ZPP Newsletter
16.09.2025
Commentary on the European Commission’s Proposal for the 2028–2034 Multiannual Financial Framework
On 16 July 2025, the European Commission presented its Proposal for the next Multiannual Financial Framework (MFF), setting a budget of EUR 1.98 trillion for the 2028–2034 period. It seeks to reshape the financial structures within the EU with the aim of accelerating and simplifying funding processes, and we as the Union of Entrepreneurs and Employers (ZPP) fully support these goals. However, we note with concern that in its current form, some of the proposed new sources of funding might negatively impact key sectors of the European economy.
The MFF’s Composition
The proposed 2028–2034 MFF is organised around three main pillars, each encompassing multiple policy areas and funding instruments. The first pillar, the National and Regional Partnership Plans (NRPPs), brings together fourteen sectors of funding, distributed by Member States and regions, into one unified framework. This includes cohesion policy, the Common Agricultural Policy (CAP), the European Social Fund Plus, and border management. In total, the NRPPs would receive EUR 865 billion, making this the largest pillar of the MFF. Within this, EUR 453 billion is allocated to cohesion policy, with 48% of that amount dedicated specifically to less developed regions. A further EUR 296 billion would go to agricultural income support under the CAP. At least 14% of NRPP funding – excluding the CAP – is earmarked for meeting the Union’s social objectives, including employment, skills development, and poverty reduction, in line with the European Pillar of Social Rights. An additional EUR 72 billion is allocated to the EU Facility, a new programme intended to aid the implementation of these funds by providing Union-level support where applicable, such as for inter-regional projects.
The second pillar, Competitiveness, Prosperity and Security, is allocated EUR 590 billion. Its core component is the newly established European Competitiveness Fund (ECF), which would receive EUR 451 billion to consolidate funding for sectors such as clean transition, digital innovation, health sciences, and defence. The Commission intends for this merger of funding streams to provide greater support for businesses from the research stage all the way through to manufacturing, and to create ideal conditions for scaling up further thereafter. The defence sector notably sees substantial developments: its budget will be quintupled from that of the 2021-2027 MFF to a total of EUR 131 billion, with more support being provided for frontier and dual-use technologies. This is further enforced by the Connecting Europe Facility receiving EUR 81 billion, of which 17 billion is dedicated to strengthening military mobility infrastructure across the Union. Finally, EUR 175 billion will go towards the Horizon Europe programme, which will continue supporting the EU’s capabilities for research and innovation.
The third pillar, Global Europe, receives just over EUR 200 billion, most of which will be channelled through the Global Europe Instrument. This will fund the EU’s external action, ranging from neighbourhood and enlargement policy to humanitarian aid, international development and dedicated funding for Ukraine’s recovery and accession efforts. Notably, candidate countries will have full access to the tools within this instrument, which should provide the technical support and resources needed for making the necessary reforms to eventually be able to achieve membership. EUR 100 billion within this pillar is specifically dedicated to Ukraine’s recovery, while the rest supports broader foreign policy objectives such as humanitarian assistance, migration management, and strategic partnerships.
Outside of the three main pillars, EUR 118 billion is allocated to administrative expenditure, which covers the functioning of EU institutions as well as technical, monitoring, and communications support for MFF delivery. Additionally, EUR 168 billion is reserved for the repayment of NextGenerationEU loans, which will begin in 2028.
Overall, on the expenses’ side, the new MFF looks quite bold and ambitious, especially in the second pillar dedicated to competitiveness and security. ZPP particularly welcomes the proposed approach for strengthening the defence sector.
Funding and financing
While these streamlining efforts are primarily intended to make funding more flexible and effective from the perspective of EU institutions, they are also paired with reforms meant to make the funds more accessible and effective for the beneficiaries. The shift towards results-based financing – wherein funds are distributed incrementally as reform milestones are reached – and consolidation of reporting requirements aims to speed up the rate at which EU funds enter the economy. The harmonisation of technical rules is also meant to assist in this, as their coherence would reduce the administrative burdens faced when implementing the funding. Finally, the Commission proposes a consolidation of online portals into a “Single Gateway”, with the goal of improving beneficiaries’ access to information.
To help finance this budget – particularly the repayments of NextGenerationEU, which will impose an annual cost of EUR 24 billion – the Commission proposes the introduction of five new Own Resources to diversify and strengthen the Union’s revenue streams. These include the following: 30% of revenues from Emissions Trading Schemes, its external equivalent in the Carbon Border Adjustment Mechanism, a per kilogram tax on non-collected e-waste, a Corporate Resource for Europe contribution which would have large enterprises provide a direct injection into the EU budget, and finally, a Tobacco Excise Duty Own Resource (TEDOR), which would work in tandem with the soon-to-be-revised tobacco excise duty directive. These measures are intended to support the EU’s climate and public health goals, while also increasing the Union’s own resources and reducing reliance on national contributions.
Opinion
The ZPP recognises that the MFF Proposal includes several elements that have the potential to strengthen the EU’s key objectives. We acknowledge the importance of strong funding for revitalising the faltering European defence sector and raising its preparedness, and therefore welcome the significantly enhanced defence budget, as well as the emphasis on dual-use technologies in this sector. We are also encouraged by the cohesion policy’s targeted focus on those regions most in need, which should direct funding to where it can deliver the greatest impact. Finally, we appreciate the Commission’s continued support for Ukraine and the integration of this commitment across multiple sectors.
However, there are some concerns regarding the overall structural direction of the Proposal. While the goals of greater flexibility and cross-sector synergy are commendable, consolidating previously independent programmes under broader umbrella frameworks might result in the undermining of sectors that require tailored approaches. It is therefore crucial to ensure that the general aim for flexibility and results-oriented financing – which we encourage – do not leave traditionally important areas and fields such as the CAP neglected. We therefore urge the Commission to engage in thorough consultations with stakeholders across the European economy in the coming years to ensure that the final MFF has a balanced and inclusive approach that reflects the interests of those most affected by it. Moreover, while we see the obvious need for providing new resources to the EU budget due to the geopolitical and economical challenges, we are not sure that all the measures proposed by the EC are sufficient and neutral for the markets. In particular, we strongly believe that TEDOR in its current structure requires more dialogue, consultations, and restructuring considering its sizable impact on the EU’s tobacco-based agriculture sector.
