On July 16, as most Europeans were leaving for a sunny place, the Commission released its proposal for the next EU budget, known as the Multiannual Financial Framework (MFF). It will cover 7 years between 2028 and 2034, with a €2 trillion price tag, about 1.25% of the block’s gross income.

A 2-year process

Commission President Ursula von der Leyen labelled it a plan “designed for a new era,” signaling a shift in how the EU funds defense, competitiveness, migration and external action.

The EU is currently spending about €200 billion a year, but the Commission plan would make that figure closer to €300 billion, a 50% hike that did not go unnoticed in European capitals. Member States are aware this budget proposal comes at a time of overlapping shocks. Yet, most capitals are unwilling to spend more, precisely because their economic situation is difficult.

European countries will need to agree by unanimity in the Council on the next MFF, with the current one ending at the end of 2027, and the Parliament will also need to consent to the deal. Two years is a long time, but not that long given the Commission’s ambitions and the long redrafting process that will take place throughout 2026 and beyond.

Spend the same, but differently?

The new architecture keeps pre allocated funds for cohesion and agriculture and adds pillars dedicated to competitiveness and external action.

Tech is the clear winner, with funds multiplied by five.

Defense goes from virtually nothing to about €130 billion out of the total €2000 billion overall for 2028-2034.

A tripling of funding for migration and border management, doubling on research efforts.

Aware of Member States’ skepticism regarding additional funding, the Commission proposes five “own resources” for the EU to keep national contributions broadly stable: a larger share of emissions trading revenues (about €10 billion/year) and carbon border levy proceeds (about €1.5 billion/year), but also novel streams with a charge on non collected e waste (about €15 billion/year), a tobacco tax (about €11 billion/year), and a Corporate Resource for Europe (a lump sum from companies with €100 million+ turnover, amounting to about €7 billion/year).

Together with adjustments to existing resources, it argues this modernized revenue mix can fund priorities and service debt without squeezing national budgets.

A hallmark of the proposal is the shift to National and Regional Partnership Plans that bundle agriculture, cohesion, social policies, migration management and more into one performance based framework per country.

The Commission says such a framework would boost synergies, cut red tape and tailor funds to local needs, while ensuring ring fenced farm income support and safeguards so less developed regions receive at least as much as today.

However, the idea to bundle agriculture and cohesion funds together has come under heavy fire from regions, farmers, agricultural ministers, and Members of the European Parliament (MEPs), where there now seems to be a majority against the reform.

Member States and Parliament agree: “this is not good”!

First reactions in the Parliament’s budgetary committee were frosty. Co rapporteurs signaled the proposal is “simply not enough” for Europe’s challenges and criticized the consolidation of many programs into national plans as a step that risks renationalizing EU policy. MEPs also challenged the claim that the package entails no real increase once debt repayments are netted out.

Legally, the Parliament cannot block the proposal outright, but it can reject the final budget once it has been approved by national capitals. If both the EPP and S&D groups were to reject the proposal, they would be close to a blocking majority in Parliament.

Member States are also skeptical. European Affairs ministers had a first discussion a few days ago, with Germany asking for the “global reduction of a proposal that is way too large”, leading the charge on behalf of net contributors to the budget.

France and Poland shared that they felt the agriculture and cohesion pillars taken together do not receive sufficient funding compared to competitiveness. Also, any new “own resource” requires unanimous adoption, making it even more difficult for the Commission to finance its ambitions.

What to watch next

Three moving parts will define the landing zone over the next couple of years. First, the size and scope of the competitiveness pillar, where industrial policy, technology scale up and supply chain security must be squared with fiscal constraints and sovereignty concerns. Second, the politics of new EU revenues, with several capitals opposing EU level taxes in principle. Third, governance: if national plans become the main spending vehicle, auditors and MEPs will push for tighter control.