Key recommendations

• The EU must safeguard and increase the overall MFF envelope to meet investment needs for competitiveness, the green transition, and social cohesion, while preventing any budgetary reductions;
• An ambitious debate on how to expand fair and sustainable own resources is urgently needed;
• EU oversight and ring-fencing within NRPRs must be strengthened, and each NRRP should be required to include a dedicated, sufficiently funded civil society budget line;
• The EU must increase climate and environmental funding beyond current proposals and maintain strict ring-fencing for biodiversity, nature protection, and climate adaptation, including safeguarding the LIFE Programme’s core mission;
• Strengthening the Just Transition Fund and Innovation Fund is essential to ensure fair decarbonisation, reduce regional inequalities, and accelerate the deployment of clean technologies across the Union;
• The EU must substantially expand the ECF and prioritise investment in R&D, digital capacity, SMEs, and strategic infrastructure to close Europe’s competitiveness and investment gap;
• The EU must tie ECF funding to social conditionality, ensuring public funding used to de-risk private investment is linked to clear commitments from beneficiaries;
• The EU must mobilise greater private capital by strengthening the European Investment Bank and scaling up blending instruments to leverage public investment and reduce strategic dependencies;
• The EU must reinforce social investment by restoring stronger ringfencing, safeguarding dedicated social funding instruments;
• Expanding investment in skills and education, including Erasmus+, is vital to strengthen workforce readiness, while improving monitoring, regional participation, and civil society involvement in social policy delivery.

Introduction

The EU enters the next budgetary cycle facing a convergence of geopolitical, economic, and societal pressures. As the institutions begin negotiations on the Multiannual Financial Framework (MFF) for 2028–2034, the EU must adopt a budget capable of responding to rapid technological change, intensifying global competition, and the growing demands of the green and digital transitions. Ensuring that civil society is heard and meaningfully represented in this process is essential to shaping a budget that reflects the needs and priorities of people across Europe.

The global race for competitiveness is intensifying, marked by rapid technological transformation, a fragmented geopolitical landscape, and rising investment levels in the United States and China. At the same time, the EU must deliver an ambitious green and just transition to meet its climate objectives for 2040 and beyond, and to rigorously implement the European Green Deal (EGD). The MFF can no longer be treated as a technical planning exercise. It must become a strategic tool that strengthens Europe’s long-term competitiveness, accelerates climate action, and reinforces social cohesion and democratic resilience.

Adjust the structure and scale to reflect today’s challenges

The Commission’s proposal of €1.98 trillion — effectively €1.82 trillion once repayments for NextGenerationEU are excluded — represents the largest MFF ever presented. Yet this accounts for only around 1.15% of EU’s gross national income (GNI), an insufficient level when compared to the scale of investment required to maintain Europe’s industrial and technological leadership, support the green transition and deliver social cohesion. At a time when major global actors are significantly expanding public investment, the EU must ensure that its budget is not merely symbolic but strategically transformative. While an increase to the overall envelope is urgently needed, it is however unlikely to be feasible due to resistance from Member States. Any downward adjustment must be avoided at all costs.

The introduction of five new own resources, projected to raise €58.5 billion annually, are a welcome step toward greater fiscal autonomy. Having a large proportion of own resources in the EU budget allows for greater flexibility when designing and implementing policies, as well as creating a clearer link between the EU’s objectives and its budget. However, the scale of these resources remains limited and there is a strong need for additional, fair resources to secure stable and predictable financing without placing an increased burden on households. Revenues from the EU Emissions Trading System (ETS) and the Carbon Border Adjustment Mechanism (CBAM), as well as future revenues from the ETS for Buildings and Road Transport (ETS2), strengthen competitiveness and speed up industrial decarbonisation. We call for an ambitious political debate on genuine EU revenue sources aligned with competitiveness, climate ambition and social fairness, and on how to expand these sources.

The proposed reorganisation of programmes — especially the creation of National and Regional Partnership Plans (NRPR) and the introduction of the European Competitiveness Fund (ECF) — offers opportunities for simplification and streamlining but also raises concerns about governance, transparency, and safeguarding EU-level priorities. Merging the Common Agricultural Policy (CAP) and Cohesion Policy into a single national envelope under the NRPR concentrates decision-making at national level and carries significant risks for regional participation, civil society involvement, and the EU’s ability to address territorial disparities. To counteract these threats, every NRRP must have a binding requirement to contain a dedicated, sufficiently funded budget line for supporting civil society in the relevant Member State. Strong EU-level oversight, clear performance criteria and additional safeguards will also be essential to ensure that this reform delivers. The EU must ensure strong ring-fencing for environmental, climate, and social spending, as well as clear performance criteria. This process can under no circumstances dilute distinctive missions or compromise legal obligations, particularly in areas such as biodiversity, nature protection, and social inclusion.

Scale up green investments

The Commission proposes €700 billion for green investments, a substantial figure on paper, yet a reduction in real terms. Once adjusted for inflation, the 2021–2027 budget, including NextGenerationEU, allocates the equivalent of €750.2 billion for green objectives. At a time of escalating climate impacts and intensifying global competition in clean technologies, the EU cannot afford to scale back. Europe needs more green investment to meet its 2040 climate target, accelerate emissions reductions, and sustain its competitive edge. Reducing climate funding sends the wrong signal, undermining both climate ambition and competitiveness.

A particular concern is the proposed integration of the LIFE Programme, Europe’s dedicated fund for nature, biodiversity, and climate adaptation, into the new European Competitiveness Fund (ECF). While strengthening competitiveness is essential, this integration carries the significant risk of diluting LIFE’s core mission and diverting biodiversity and climate-adaptation funding toward short-term industrial priorities. Strict ring-fencing for biodiversity, nature protection and climate adaptation must therefore urgently be maintained to ensure that essential environmental objectives remain adequately funded. At a time when there is a push back against legislation aimed at climate protection and nature preservation, sustained investment in nature restoration and climate resilience is essential. Such investment can underpin long-term competitiveness by preserving natural capital and reducing climate-related risks. It can also enable NGOs to support efforts to protect the environment.

Strengthening the Just Transition Fund and Innovation Fund is also crucial to ensure that decarbonisation proceeds fairly and that new technologies can scale across the Union. These instruments help prevent regional inequalities, support economic diversification and create markets for future-proof industries.

Seek for strategic autonomy

The €409 billion European Competitiveness Fund (ECF) for 2028–2034 represents an important innovation and a welcome step toward a more proactive industrial strategy. However, when compared with the annual investment gap of €800 billion identified in Mario Draghi’s competitiveness report, this multi-year envelope falls far short of what is required to secure Europe’s economic resilience and technological leadership. To bridge this gap, Europe requires deeper structural reforms, a fully integrated Single Market, and increased financial and structural support for small and medium-sized enterprises (SMEs), which form the backbone of the EU economy. Furthermore, targeted investment in research and development (R&D), digital capacity, and industrial leadership is urgently required. At the same time, strengthening Europe’s competitiveness must go hand in hand with reinforcing societal cohesion. This requires that funding within the ECF is tied to social conditionality: public funding for de-risking private investment should come with commitments from the beneficiaries. In summary, the MFF should act as a catalyst for these reforms by boosting investment in innovation, skills, and strategic infrastructure, as well as by attracting private capital on a large scale. However, the current proposal does not rise to this level of ambition. A substantially larger competitiveness envelope would better support net-zero industries, digitalisation, and critical infrastructure, helping to scale up European technologies and reduce strategic dependencies.

The MFF should also be designed to mobilise significantly greater private investment. Strengthening the role of the European Investment Bank (EIB) and expanding existing blending instruments would enable the EU to leverage every euro of public funding several times over. By crowding in private capital — particularly in high-risk, high-innovation sectors — the EU can scale up investment far beyond what the MFF alone can provide.

Enable a fair and just transition

The twin digital and green transition is already placing significant pressure on European citizens and acting as a catalyst for major socio-economic challenges, a trend that will intensify in the years ahead. As public acceptance is essential for the success of this transition, it is vital that no one is left behind. This requires social investment to match industrial and climate investment.

The current MFF proposal limits social spending to 14 percent of NRPR envelopes and eliminates the dedicated ESF+ budget line, dispersing social objectives across multiple funds and removes existing minimum earmarks for social inclusion, child poverty, and material deprivation. Incorporating social spending into the NRPP framework marks a shift toward more centralised national planning, which might enhance streamlining, but carries the great risk of weakening regional participation and civil society involvement in programme design and delivery. These changes reduce guaranteed support and dilute funding across more policy areas at a time when challenges such as employment, reskilling, youth opportunities, housing, inclusion, and poverty reduction demand robust and targeted investment. Social investment thus must urgently form a central pillar of the MFF, and the EU must guarantee stronger ring-fencing to ensure that resources reach those who need them most.

Key remaining social instruments also require reinforcement. Erasmus+, representing only 6.9 percent of the Competitiveness Fund, must be expanded to broaden access to skills development and lifelong learning. These investments directly raise productivity and innovation capacity and help ensure a workforce equipped for emerging industries.

Robust monitoring of social spending is essential. Transparent reporting of outcomes such as employment rates, reskilling participation and poverty reduction would strengthen accountability, improve policy design and ensure social investment delivers tangible benefits. Finally, upholding a meaningful role for civil society, regional authorities, and social partners in designing and implementing national plans is needed to strengthen democratic accountability and improve policy outcomes.

Conclusion

The next MFF will shape the European Union’s strategic trajectory for a decade marked by profound transformation. The Commission’s proposal provides a solid foundation, but it must be strengthened in scale, ambition, and strategic clarity to meet Europe’s challenges. The co-legislators, European Parliament and the Member States, must reinforce the MFF’s capacity to support the Union’s competitiveness, climate leadership and social cohesion, and democratic resilience.

A stronger, more future-oriented European budget is not simply a financial necessity, it is an essential investment in Europe’s stability, prosperity, and global influence. The decisions made in the coming months will determine whether the EU can turn pressure into long-term strength.

For more detailed policy positions on the above themes, please click HERE.