On 16 July 2025, the European Commission launched the negotiations on the EU’s next long-term budget by publishing its proposal for the 2028–2034 Multiannual Financial Framework (MFF). The MFF remains the EU’s main financial tool for turning common political goals and priorities into concrete investments, providing the stability and coordination of spending essential for some EU policy objectives.
The proposal for the future financial plan, worth EUR 1.98 trillion, equivalent to 1.26% of the EU’s Gross National Income (GNI), marks a significant restructuring of EU spending, shifting from programme- to policy-based budgeting and from cost- to performance-based funding. This shift is framed as a response to geopolitical instability, intensified global competition, economic uncertainty, as well as the EU’s commitment to decarbonise its economy by 2050. Therefore, greater budgetary flexibility is designed to allow the Union to respond more quickly to unexpected shocks and emerging priorities, reducing the rigidity that has characterised previous frameworks and thereby adapting more effectively to shifting policy priorities.
With the Commission aiming to “maximise the impact of every euro”, security, competitiveness and a successful transition are elevated from supporting objectives to core budgetary priorities, reflecting the political salience of issues regarding EU strategic autonomy and resilience. However, this shift raises important questions about increased centralisation, the potential erosion of traditional cohesion objectives, and the uneven capacity of Member States to operate within a more demanding, performance-driven framework.
These tensions are particularly relevant for Central and Eastern European (CEE) Member States, whose economies remain reliant on energy-intensive industries. Those sectors have already been feeling the strain of rising energy prices, while tight public budgets are limiting the ability of governments to cushion the impact through state aid. Facilitating industrial transformation in this region is important not only for meeting climate goals but especially for maintaining economic resilience, stimulating competitiveness and growth, and maintaining social cohesion. Therefore, the success of the next MFF in contributing to the EU’s industrial ambitions also depends on its ability to drive investment in CEE.
The new budget proposal offers instruments that could address these needs, especially through novel funding programmes. At the same time, the proposal offers no credible mechanism for advancing common industrial goals and no corrective instruments for addressing the Single Market distortions caused by state aid leveraged to support industrial production in some Member States.
The authors thank the two reviewers, Mihnea Cătuți and Sabina Strîmbovschi, for their valuable feedback, which significantly contributed to the development of this commentary.
Sabina Ghiță, EPG Research Assistant
Sabina is a Research Assistant in the Clean Economy Department, working primarily on Industrial Carbon Management. She recently graduated from a research Master’s programme in Behavioural Economics at the University of Bucharest and is interested in technologies that can combat climate change.
Before joining the Clean Economy Department, Sabina worked as a Strategy & Transactions Junior at EY, assisting with financial due diligence evaluations and market analyses.
Contact: sabina.ghita@epg-thinktank.org