The cash will not start flowing until 2028, but the next long-term spending plan of the European Union has filled many a meeting room since February. So, as 2025 draws to a close, where are things standing? The trenches of the battles to come are already taking shape.
Europe’s budget geeks call it the mother of all dossiers, only partially in jest. The next Multiannual Financial Framework (MFF) for 2028–2034 promises to shape everything from farm subsidies to drone fleets. And before it does, it will turn many European figures to warriors.
The Commission pitched its €1.984tn commitments ceiling in July, flanked by a payments cap of €1.890tn. Ursula von der Leyen, the Commission’s president, boasted that the blueprint “addresses Europe’s challenges. That strengthens our independence.”
A week of back-slapping followed; then the knives came out. Net contributors muttered about thrift. Net recipients demanded largesse. Observers noted that the package, equal to 1.26 per cent of EU GNI, is bigger than the current one but still dwarfed by America’s federal spending.
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Gathering headwinds
“This package is the most important set of proposals that we as a parliament will deal with over the next few years,” declared MEP Johan Van Overtveldt (ECR/BEL), chair of the European Parliament’s budgets committee. The Flemish Conservative knows whereof he speaks: every annual budget between 2028 and 2034 must fit beneath the ceilings now under debate.
The new plan lands in a different world from its predecessor. The 2021-27 ceiling of €1.211tn looked ample until Covid-19, Russia’s assault on Ukraine and an energy crunch forced leaders to bolt on a €750bn recovery fund. Repayments on that debt start in 2028 and last until 2058—roughly €160bn over seven years—automatically gobbling up 0.11 per cent of GNI each year. “Starting in 2028, we begin repaying the next generation EU funds, so even a modest increase in spending requires a matching effort on the revenue side,” warned Piotr Serafin, the budget commissioner.
Ms von der Leyen sells the new framework as “strategic, more flexible and more transparent”. Some capitals hear only ‘more expensive‘. Austria, Denmark, Finland, the Netherlands, Sweden, and an austerity-minded Germany have formed a ‘stability first‘ camp. They want the ceiling at or below one per cent of GNI and oppose fresh borrowing. A ‘targeted expansion‘ group—France, Poland and a clutch of centrists—could live with 1.2-1.3 per cent if it funds defence and competitiveness. Southern and eastern members, the self-styled ‘ambition coalition‘, dream of at least 1.35 per cent and more joint debt.
Wider, not deeper
Besides size, the design is novel. Six spending headings survive, though shuffled. A €15.8bn flexibility pot aims to let Brussels move money quickly during crises. A separate crisis facility, parked outside the ceilings, would allow borrowing of up to 0.07 per cent of GNI per year.
A €100bn reserve would bankroll Ukraine without annual haggling. Defence programmes triple to €73bn, yet farming and cohesion still swallow a hefty slice, 55 per cent of the current framework. The figure slid to 48 per cent in the proposal, but it still is almost half the pie. Ms von der Leyen insists the mix will make Europe “stronger and faster, more strategic and more modern.” Critics spy an over-stuffed Christmas pudding.
Early skirmishing shows why the talks may drag. The Parliament’s resolution of 7 May demanded ring-fenced shares—40 per cent of all spending for climate action, 10 per cent for youth programmes—plus a mid-term review in 2031 and an ‘MFF Scrutiny Board‘ to shame laggards. “I believe this proposal can be the basis for the negotiations,” said MEP Niklas Nienaß (Greens-EFA/DEU), adding sotto voce that much must change before consent.
Rule-of-law rows
Mr Van Overtveldt, ever the accountant, reminds colleagues that ambition and arithmetic are not the same: “It’s a great responsibility for all of us to make sure that the process ends with an ambitious budget… that combines sufficient flexibility with the predictability required.”
The drama, however, is not just fiscal. Hungary’s PM Viktor Orbán is again brandishing his veto. Brussels froze some of his cohesion cash over rule-of-law breaches; Mr Orbán hints he will back the budget only if the tap is turned on. Others fear a re-run of the 2020 cliff-edge, when Hungary and Poland held up the current MFF. Poland’s new, pro-EU government sides with the Commission’s plan to trigger sanctions automatically when Article 7 procedures begin. Budapest calls that “economic blackmail”.
Another flashpoint is the own-resources decision, a separate law that raises EU revenue. Mr Serafin wants three new streams—carbon-border fees, a digital levy and a slice of corporate tax—worth 0.26 per cent of GNI by 2030. “This has always been one of the most difficult parts of the MFF negotiations with the council and this time…even more challenging given the growing pressure on national budgets,” he sighed to MEPs during one session. Each levy needs unanimity and ratification in 27 parliaments, a slog even for modest tweaks.
Crowding the agenda
Meanwhile national chambers have already waved nine sp-called yellow cards, mostly grumbling that the revenue plans trespass on fiscal sovereignty. The Danish presidency, holder of the Council gavel until year-end, drafted a progress report mapping its three factions. Square brackets litter its ‘negotiating box‘, signalling numbers yet to be settled. Cyprus, which takes over in January, must decide whether to prune the proposal or trade cheques for concessions.
It’s a great responsibility for all of us to make sure that the process ends with an ambitious budget… that combines sufficient flexibility with the predictability required. — Johan Van Overtveldt (ECR/BEL)
Outside the institutions, stakeholders sharpen pens. BusinessEurope, an industry lobby, calls the package “directionally right” but wants stricter performance audits. Think-tankers warn of ‘systemic blackmail’ under unanimity. NGOs complain that the Commission’s claim of 34 per cent climate spending is fluffy, noting that some gas projects count as green.
Says Tim Peters of the Parliament’s research service: “The new National and Regional Partnership Plans risk renationalising cohesion policy.“ Needless to say, that is a red rag to regional leaders who fear losing direct access to Brussels cash.
Defence and deterrence
Russia’s war has nudged the EU towards joint defence spending. The proposed European Defence Capability Facility would bundle five existing tools, aiming for economies of scale. Yet frugal states question duplication with NATO. Eastern hawks retort that only an EU budget line guarantees steady orders for shells and semiconductors.
The €73bn earmark is triple the current envelope, but pro-Ukraine voices grumble it is still too small. The planned €100bn Ukraine reserve pleases Kyiv’s friends, though development agencies mutter that it robs Peter to pay Paul.
Next come the repayment costs of the Covid-era recovery fund. Servicing debt inside the ceiling means fresh programmes must jostle with fixed obligations. Some capitals favour repaying the loans off-budget; others prefer squeezing spending. Parliament would rather raise fresh taxes. Mr Serafin, caught in the middle, tells anyone who listens that only a credible revenue plan can square the circle.
Behind the scenes
Procedurally, the file rests at first-reading stage in both the Council and Parliament. No formal amendments have been tabled, though MEPs send a steady stream of informal wish-lists. The Commission helpfully produced 41 sectoral regulations in September, enough paper to fell a small forest.
This has always been one of the most difficult parts of the MFF negotiations with the council and this time…even more challenging given the growing pressure on national budgets. — Piotr Serafin, EU Budget Commissioner
National officials predict real horse-trading will begin in late spring, once Cyprus reveals its compromise figures. By December 2026 leaders aim for a deal. Miss that date and the EU tumbles into a contingency regime that doles out one-tenth of the current budget each month—a prospect that concentrates minds.
Observers recall that the 2021-27 MFF took two summits, a pandemic and several all-nighters to finish. This cycle adds war, inflation and a looming American election. The Commission also proposes indexing some ceilings to inflation, a move that Germany dislikes on principle. Member states must weigh the allure of strategic autonomy against sticker shock at home.
Where money meets politics
The Parliament, eager to flex its muscles, threatens to withhold consent unless its conditions are met. Governments shrug that MEPs always huff before grudgingly approving a late-night compromise. Yet the politics have shifted: green and far-right parties both gained seats in 2024, making the coalition maths trickier. Mr Van Overtveldt commands only one committee; the plenary could spring surprises.
In the Council, France and Poland trumpet the merits of the 1.35 per cent ceiling. The Dutch warn that their voters feel squeezed enough. Northern governments insist that any extra euro be offset by cuts elsewhere. Italy and Spain retort that scarred public finances leave them little room to co-finance EU projects without bigger grants.
Much fuss centres on flexibility. The €15.8bn buffer looks tiny beside the crises of recent years. Net contributors fear it will turn into a slush fund. Parliament and NGOs want sub-ceilings for climate and youth to stop cash being raided for border fences. Yet adding locks to an already rigid system may hinder quick responses—the very thing flexibility was meant to fix.
A hollow core?
The own-resources wrangle runs in parallel. Carbon-border fees may yield cash, but digital taxes face American hostility. Corporate-tax sharing is stuck at the OECD. Without new revenue, the repayment bill threatens to eat future investment. Fights over who pays could dwarf those over what to fund.
The new National and Regional Partnership Plans risk renationalising cohesion policy. — Tim Peters, reseacher with the European Parliament
By Christmas the European Council merely “took note” of the Danish progress report and implored future presidencies to intensify talks. Diplomats translate that as: nothing is agreed, everything is parked. Cyprus will try to break the deadlock during January-March; Hungary’s turn at the helm looms in the second half of 2026, a timing that gives worriers palpitations.
Yet deals do emerge when deadlines bite. The mid-term review of the current budget—agreed in February 2024 after similar theatrics—proved that money and exhaustion can overcome ideology. Whether the same alchemy works this time is uncertain. The six knots (size, debt service, flexibility, rule-of-law, cohesion reform and Ukraine funding) are tighter and more entangled.
No room for miracles
Europe’s leaders pride themselves on muddling through. This MFF will test that knack. If the circle is squared, the Union gains a modest boost in collective firepower and a clearer defence role. If talks fail, temporary budgets will hobble planning just as war on the continent, Chinese assertiveness and American unpredictability demand coherence.
For now the budget remains, as Brussels insiders like to say, ‘in brackets‘. In Eurospeak, brackets mean numbers yet to be fixed, policies yet to be agreed, ambitions yet to be paid for. What offspring shall the mother of all dossiers bear, we are to learn over the next 12 months.
Selective legislative files that moved in 2025 and their current state:
MFF 2028-2034 Package
Sets the commitments ceiling (€1.984tn, 1.26 % GNI), payments ceiling (€1.890tn) and six-heading architecture for 2028-34.
Latest: November – EP BUDG committee appoints rapporteur
15-16 Dec – European Council holds first orientation debate
Status: technical discussion stage; no amendments yet
Ball now with: Council (working groups) and European Council; Parliament prepares consent position
Mid-term Cohesion Policy Package
Amends regulation on European Regional Development Fund and Cohesion Fund, amends regulation on European Social Fund Plus. Builds the February-2024 MFF top-up into cohesion rules; adds higher co-financing, defence-industry, housing and water-resilience priorities.
Latest: 11 Dec – European Parliament first-reading vote backs political deal
Status: political agreement reached; final Council adoption due Q1 2026
Ball now with: Council of the EU (formal adoption)
New Own-Resources Decision
Introduces five revenue streams (Emissions Trading Systems, Carbon Border Adjustment Mechanism, financial-transaction levy, revised plastics levy) worth up to 0.26 per cent GNI by 2030.
Latest: Aug-Dec – Council working party meets seven times; EP BUDG drafts opinion
Status: negotiations ongoing; unanimity and national ratifications still ahead
Ball now with: Council of the EU (special legislative procedure); national parliaments later
Temporary Decarbonisation Fund Regulation
Channels 75 per cent of CBAM revenue to a new external-assigned-revenue fund for climate spending.
Latest: 17 Dec – proposal sent to EP and Council
Status: just launched; Council working party to open Jan 2026; EP ENVI committee to choose rapporteur Feb 2026
Ball now with: Council and Parliament (early first-reading stage)
Implementation acts linked to the 2024 MFF mid-term revision
Operationalise the €64.6bn top-up to Ukraine Facility Regulation adopted in Feb 2024.
Latest: Oct – Commission adopts first Strategic Technologies for Europe Platform (STEP) work-programme
Status: secondary legislation in force; regular budget execution and scrutiny under way
Ball now with: Commission for implementation; Parliament/Council for oversight
