What is the future of the Multiannual Financial Framework?

Translated by Erica Cervellera

The Multiannual Financial Framework (MFF) is the instrument through which the European Union defines its spending strategy over a seven-year period. The next MFF, covering the period 2028–2034, will be presented by the European Commission on July 16, 2025, and is shaping up to be one of the most ambitious reforms. Its role is to outline political priorities in advance, set spending ceilings, and ensure the financial stability of the EU budget. With the current budget amounting to around €1.2 trillion, the new MFF aims to radically transform the way Europe finances growth, defense, research, and the green and digital transitions.

The most significant innovation in the proposal is the creation of the European Competitiveness Fund (ECF), a kind of central strategic fund that will bring together resources and instruments currently fragmented across multiple programs. Its goal is to mobilize large amounts of public and private capital for European projects of strategic importance in sectors such as artificial intelligence, space, defense, clean tech, biotech, and digitalization, helping to close the investment gap with the United States and China. The fund will feature a streamlined structure, based on a “single rulebook” that will simplify access to financing. It will reward priority projects by granting them a “Competitiveness Seal”, a label that will enable them to draw on European, national, and private resources. According to the draft, the fund may receive both financial and non-financial contributions from Member States, EU institutions, private entities, and international organizations. While specific amounts have not yet been indicated, the fund is expected to consolidate up to 14 existing budget lines, including the Innovation Fund, the Digital Europe Programme, parts of the Connecting Europe Facility, the European Defence Fund, the ASAP program for ammunition production, EDIRPA, EDIP, InvestEU, EU4Health, the EU space program, and the IRIS² satellite.The idea is to bring together currently separate instruments under a single framework to strengthen Europe’s industrial sovereignty. However, the fund’s ambition has raised concerns.

In the preliminary version of the plan, Horizon Europe—the EU’s most important research program, with a budget of around €96 billion—was also included within the ECF. However, after strong criticism from the academic and scientific communities, who were concerned about a possible shift of resources away from fundamental research toward more immediate goals like defense, Commission President Ursula von der Leyen pledged that Horizon will remain autonomous, though it will be "closely linked" to the fund in order to better align research with industrial needs. Despite this assurance, widespread concerns persist: the ECF could gradually subordinate scientific priorities to economic-strategic ones, potentially undermining basic research and long-term innovation. From a technical standpoint, the fund will leverage the full EU financial toolbox, including loans, grants, equity, blending, procurement, and guarantees. The model is inspired by InvestEU, which has already shown potential in catalyzing private investment using public guarantees, although the European Court of Auditors has warned that such tools rarely generate the expected multipliers.

In parallel, the Commission aims to revise the EU’s own resources system to boost the Union’s financial autonomy, with proposals such as extending the Emissions Trading System (ETS), implementing a tax on multinational corporations, and introducing the much-debated Carbon Border Adjustment Mechanism (CBAM). Part of the debate also concerns the possible introduction of a permanent common debt instrument, modeled on NextGenerationEU, to finance strategic investments and respond to crises such as geopolitical emergencies. This idea faces strong opposition from countries like Germany, the Netherlands, and Sweden, which oppose further debt mutualization without direct control over spending. Politically, there are also divergent views: France, Poland, Italy, and parts of the European Parliament are calling for a more ambitious and flexible EU budget, while net contributors are pushing to keep overall spending in check. The Parliament, in particular, has demanded that the Horizon program remain fully autonomous also after 2028 and be granted additional resources.

If approved, the ECF would represent a paradigm shift in the management of EU resources, creating a single platform to direct investments toward the Union’s strategic priorities. The success of the reform will depend on the ability to secure sufficient funding without sacrificing essential sectors, although the negotiations (expected by the end of 2027) may still alter its structure.

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