Mid-term revision of the Multiannual Financial Framework - Related Opinions

The debate on new own resources should evolve beyond technical adjustments and become a strategic reflection on how to strengthen the EU’s financial autonomy, cohesion and competitiveness. The EESC encourages the European Commission to further refine the overall design of the proposed own-resources package to make it ambitious, balanced and future-oriented.

The EESC warns that a weak long-term EU budget would undermine competitiveness, cohesion, agriculture and democracy. The Committee calls for a stronger, fairer and future-proof multiannual financial framework (MFF) for 2028 to 2034.

The EESC emphasises that peace must remain a core EU priority and cautions against focusing solely on military threats while overlooking other serious risks to human life. It stresses the importance of diplomacy for conflict resolution and crisis prevention wherever possible.The EESC supports a comprehensive, inclusive European defence strategy that supplements military readiness with civil preparedness. It endorses the European Commission’s Joint white Paper for European Defence – Readiness 2030 and calls for a coordinated EU approach that treats defence, peace and security as shared public goods, underpinned by strong legal, institutional and financial frameworks with democratic oversight.

In view of Europe's current security challenges, in particular with the armed conflict caused by Russia’s full-scale aggression against Ukraine, defence funding places a significant burden on the budgets of many EU Member States, worsening their fiscal position. 

At the same time, the resources that Member States are currently able to allocate to the development of defence capabilities still seem to be insufficient. 

As Europe needs to develop defence capabilities in a more integrated way, there is a need to significantly increase investment in European defence infrastructure and technological innovation to improve preparedness to respond to threats. 

Climate change is an existential threat for the European economy. Therefore, a comprehensive approach is needed. In this context, based on the empirical and data analyses related to the impact of climate change on the real economy, macroeconomic and financial stability is essential. As things currently stand, intensified natural disasters will lead to unprecedented costs that will have an unpredictable impact on public finance.

The European economy is currently on a downward trend. This will lead to lower revenue and, at the same time, higher demand for spending – mainly related to the costs of climate change, higher borrowing costs and negative trends in demographic development.

The need for open and transparent budgetary processes has never been more critical. The multiannual financial framework (MFF) emerges as a crucial tool for aligning financial resources with the Union's long-term priorities. The EESC has highlighted significant gaps in the current MFF, including its limited scope in addressing contemporary challenges such as Europe's aging population and strained budgets due to inflation.

The EESC therefore explores a paradigm shift towards Open budgets in the EU –a framework that encompasses not only participatory budgeting but a broader spectrum of fiscal transparency and citizen engagement across all stages of the budget cycle. This approach is aimed at enhancing the responsiveness and effectiveness of EU budget allocations, thereby fostering a more resilient, inclusive, and democratic European economy.

EESC with this Resolution, calls on the Member States of the European Union and its leaders, the European institutions and the EU citizens, to safeguard and protect the economic, social and territorial cohesion of the EU according to Article 174 of the TFEU.

The fundamental principle of cohesion policy, according to which ‘no one should be left behind’, remains sound and valid. Civil society partners are ready to continue working towards it by means of a solid EU investment policy.

The EESC emphasises that the designing of proposals for new sources of own revenues should be done in context of the budgetary pressures faced by Member States following the pandemic and the ongoing international tensions. This has become all the more important in the current higher interest rate environment. The EESC also emphasises that the second set of own resources measures should be in line with the proportionality and social fairness principles. An EU-wide tax on digital transactions could be potentially considered to increase own resources in case the agreed rules of the OECD/G20 Inclusive Framework are not respected by other major trading partners.

The EESC considers that it is necessary to add new own resources to cover the debt repayment resulting from borrowing under the NextGenerationEU initiative without jeopardising the budgets of other EU programmes and instruments, or substantially increasing the Gross National Income (GNI)-based resource contribution. Although the Commission proposals as set out in the communication are deemed necessary, EESC believes that the Commission should ensure that the design of the new system is based on achieving equity and fairness, efficiency, transparency, simplicity and stability, with a focus on competitiveness and applying solidarity where necessary.

The Own Resources Decision (ORD) entered into force on 1 June, enabling the Commission to start borrowing resources for the Next Generation EU (NGEU) recovery instrument. For the EESC, a well-functioning funding strategy is key for the smooth implementation of NGEU. Sound and sustainable funding and solid risk management are in the very interests of civil society. Moreover, borrowing and debt management has to be based on democratic control, legitimacy and transparency.

The EESC stresses how important it is that the Commission manage the funding strategy directly and does not outsource this. The massive engagement on capital markets will be accompanied with a broad set of risks. The EESC supports the establishment of solid risk-management systems and the holding of the 'NGEU account' with the ECB.

The EESC strongly supports the Commission's proposal – Next Generation EU – as a specific tool for a quick and effective recovery.

The EESC takes a very positive view of the Commission's two main decisions:

1. to introduce an extraordinary financial recovery instrument as part of the multiannual financial framework
2. to raise common debt, which will be repaid over a long period of time, and prevent the extraordinary financial burden from falling directly on the Member States in the short run.

The EESC strongly welcomes the fact that the newly proposed instrument should be closely coordinated with the European Semester process, and furthermore welcomes the Commission's proposal to introduce additional genuine own resources based on different taxes (revenues from the EU Emissions Trading System, digital taxation, large companies' revenues).

Europeans need more (and better) Europe. The powers and financial resources currently allocated to the EU have been increasingly misaligned with the concerns and expectations of Europeans. The EESC, in accordance with the European Parliament's position, therefore proposes that the expenditure and revenue figure reach 1.3% of GNI. The proposed level of commitments of 1.11% of the EU's GNI is too modest to credibly deliver on the political agenda of the EU.

The EESC recognises the high European added value of the programmes where the MFF 2021-2027 concentrates the main increases in expenditure. However, the Committee questions the fact that these increases are made at the cost of strong cuts in cohesion policy (-10%) and the Common Agricultural Policy – CAP (-15%).