Written by Karoline Kowald and Marianna Pari.
The adoption of the next multiannual financial framework (MFF) for the period from 2028 will be one of the second von der Leyen Commission’s defining projects. Striking a delicate balance between the EU’s growing financial needs and many Member States’ reluctance to shoulder higher payments to the EU has always been a challenging task. However, never before have the EU’s many financial needs been greater – and, at the same time, Member States’ budgets are under heavy constraints.
On the expenditure side, several costly projects are on the horizon. The EU’s next long-term budget will have to finance the principal repayment of Next Generation EU (NGEU) grants from 2028 onwards, as well as borrowing costs that are higher than originally planned owing to a rise in interest rates. Other major expenditure items will include further financial support for Ukraine in its defence against Russia’s war of aggression and the subsequent contribution to recovery and reconstruction, the need to enhance the EU’s defence, security and preparedness, and the cost of EU enlargement. In addition, the EU must continue to invest in high-growth projects and its green and digital transformation in order to remain competitive, as recently underlined by the former president of the European Central Bank, Mario Draghi, in his high-level report on competitiveness.
To finance the repayment of the NGEU debt, the European Parliament, the Council and the European Commission have agreed to introduce new own resources. However, although the Commission presented a proposal, approved by Parliament, no significant progress has so far been made on new own resources in the Council. Some Member States consider increased gross national income-based own resources as a simpler and fairer solution, which they want to combine with savings in existing areas as a way to balance the budget. Parliament has started shaping its position for the forthcoming debate on the next MFF with a draft initiative report, ‘A revamped long-term budget for the Union in a changing world’, presented by co-rapporteurs Siegfried Mureșan (EPP, Romania) and Carla Tavares (S&D, Portugal).
Read the complete briefing on ‘Future of EU long-term financing: Post-2027 needs and how to finance them‘ in the Think Tank pages of the European Parliament.
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