The EU budget is not just a fiscal exercise. It is a 7-year investment plan that will shape Europe’s green economy, its research capacity, and the daily services that citizens depend on, and right now it is being negotiated in real time.
What the MFF is and why it matters
The EU decides on its long-term budget framework, called the multiannual financial framework (MFF), every seven years. The MFF determines the maximum amount EU institutions can spend through the annual budget over a multi-year period. It also sets the strategic policy areas, such as climate action, to which spending is allocated.
On 16 July 2025, the Commission presented its proposal for an ambitious and dynamic MFF amounting to almost €2 trillion, or 1.26% of the EU’s gross national income on average between 2028 and 2034. Compared to the current period, the budget is set to increase by 64 percent. At the same time, a fundamental reform of the structure and management of the EU budget is planned.
The Commission’s proposal represents a fundamental redesign of the EU budget to address the increasing challenges Europe faces in security, defence, competitiveness, migration, energy, and climate resilience, while preserving a focus on longstanding priorities like agriculture and economic, social, and territorial cohesion. Simply put, this is not a budget that maintains the status quo. It is a structural shift.
What the money will fund
The proposed EU budget organises spending around 3 main operational areas. The largest single block focuses on cohesion, agriculture, and social investment through National and Regional Partnership Plans (NRPPs). Approximately €865 billion, covering agriculture, fisheries, cohesion, and social policies, will be managed through one plan per each of the 27 member states.
A second major pillar is competitiveness. The European Competitiveness Fund (ECF) is a new single fund that brings together 14 existing programmes under one rulebook with one application gateway. Responding directly to the recommendations of the Letta and Draghi reports, it will channel EU investment into the strategic technologies and industries in which Europe needs to strengthen its position globally.
The Commission proposes the creation of the ECF, which will act as a central instrument to boost investment in sectors deemed essential for Europe’s long-term competitiveness and resilience. It is particularly relevant due to its focus on accelerating the clean transition, decarbonization, and innovation. For businesses working in clean technology, renewables, and digital infrastructure, this is a significant opening.
Green economy and innovation: what changes
Key focus areas include financing the transition: investing to achieve the EU’s decarbonisation goals and removing barriers to the Energy Union are key priorities, offering an opportunity to lower energy prices, increase energy security, and accelerate investment in clean technologies.
Horizon Europe, worth €175 billion, will continue to fund world-class innovation. Horizon Europe and the Competitiveness Fund will offer support for the entire investment journey of a project, from conception phase to scale-up, and reduce both the cost for potential beneficiaries and the time for disbursement.
The ECF aims to de-risk private capital mobilization in sectors such as renewables, sustainable transport, circular economy, and industrial decarbonization. The Fund is positioned as a structural enabler of the EU’s green industrial policy, aligning financial instruments with climate targets and ensuring that public spending supports long-term strategic autonomy and environmental performance.
Expert perspective
The principle of the European Competitiveness Fund enjoys broad support in both Council and Parliament, though views differ over its purpose and how it should operate. The main innovation the Commission has put on the table is to bring together, under a single fund and shared governance, a wide range of programmes spanning defence, digital, health, and the green transition. Discussions in the European Parliament have centred on how to define competitiveness, the definition that will ultimately steer the fund. Two visions are at odds: one built around resilience and autonomy, the other around productivity. These are not incompatible, but the balance will determine who benefits most from the new architecture.
Industry perspective, EU budget and sustainable investment professionals
Where negotiations stand now
On 28 April 2026, Parliament’s plenary adopted an interim report on the MFF, with 370 votes in favour, 201 against, and 84 abstentions, establishing its mandate for negotiations with the Council. Parliament calls for the MFF to be set at 1.27% of EU gross national income, corresponding to €1,789 billion in constant 2025 prices, with an additional 0.11% of EU GNI for the repayment of debt created by NextGenerationEU above the MFF ceilings.
On 11 June 2026, the Cyprus presidency presented a revised negotiating box, with figures, aiming to identify elements for political consideration and facilitate discussions among EU leaders ahead of the June 2026 European Council meeting. In the second half of 2026, the Irish Presidency will drive efforts in the Council to prepare the ground for a political agreement in the European Council. An agreement by the end of 2026 is considered necessary to allow for the adoption of legislative acts in 2027 and ensure EU funding reaches beneficiaries without interruption from January 2028.
For the first time, the EU will offer EU-backed loans, called Catalyst Europe, to spur investment in strategic areas. To fund this ambitious programme without asking countries to contribute more, the European Commission has proposed 5 new sources of EU income, called own resources, which are expected to generate €58.5 billion per year.
Conclusion
The EU budget for 2028 to 2034 is the most structurally ambitious the Union has proposed. The Commission’s proposal is designed to ensure that EU funding is steered by EU political priorities, delivering results that national budgets cannot achieve alone. For citizens, businesses, and regions, the EU budget will determine access to green investment, research grants, cohesion support, and skills funding for the next 7 years. The window to shape the outcome is open now. Follow the negotiations, understand your region’s partnership plan, and engage with the process because the EU budget is not an abstract document. It is the financial architecture of your economic future.
Discover more about EU budget
- EU Budget 2028-2034: Official European Commission Overview
- European Parliament Interim Report: A More Ambitious MFF for 2028-2034 (EP Think Tank, May 2026)
- Council of the EU: The Long-Term Budget 2028-2034, Negotiations and Latest Positions
