The key facts

  • The new EU MFF for 2028–2034 is reorganised into three pillars: social and regional funds, a Competitiveness Fund, and foreign policy
  • Germany and the 'frugal' countries demand cuts of around €200 billion; the Irish presidency proposed €141 billion
  • If the new MFF is not adopted by 2028, EU funding will cease — there is no provisional budget management as at national level

New budget structure: three pillars

The EU is negotiating a new multiannual financial framework (MFF) for 2028–2034. The European Commission's proposal, presented a year earlier, restructured the budget in line with the Draghi and Letta reports on EU competitiveness. Social, cohesion and agricultural programmes — including the European Social Fund Plus (ESF+) and the European Regional Development Fund (ERDF) — are being combined into the so-called first pillar. Detailed allocation of funds will pass to the member states under national and regional partnership plans (NRPP). Since funds are no longer firmly tied to individual programmes, the Euronews author predicts a struggle over distribution.

Risks for social programmes

The Commission proposed a 14% quota for the social sphere, but, in the author's view, this is where the most is at stake: many social projects in Germany are funded exclusively by the EU, and the national budget will not be able to close this gap. The author calls for setting a minimum quota of 20% for social projects, and if this cannot be achieved at European level — enshrining it for the German NRPP in a federal-state ordinance. It is noted that Germany has already agreed to retain the proven federal allocation mechanisms and not follow Brussels' preference for centralised national allocation.

Competitiveness Fund and foreign policy

The main innovation is called the Competitiveness Fund in the second pillar, intended to support innovation and investment in the single market. In the author's view, the EU and especially Germany are lagging in the industries of the future and artificial intelligence, and targeted funding could close this gap. The Horizon and Erasmus programmes, also available to non-EU members, are likewise placed in the second pillar, which is believed to give them greater weight and link them to the economy. The third pillar will emphasise common foreign policy, security and development, including sanction mechanisms against countries refusing the rule of law and clearer differentiation when allocating aid regarding extremist and terrorist organisations.

Dispute over cuts and rural subsidies

Germany recently joined the group of 'frugal' countries (Germany, Austria, the Netherlands, Sweden, Denmark, Finland) demanding cuts of roughly €200 billion. The Irish presidency of the Council spoke of €141 billion in its proposal. The author believes that cuts, if inevitable, should be horizontal — even across all areas, contrary to the Irish presidency's proposal. Common Agricultural Policy (CAP) subsidies 'can no longer be considered untouchable': support should be targeted, and the LEADER programme for rural areas should be distributed with a focus on innovation rather than land area. Chancellor Merz, according to the publication, has already threatened a 'budget blockade' (Haushaltsperre) if the states do not agree on radical cuts. Unlike the national budget, the MFF does not switch to provisional management: if the new framework is not agreed by 2028, funding will simply cease.

Repayment of NextGenerationEU and own resources

An additional burden on the new MFF will be the repayment of the Next Generation EU recovery instrument, created to combat the economic and social consequences of the COVID-19 pandemic, and interest on borrowings. The planned new EU own resources have not yet been introduced. The author believes that only own resources can ensure stable funding, since new borrowing is impossible; the German Federal Constitutional Court, it is noted, has taken the position that NGEU is a one-off measure. New own resources could also serve as an instrument of political regulation: for example, a digital tax would, in the author's view, be a signal to the US. Without the consent of the EU finance ministers or the willingness of countries to channel more funds from national budgets, European funds will remain meagre.