Designing the multiannual financial framework is not only a negotiation over numbers. It is, in essence, a discussion about the future of European integration, about the extent to which Member States are prepared to allocate resources enabling the EU to achieve collective objectives. As geopolitical tensions intensify, technological competition accelerates, and Europe seeks to strengthen its resilience, competitiveness and security, the question is whether its current financial architecture is capable of supporting its ambitions.

By Jaroslaw Pietras

The European Union is expected to deliver solutions to new problems such as climate change, migration, energy security, defence capabilities, digital transformation, research and innovation, public health, external border management and support for Ukraine. The rationale for a common European budget lies precisely in the capacity to finance activities that create benefits for all. Pooling resources reduces duplication, creates economies of scale and allows Europe to achieve outcomes that exceed the sum of individual national efforts. However, despite the increasing demand for collective action, the European budget remains unchanged and remarkably modest. This structural imbalance has become increasingly evident over the last decade. This raises an unavoidable question: should the European Union continue relying on extraordinary instruments whenever major crises arise, or should its permanent budget address these responsibilities?

The answer is far from straightforward. The EU budget differs from national budgets. It is not designed to finance welfare systems, pensions, healthcare, education, culture or security. Although the EU finances common policies, the overwhelming majority of public investment even in these areas continues to be carried out by Member States. European funding acts primarily as a catalyst, supporting national expenditure rather than replacing it. 

The proposal for the next multiannual financial framework is based on the recognition that the European Union cannot continue expanding its responsibilities while it is unable to substantially increase its budget. Therefore, the Commission proposes that a significant share of EU funding be brought together within integrated national and regional partnership plans. Inspired partly by the experience of the Recovery and Resilience Facility, these plans would combine several existing policies under a single strategic framework agreed between the Commission and each Member State. Such an approach would simplify implementation, reduce administrative burdens, improve coordination between different policy areas and allow resources to be redirected more rapidly when unforeseen circumstances arise. 

However, the very features that make the proposal attractive to its authors also explain considerable reservations. Governments generally welcome simplification but are cautious about expanding the Commission's role in assessing reforms, monitoring milestones and deciding on the release of financial resources. Even stronger concerns have emerged from the European Parliament. Members of Parliament have consistently argued that the EU's budget should continue to be based on clearly identifiable European policies rather than becoming a collection of national financial envelopes. From the Parliament's perspective, the proposed architecture risks weakening the genuinely European dimension of common policies.

These institutional debates are particularly visible in the case of cohesion policy. Until now it has been based upon a partnership principle involving the European Commission, national governments, regional authorities, municipalities, economic and social partners and civil society organisations. Regions themselves possess detailed knowledge of local needs and investment priorities. Nevertheless, many regional authorities fear that their role could gradually diminish if programming decisions become increasingly centralised at national level. 

A similar discussion surrounds the future of the common agricultural policy. The Commission proposes maintaining substantial financial support while allowing greater flexibility for Member States to tailor implementation to national circumstances, yet many stakeholders fear that excessive decentralisation could undermine the common character of agricultural policy itself. 

Behind these sectoral debates lies a broader constitutional question regarding the distribution of responsibilities within the European Union. Should the Commission evolve towards a strategic executive managing broad investment frameworks while Member States assume greater responsibility for implementation? Or should the EU preserve more detailed common programmes that ensure greater uniformity across Europe? The answer will shape not only the next financial framework but potentially the future institutional balance within the EU itself.

Jarosław Pietras is currently a Visiting Fellow at the Wilfried Martens Centre for European Studies and Visiting Professor at the College of Europe in Bruges, Belgium. He served as Director General in the Council of the European Union from 2008 to 2020. His professional career started in 1980 at the University of Warsaw Faculty of Economics, teaching international economy and trade policy. 

After 1990, he worked for consecutive Polish Governments, serving as Secretary of State in the Ministry of Finance, Secretary of State for Europe and Head of the Office of the Committee for European Integration.  He obtained his PhD in Economics in 1986 at the Faculty of Economics of the University of Warsaw. He is also the author of a number of publications on EU and trade issues. He was a Fulbright Foundation scholar at Duke University in North Carolina, USA, a board member of the Bruegel think-tank devoted to international economics in Brussels, and ACE Programme scholar at the Centre for European Policy Studies in Brussels.