Romy Hansum

Ripe for Reform – What’s in the EU Budget Proposal and What Should Come Next On 16 July 2025, the European Commission unveiled its proposal for the next Multiannual Financial Framework (MFF) for 2028-35, kicking off what promises to be a highly fraught and marathon set of nego...

The initial fuss over the COM’s MFF proposal has been digested - but the bargaining is only just beginning. In a new policy brief, @nilsredeker.bsky.social, @eulaliarubio.bsky.social, @lindnerjs.bsky.social and I take a closer look at the figures and the direction the negotiations should now take.

Ripe for Reform – What’s in the EU Budget Proposal and What Should Come Next On 16 July 2025, the European Commission unveiled its proposal for the next Multiannual Financial Framework (MFF) for 2028-35, kicking off what promises to be a highly fraught and marathon set of nego...

Just a few weeks to go before the EU dives into what will likely be a bruising battle over its next budget.

@romyha.bsky.social, @eulaliarubio.bsky.social, @lindnerjs.bsky.social l and I took a closer look at the Commission’s proposal.

We think successful negotiations now hinge on four things:

No one’s holding their breath for big announcements from today’s EU–China summit.

But FDI remains one area where pragmatic cooperation is still possible and, under the right conditions, can strengthen EU industry.

In today’s Euractiv op-ed, I outline what it takes to make that happen.

What does the new Commission budget proposal say on funding for democracy?

It increases the funds allocated to defending democracy, rule of law and other Union values from ~1,55bn € (not adjusted for inflation) in the last MFF to 3,18bn € (in 2025 prices).

Let me conclude: There are important reshuffles in this budget that align it better with current EU priorities and challenges - the detailed envelopes such as for decarbonisation and for less developed regions (and how about the JTF ones?) could do with some fine-tuning.

Also, one shortcoming of MFF comparisons becomes very obvious: they neglect the generous NGEU funding. So de facto, the increases of the current MFF are much less impressive considering that countries and beneficiaries had access to these additional funds in the last years.

The ringfenced social investment 28-34 is roughly comparable (+2%) with ESF+ and JTF in 21-26, but less developed regions receive 9% less than before. Within Heading 1, the relatively largest profiteer is clearly the topic of Migration & Security.

Cohesion and agriculture face some reductions. And whereas the ringfenced income support for farmers is cut by 10%, all other cohesion funding goes down by more than 20%. And this could even be more drastic, if farmers manage to captivate a higher share of the National and Regional P. Plans.

The praised shift towards competitiveness becomes very clear when considering the new Heading 2. Zooming in, a lot of the change derives from the increases of Horizon Europe and the ECF‘s Defence & Space window. NB: the targeting of the green transition doesn‘t exactly jump out.

The budget numbers proposed by the EU COM are finally out - but their interpretation is far from unequivocal. Let me give you some comparisons in 2025 prices which is more informative in terms of actual buying power:

We ran some initial estimates on what today’s EU budget proposal could mean.

The numbers aren’t official yet, so details might still change - but the overall picture looks a lot more positive than I expected.

Three quick takeaways:

4/ For now, it looks like the EU Commission really delivered on its Competitiveness agenda - laying down an important marker for the budget negotiations.

These increases are not completely covered by the overall larger budge size. Indeed, cuts are faced by the cohesion and rural development envelope (-15%) and the farmers‘ direct income support (-10%) - a political choice that will definitely create some tension.

2/ Looking at some provisional (still not official) numbers, this shift towards competitiveness is rather bold. The new European Competitiveness Fund triples its preceding programs, Horizon increases by 75% and Defence and Space by 50%.

1/ The EU Commission proposes a budget 2028-2034 that is around €580bn higher than its precursor. The increase is a bit less enormous considering that NGEU repayments will already consume €168bn. However, there is still quite some additional spending in there, mainly going to the new Pillar II:

(5) Small caveat: the numbers are a very first impression, we all still wait for the actual legal proposal…

(4) For now, it really looks like the EU Commission delivered on its Competitiveness agenda, laying down an important marker in the budget negotiations.

These increases are not completely covered by the overall larger budget size. Indeed, cuts are faced by the cohesion and rural development envelope (-15%) and the farmers‘ direct income support (-10%) - a political choice that will definitely create some tension.

(2) And the broader shift to Competitiveness is rather bold. The European Competitiveness Fund triples compared to its predecessor program, Horizon increases by 75% and Defence and Space by about 50%.

Also, national governments will be in charge to distribute funds across different types of regions and balance cohesion and rural development goals - decisions that have been prescribed with the current MFF regulations and now offer room for a lot of tension in each country.

The leaked draft of the future Pillar I in the MFF 2028-2034 proposes one large national envelope for both agriculture and cohesion goals - and its allocation across member states sees quite some changes to the well-known Berlin Formula used for cohesion so far.

Overall, there are no real surprises as far as the composition of the ECF is concerned. Ultimately, the question of its effect also boils down to the still unanswered question: How much will it cost?

There remain also some concerns about potential overlaps between the ECF and other Union programs. How will it be made sure that “skills investment” and SME support under the ECF don’t duplicate cohesion policy programs or “fostering competitiveness of agriculture” doesn’t overlap with CAP funding?

The proposal stresses the ECF’s close coordination with Horizon Europe and Innovation Fund in a ‘EU Competitiveness Funding’. The leverage created will be critical as the merged 14 instruments only amount to about €50 bn in the current MFF – so a smaller size than the current Horizon Europe budget.

It remains questionable whether LIFE is tied more to competitiveness than the Connecting Europe Facilities - apart from that, the funds included appear to be suitable candidates.

The largest entrants: European Space Programme, Digital Europe, InvestEU, European Defence Fund, LIFE, and (partially) Innovation Fund. Horizon Europe and the Connecting Europe Facilities Transport and Energy remain outside.

14 funding instruments are merged into one pot, structured around 4 policy windows: Clean Transition & Industrial Decarbonisation, Digital Leadership, Health & Biotech & Bioeconomy, Resilience & Defence industry & Space.

The leaked proposal of the #Competitiveness Fund #ECF still conceals its most important information: its size. However, let’s take a closer look at what’s in and what’s out:

Thanks for the informative breakdown! How‘s your view on the „indicative“ budget distribution across windows and the claim to maintain „flexibility to reallocate parts of the budget“ - any options for redeployments beyond the intervention mechanism and the 20% for InvestEU?

The Who's Who of German foreign policy. Because who needs women in 2025?

(Picture by @internationalepolitik.de)