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The main focus will be on defense and economic projects.
The European Commission is considering a radical overhaul of the European Union's multi-annual budget, which would merge dozens of programmes into three main funds that would give more financial autonomy to national governments. The reform aims to make the EU budget more flexible and able to respond to new challenges, including rising defence spending and debt repayments. The Commission stresses that the current model for distributing funds is outdated and "the status quo is not an option".
This was reported by the Financial Times, citing a document describing the proposed changes.
Instead of the traditional division of funds into over 50 separate programs, it is proposed to create three main funds:
- National Investment and Reform Fund, which will combine regional funding and subsidies for the agricultural sector. This will give capitals more control over the distribution of funds.
- European Competitiveness Fund, aimed at supporting key sectors of the economy and innovative projects.
- Updated Foreign Policy Fund, which will align spending with the EU's long-term strategic interests.
The reform could significantly change the mechanism for financing defense initiatives. The EU is expected to direct more funds to cross-border military projects that were not previously a priority.
The European Commission has not yet announced the specific size of the new budget for the period after 2028. At the same time, it acknowledges that a significant part of the funds should be allocated to debt repayments, in particular the repayment of bonds issued during the COVID-19 pandemic. For these purposes alone, about 30 billion euros are needed annually, which would amount to 20% of all EU spending.
Any significant budget increase is likely to face resistance from the EU's biggest donors, such as Germany and the Netherlands. At the same time, Brussels believes that the centralised funding mechanisms are currently too bureaucratic: only 6,4% of regional funds have been used halfway through the current seven-year budget cycle.
The Commission plans to present a formal legislative proposal for the new Multiannual Financial Framework this summer. Its adoption requires the agreement of all 27 EU member states.
Siegfried Mureşan, an MEP involved in the budget negotiations, said the new approach must meet modern challenges: “We want a budget that is better aligned with the Union’s new priorities, such as competitiveness and EU defence.”
A European Commission representative declined to comment on the content of the proposal before its official publication, which is expected on Wednesday.
Is it realistic for European countries to move to 5% of defense spending, as Donald Trump demands? In a world where even 2% remains unattainable for many NATO members, the ambitious new threshold looks like a provocation.
