Written by: Francesco Filiberti

Supervised by: Stephen Crowley

Edited by: Michael O’Daly 

On 16 July 2025, the European Commission presented its proposal for the next Multiannual Financial Framework (MFF), which establishes the rules and expenditure ceilings for broad categories of spending—referred to as “headings”—over a six year  period from 2028 to 2034.

The rationale for this financial planning is to ensure greater predictability in the EU’s annual budget allocation and expenditure, foster sound and responsible financial management, and provide a structured framework to ensure that EU spending is efficient and aligned with policy priorities. By setting clear limits and guidelines, the MFF also reinforces transparency and accountability within the Union’s financial governance. (EU Commission, 2025a)

The most significant innovation in the proposed MFF lies in its enhanced flexibility, coupled with an increase in the overall allocation from 1.05% to 1.26% of the EU’s Gross National Income (GNI), amounting to nearly €2 billion. The architecture of the MFF have been notably simplified: the number of programmes has been reduced from 52 to 16. Moreover, the proposed framework introduces a streamlined breakdown of only four main headings, compared to eight in the 2021–2027 period. This reduces fragmentation by merging budget lines and expanding the share of unprogrammed resources. These unallocated funds provide the EU with greater flexibility to adjust spending priorities in response to unforeseen circumstances or emerging needs. (EU Commission, 2025b)

The first three headings introduce significant innovations in both structure and substance. For the first heading, centred on “National and Regional Partnership Plans,” the Commission allocated €865 billion and represents a major consolidation of key EU policies. It merges the Common Agricultural Policy (CAP), which provides subsidies to European farmers, with the Cohesion Policy, which supports regional development and seeks to reduce disparities between EU regions.

The second heading, which is particularly relevant for defence and security policy, is the Competitiveness Fund, to which €410 billion has been allocated. This fund was established, among other factors, in response to proposals and pressure stemming from the Draghi and Letta reports. It incorporates 13 pre-existing budgetary lines and includes a dedicated envelope for “resilience and security, the defence industry, and space,” to which the Commission has foreseen a budget of €130.704 billion—representing a fivefold increase compared to defence and space funding in the 2021–2027 MFF. This substantial increase also translates into a tenfold rise in funds available for military mobility. Politicians, especially from the eastern bloc, and industry representatives have repeatedly advocated for a €100 billion target for EU defence industry policies. The Commission’s proposal even surpasses that target, and even in case of a reduction after the intergovernmental rebates, is likely to be more than expected, reinforcing stakeholders’ confidence over the EU long-term defence agenda. (EU Commission, 2025b). The overarching objective of the defence envelope of the Competitiveness Fund is to lay the foundation for a European Defence Union by significantly enhancing the EU’s capacity to act collectively in areas of strategic autonomy, procurement, interoperability and support to Ukraine.

Building on the blueprint provided by the Commission’s White Paper on Readiness 2030 and the Niinistö Report, the proposed multiannual budget aims to deliver unprecedented added value to national defence innovation, investment, spending, and overall competitiveness. Within the broader umbrella of “resilience and security, the defence industry, and space,” the current European Defence Industry Programme and the European Defence Fund will be consolidated.

This scheme provides the Commission with significantly greater flexibility to reallocate resources across strategic priorities as circumstances evolve. This structural arrangement allows the Commission to adapt spending without the need for a formal revision of the MFF or reliance on cohesion policy mechanisms in emergency —as was the case under the current seven-year budgetary cycle. The reorganisation reflects a clear intention to enhance responsiveness and streamline financial governance in critical areas related to defence and security. (Moller-Nielsen, 2025)

This flagship proposal—marked by a more ambitious, more flexible, and deeply integrated approach to enhancing the competitiveness of EU industries — has not been without criticism.  In particular, the proposed 30% reduction in the projected budget for the Common Agricultural Policy has already triggered strong opposition and mobilised protests from farming representatives in Brussels. Moreover, the merging of Cohesion Policy into the broader framework of “National and Regional Partnership Plans” has provoked disappointment among regional authorities. Not only do they perceive a loss of competences—since territorial cohesion spending will now be directed through national plans—but they also express concern over the expanded scope of cohesion spending, which now includes areas such as agriculture, fisheries, and other sectors that have simultaneously experienced significant budget reduction under other funds. This structural and financial reshaping is thus seen as a threat to the current status quo from various actors left unsatisfied  by the changes. (Bonini, 2025)

The ball is now in the Member States’ court, as they must agree on a compromise that secures unanimity in the Council, followed by approval by a majority vote in the European Parliament, in accordance with the procedure as set out in Article 312 of the TFEU. The final version of the new MFF is expected to be adopted within the next two years. However, it remains to be seen whether the Commission’s bold and transformative budgetary proposal can withstand the political scrutiny and criticism of the Member States. (Rubio, 2025)

 Will this ambitious plan mark a decisive step forward in strengthening the Commission’s role in shaping the EU’s strategic priorities, or will it be scaled back in the face of intergovernmental bargaining?  

Bibliography  

Bonini. E.,  (2025, July, 16) Almost 2 trillion, with CAP and cohesion together: the proposed new 2028–2034 EU budget , Eunews. https://www.eunews.it/en/2025/07/16/almost-2-trillion-with-cap-and-cohesion-together-the-proposed-new-2028-2034-eu-budget/

European Commission (2025a, July 16). Communication from the Commission to the European parliament, the European Council, the Council, the European and Social Committee and the Committee of the Regions. A dynamic EU Budget for the priorities of the future – The Multiannual Financial Framework 2028-2034 (COM (2025) 570 final)

European Commission. (2025b, July 16). Proposal for a Council Regulation laying down the multiannual financial framework for the years 2028 to 2034 (COM(2025) 571 final)

Martens-Preiss C. L. (2025, July 16). New MFF: A step forward but far from the finish line. Renew Europe. https://www.reneweuropegroup.eu/news/2025-07-16/new-mff-a-step-forward-but-far-from-the-finish-line

Moller-Nielsen, T., (2025, July 17). Cheat sheet: Everything you need to know about the EU budget battle, Euractiv.  https://www.euractiv.com/section/economy-jobs/news/cheat-sheet-everything-you-need-to-know-about-the-eu-budget-battle/

Neubert, K., (2025, July 16). Commission pitches €131bn for defence and space in EU budget, Euractiv.  https://www.euractiv.com/section/defence/news/commission-pitches-e131bn-for-defence-and-space-in-eu-budget/

Rubio, E., (2025, July 17) The MFF package: A ambitious proposal from a fragile Commission, Institut Jacques Delors. https://institutdelors.eu/en/publications/the-mff-package-a-ambitious-proposal-from-a-fragile-commission/

Wax, E., (2025, July, 16). A huge new EU competitiveness fund? ,Euractiv. https://www.euractiv.com/section/politics/news/the-capitals-a-huge-new-eu-competitiveness-fund/