“The Status quo is not an option”.
These words set the urgent tone permeating the European Commission’s communication on “The road to the next Multiannual Financial Framework (MFF)”, in which the EU’s growing needs and expectations are assessed against the corresponding budgetary requirements for the 2028-2034 programming period.
The Communication acts as an initial reflection on how the MFF must be adjusted to the pressing challenges facing the EU in the longer term, before the MFF proposal is published during the upcoming Danish Presidency of the Council of the European Union, as Commissioner for Budget, Anti-Fraud and Public Administration, Piotr Serafin, indicated. The Communication indicates the intention of the European Commission to publish it in July 2025. Furthermore, and in preparation for the proposal’s publication, the Commission has opened several consultations whereon to base it.
Let us now take a look at what the Communication comprises exactly.
A Long-term Budget facing countless Challenges
First, the document is clear in its call for a reformed and reinforced EU Budget that is aligned with the political guidelines of the new Commission and the Strategic Agenda of the European Council for 2024-2029. Chiefly, it recognises that the budget needs to come to fruition within a difficult geopolitical context. The document is clear as well in extolling the consequence of a budget which is capable of facing up to the growing challenges faced by the block, and underpinning that consideration, it particularly singles out NextGenerationEU as an effective and worthy crisis-response instrument.
However, it is precisely the debt repayments of NextGenerationEU, due to begin in 2028, that crop up in the text as a major future hurdle in need of a proper budgetary response. The solution espoused by the Commission to address this issue is the introduction of new own resources. In its view, with such an introduction, the ambition of the EU would be matched whilst simultaneously maintaining stable financial contributions from Member States. Opportunely, in the document the Commission calls on the Council to resume work on new own resources as a matter of urgency.
Several other policy challenges are enumerated in the Communication – namely rising security threats, and dwindling European competitiveness stemming from factors such as high energy prices, unfair international competition, difficulties in European businesses accessing capital, and low research intensity. The file also identifies migratory pressures, the single market’s incompleteness, regional disparities, livelihood ordeals for farmers and fishers, soaring climate risks, and the imperative of enlargement as key challenges necessitating “an ambitious budget, both in size and design”. The Commission therefore considers that “the future EU budget should focus on common challenges where spending at European level brings the highest added value”, and espouses reaching a broad agreement on what to finance in order for the how to finance it to be able to be subsequently agreed upon.
Main Features Proposed by the Commission
In order to face up to the key tasks outlined, the European Commission offers a series of main orientations for the MFF’s design. First among many, the Commission proposes a more flexible budget which is capable of reacting to unforeseen crises. Unequivocally, the document asserts that “the inherent rigidities of the multiannual financial framework need to be smoothened”, and deems the extant in-built financial flexibilities as limited in size and their use rigid. Upon first look, flexibility needs seem not to be a thorn between Commission and Parliament, but contention points may come up in the manner this flexibility is brought to life, considering that several MEPs have repeatedly condemned crisis-response budgetary reallocations draining cohesion funds, and backed a ringfencing of FP10, the successor to Horizon Europe.
The Institution also favours the prosecution of a “true policy-based budget” that ensures synergies between policies and financial action, seeing as the Union’s policy goals are taken to have oftentimes been dispersed among divers programmes which not unfrequently overlap. Another source of discomfort laid out in the communication is the oft-reiterated need for simplification. The exposition notes how access to EU funding is hampered by the Budget’s complexity, owing to the vast number of existing programmes, which themselves, through their sheer amount, ground down transparency and hinder the concretisation of cross-cutting priorities. It is unmistakeable that the Commission recognises the bureaucratic burden foisted on funding beneficiaries by way of an immense number of rules and criteria. These preclude not only access to funding, but also celerity in implementation and stakeholder involvement. Managing authorities are likewise affected by a certain unwieldiness, the Communication acknowledges, chiefly by dint of an exaggerated amount of resource-intensive programming documents. In addition, the coexistence of several funds (notably the RRF, whose 2026 deadline places considerable pressure on national administrations) works only to beget more burdens.
The impact of the long-term budget is also given consideration in the document. Noting that it leverages the overall financial capacity of the Union, the Communication recognises that it still faces hurdles in unlocking private investments. More concretely, the low-appetite of implementing partners for risk is stated, as is that higher provisioning is necessary to support sectors that face more difficulties in accessing market financing. Mobilising private capital, and the public kind as well, is highlighted as key in order to finance the green, the digital, and social transition. The Commission openly advocates for a stronger focus on performance coupled with simplification and accountability.
Inescapably, rule of law conditionality considerations are expressed peremptorily in the Communication, which states in no uncertain terms that “not a single euro should be spent for activities where the principles of the rule of law are not safeguarded or the protection of the financial interests of the EU not guaranteed.” The Commission therefore proposes that the next MFF be equipped with strong corresponding safeguards. Although several rule of law conditionality provisions protecting the financial interests of the Union exist and are in force, and in light of the controversial unfreezing of cohesion funds made in late 2023 to the benefit of Hungary amounting to around EUR 10 billion, the desire expressed by the Commission can be construed as politically relevant, notwithstanding its vagueness. Although its will to ensure that Member States abide by the rule of law is stated clearly, the Commission’s formulation leaves room for thought on the shape the endorsed conditionality will assume. Its imprecision is particularly important in view of the recent discussions around (and calls for) a “smart conditionality” system whereby national governments are castigated for rule of law breaches but not regions and final beneficiaries bearing no responsibility for such violations. The Communication has not openly endorsed that approach, one which can be expected to be pushed forth by the Parliament.
The Commission also backs other features that should be present in the budget in order to make good on the policy objectives of the Union, such as the introduction of a plan for each country with key reforms and investments, a strengthened cohesion and growth policy designed and implemented in partnership with national, regional and local authorities, a European Competitiveness Fund establishing an investment capacity that will support strategic sectors and technologies critical to the EU competitiveness, and a revamped external action financing to make it more impactful and targeted for the EU’s partners.
Looking Ahead
The week following that of the Communication’s publication presented itself as a fertile start to the important discussions surrounding the inception of the upcoming MFF, in that a considerable number of European Parliament Committees published or convened to discuss their opinions on EP BUDG’s Own-Initiative Draft Report on a revamped long-term budget for the Union in a changing world. These simultaneous discussions allowed the Committees to broach their own policy priorities at some length, which will feed into the Parliament’s final position due to be voted on in Plenary on May 5.
In a nutshell, during their respective meetings, the CONT Committee’s attention was focused on improving simplification and transparency in the long-term budget, whereas ITRE generally upheld the view that the EU’s research intensity should be enhanced. DEVE, in light of the Trump administration’s recent efforts to dismantle USAID, focused itself on the role of the EU as a humanitarian donor, with many MEPs emphasising the need for the EU to maintain its leading position. FEMM raised the importance of gender mainstreaming, gender budgeting, and women’s rights, with REGI expressing concerns about the possible centralisation of cohesion policy under the coming MFF whilst calling for its budget to be increased. The BUDG Committee, responsible for the file, defended the maintenance of traditional priorities such as the cohesion and agricultural policies, the need for budgetary flexibility, and the rule of law conditionality for funds’ disbursement.
Subsequently, on February 25, the General Affairs Council discussed the Commission’s legislative programming with Commissioner for the Mediterranean, Dubravka Šuica. The discussion allowed several delegations to briefly present their views on the MFF. Some Member States advocated for a cautious approach (such as the Netherlands and Finland), whereas others urged it to be ambitious so as to match the Union’s objectives. Nevertheless, only the Estonian and the French representatives mentioned increased spending, with the latter and his Portuguese counterpart expressly stressing the need to work on new resources.
The preceding demonstrates that both the Commission and the Parliament evince a willingness to adapt the incoming MFF to the height of the existing challenges facing (and the unforeseen ones expected to face) the Union in the coming years. Although both Institutions appear to broadly agree on many instances, certain disagreements are also expected to divide them, namely as regards the Commission’s preference for a “policy-based” budget. Furthermore, both the Commission and the Parliament will have to reckon with the possibility of the Council adopting a more frugal approach, judging, as a paradigmatic example, from its reluctance to resume work on new own resources, the absence of which shall preclude the realisation of all the Union’s goals in their view. The months leading up to the publication’s proposal, but most importantly those immediately following its July-projected unveil, will prove abundant and fruitful in exchanges, seeing as all relevant Institutions, but stakeholders too, are expected to invest a great deal of energy in setting out and advocating for their own policy priorities. For, without an adequate budget on which to anchor them, policies themselves are but a gust of hot air.
Image source: European Parliament