the most ambitious ever proposed,” Commission President Ursula von der Leyen told reporters on Wednesday. “It is more strategic, more flexible, more transparent, and we’re investing more in our capacity to respond and in our independence.”
But Von der Leyen’s upbeat tone contrasts with criticism from European lawmakers who lament that their red lines, outlined in a report earlier this year, were systematically ignored; and from key constituencies such as farmers and regional authorities, who saw their funds shrunk as the bloc pivots to raise military spending fivefold.
1. How much cash are we talking about?
The headline figure is €2 trillion — a sizeable increase compared to the previous €1.2 trillion budget. But critics were quick to call the figure “misleading,” arguing it would lead citizens to believe the EU is putting more on the table than it actually is.
Inflation and repayments of the NextGenerationEU funds would cut into the real amount of funds available, Siegfried Mureșan, who is in charge of steering negotiations for the centre-right European People’s Party (EPP), told EU budget commissioner Piotr Serafin on Wednesday.
From 2028, the EU will begin repaying its Covid-19 recovery package — an unprecedented joint borrowing effort launched in 2020 to counter the pandemic’s economic fallout. According to the Commission’s own estimates, the overall cost would amount to €168 billion. Lawmakers have warned that rising interest rates could put additional strain on the rest of the spending plan.
Von der Leyen’s plans have also run into resistance for the opposite reason, from EU member states reluctant to cough up additional contributions. Within a day of the announcement, her native Germany led other fiscally conservative countries in bashing the provisional figure as "unacceptable."
That configuration, however, was to be expected, considering that the EU executive had to find a balance between an imperative to raise the budget — the only way to deal with ballooning challenges — and = certain member states’ parsimony, particularly when most countries are contending with sky-high deficit levels.
“Given the fiscally strained situation in all member states, there is a slim chance that there will be any noticeable increase in the future EU budget,” Fabian Zuleeg, chief executive at the European Policy Centre think tank, said in a statement.
2. How significant are the structural changes?
The proposed spending plan marks a tectonic shift in the way funds have been distributed so far — a reform the Commission has been trailing for months, arguing that the previous spending architecture was “designed for a world that no longer exists,” as Von der Leyen put it at an EU budget conference in May.
To streamline EU funding, the Commission merged 52 separate programmes into 16 funds. Central to the reform is the decision to channel the largest share of the budget — €865 billion — into a single instrument called the National and Regional Partnership Plans (NRPP). This brings together funding streams for agricultural policy, cohesion, fisheries, social, and rural development, in a pivot away from the previous structure where the Common Agricultural Policy and Cohesion Policy operated as standalone funds.
The EU executive insisted that having just one plan per country would allow for a more efficient use of funding, but lawmakers retorted that the result will most likely be a worsening of the principle of solidarity.
“What is being put forward now is a proposal to renationalise the budget of the European Union,” noted Mureșan, the EPP lead. “We cannot accept that the budget of the European Union becomes the sum of 27 national, eventually conflicting, agendas.”
Analysts have also expressed concern, noting that replicating the model of the EU’s €723 billion pandemic recovery fund carries serious risks. “My major fear is that [these plans] won’t be focused on results, but much more on spending the money,” Zsolt Darvas, a senior fellow at the Bruegel think tank, told The Parliament.
3. Why are farmers so angry?
Every spending bill creates its own winners and losers, and this time, after being on a winning streak for months, farmers found themselves on the losing side. The CAP, which in the previous budget stood at €386.6 billion, was reduced to just €300 billion and folded into the broader NRPP.
That came after the powerful farming lobby secured significant concessions over the past months — largely thanks to a climate backlash spearheaded by the EPP, Von der Leyen’s own party. But given its highly politicised nature, the curbing of agricultural subsidies is likely to become a flashpoint in the upcoming battle over the MFF, meaning the farmers might yet get the last laugh.
4. Is there enough money to make Europe competitive again?
Alongside security and defence, competitiveness emerged as one of the budget’s top priorities. In a bid to make funds more easily accessible, the Commission created a €409 billion competitiveness fund that exceeded expectations from stakeholders.
The fund is meant to bolster the bloc’s industrial base to fend off mounting competition from international rivals such as China. Its largest share — €131 billion — will be spent on strategic technologies, while Horizon Europe will keep pumping €175 billion into research and innovation, up from €93.5 billion last time around.
Most observers The Parliament spoke to agreed that the new fund is likely to be the least contentious part of the package. “The Competitiveness Fund is arguably the boldest and most welcome element of the MFF proposal,” said Philipp Lausberg, senior policy analyst at the European Policy Centre.
5. Are there fresh revenue streams?
Not exactly.
To ramp up its revenues independently of member state contributions, the Commission suggested channeling funds from the carbon market and an upcoming carbon levy, taxes on tobacco and uncollected e-waste, and a lump sum for companies, into the new budget. Overall, these new resources should generate a total of €58.5 billion per year in 2025 prices, according to early estimates.
But much of that money would otherwise have gone into national budgets, and in any case it won’t be enough to avoid the need for higher contributions from member states, analysts warn. “National governments will have to make larger transfers to the EU budget,” said Darvas. “Von der Leyen’s claim that member state contributions won’t increase is simply not correct.”
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