On 16 July 2025, the European Commission presented its proposal for the new financial framework for the period 2028–2034, known as the Union’s budget or, by its acronym, ‘MFF’ (Multiannual Financial Framework). The proposal officially opens discussions on the next European budget, which will continue until the end of 2027, and outlines its overall structure and size.
While the Commission’s proposal is broadly positive, setting a spending target dedicated to supporting the Union’s climate goals, questions remain about the amount of funding and the methodology used to assess progress towards this target.
The 2028–2034 budget
With a total size of €1,984 billion – equivalent to 1.26% of the Member States’ annual gross national income – the new budget aims to equip the Union, Member States and citizens with the necessary resources to address the challenges facing Europe. Among these is a significant need for public funds (both national and European) to finance a transition that ensures energy security and independence for the continent. The EU budget also aims to fund social policies supporting the most vulnerable groups in society, strengthen defence, and ensure a level playing field and balanced development opportunities across Member States, which, following the adoption of new national public spending rules, have differing fiscal margins and spending possibilities.
Although the overall figure of €1,984 billion seems substantial, it appears to be the minimum necessary to provide an EU budget adequate to meet European priorities. This is particularly the case when considering inflation over the 2028–2034 period (which, according to the Commission, will reduce the real value of the budget to €1,763 billion) and the repayment, starting in 2028, of European debt incurred during the pandemic through the Next Generation EU facility (amounting to 0.11% of gross national income – estimated at €24 billion for 2028 – which must be covered by the EU budget).
The previous EU budget for the current period (2021–2027) was initially set at €1,211 billion but rose to a total of €2,018 billion with the approval of the Next Generation EU facility.
The Commission’s proposal also includes a regulation for five new “own resources” (i.e. revenue streams directly collected by the EU, as opposed to contributions from Member States), which would generate €58.2 billion annually for the EU budget – needed to strengthen it and meet the Union’s financial requirements. However, proposals for new own resources that enjoy broad public support – related to taxation of polluting sectors that often benefit from environmentally harmful subsidies and tax advantages (notably, luxury aviation and profits of fossil fuel companies) – were not included.
Climate in the EU budget
On the climate front, the Commission proposes a horizontal minimum spending target of at least 35% for climate and environmental objectives, calculated based on the total budget excluding defence and security expenditure. While this target is a good starting point, it does not represent a significant increase compared to the current MFF 2021–2027 target (30%) and falls short of the 37% target required for Member States’ NRRPs. Moreover, it is a partial target that does not apply to the entire budget, with the actual value depending on defence and security spending. There is also no separate minimum spending obligation for biodiversity. The climate and environmental spending target set by the Commission should prioritise the transition as a driver of energy security, prosperity, competitiveness and social inclusion. It is therefore crucial that climate funding is increased or at least maintained in absolute terms during negotiations between now and 2028.
In addition to the limited ambition of this minimum climate spending target, there is a methodological issue in how it is determined – one that has already been encountered with the NRRP target. The classification of funded measures based on coefficients for climate contributions (100% – substantial, 40% – moderate, 0% – neutral) does not always realistically reflect the actual climate impact of the financed interventions. For example, the Commission’s proposal would assign the highest coefficient (100%) to measures such as biofuel production, CCS/CCU value chains and nuclear fission, which have a potentially limited and uncertain role in decarbonisation. Conversely, measures such as low-carbon hydrogen production (including hydrogen produced from gas with CCS) are rated as moderately positive (40%) for climate mitigation. It is positive that the final proposal excludes explicit derogations from the ‘do no significant harm’ (DNSH) principle in favour of fossil fuel projects, which appeared in earlier drafts. However, the system still cannot adequately quantify the impact of interventions that may be partially harmful to the climate.
An accurate and transparent assessment of the climate impact of funded measures is essential to make the 35% target credible. Without a revision of classification criteria and better alignment between climate goals and financial instruments, there is a risk that the figures will present an artificially optimistic picture of the EU budget’s climate impact, obscuring the true effects of the funded measures.
How the EU budget is structured
Structurally, the Commission’s proposal aims to ensure flexibility in the next budget and simplify fund management by administrations and access to them by beneficiaries. The Commission proposes consolidating the numerous existing EU funds into three main lines of action: (1) a National and Regional Partnership Plan for each Member State, modelled on the NRRPs, which will include most current EU funds (Cohesion Funds, Social Climate Fund, Just Transition Fund, Common Agricultural Policy Funds, etc.); (2) the European Competitiveness Fund, which will support industry, research and innovation; and (3) the Global Europe Fund, divided into six geographic pillars, supporting the EU’s external action.
On the positive side, the proposal includes several innovations, including a uniform and simplified system for monitoring and evaluating the progress of funded measures, and harmonisation of some cross-cutting principles applicable to all funds. It is also positive that the impact of funded measures (including, for some, avoided greenhouse gas emissions) will be systematically tracked, and that support for SMEs in accessing funds is highlighted.
However, it is important that this new, seemingly simpler and more flexible architecture of the budget does not exclude local and regional authorities and civil society from the preparation and implementation of funded projects, and that it guarantees the effective pursuit of a just transition, providing necessary support to the most vulnerable regions and populations. At the same time, if there is no strong EU-level monitoring system, the central role given to National and Regional Partnership Plans risks reinforcing a strongly national approach, where Member States’ priorities may prevail over common European ones. This could weaken the EU’s role in promoting truly European, ambitious and coordinated policies, limiting the EU budget’s ability to act as a strategic lever to address shared challenges – from decarbonisation to security, competitiveness and social inclusion.
Towards 2028
What the Commission presented in July is just the first act of a long political and economic play: from now until 2028, a multilevel negotiation phase involving various European institutions will unfold, shaping the final form of the next EU budget.
The next step will be the start of discussions within the Council of the European Union under the leadership of the Danish Presidency, which intends to propose a first round of amendments by the end of this year. Between the end of 2025 and early 2026, the European Council will then open discussions on the Commission’s proposal, alongside the European Parliament, which will have the power to approve or veto the final text.
Photo by CARTIST
