The European Union is embarking on negotiations for its largest-ever long-term budget, the Multiannual Financial Framework (MFF) covering 2028 to 2034. The European Commission has proposed a €1.8 trillion package, but the European Parliament is demanding €1.96 trillion, leaving a €175 billion gap that reflects deep divisions over priorities. As talks intensify in 2025, the outcome will reshape spending across the continent for seven years.
Defence Takes Centre Stage
The clearest winner in the proposed budget is defence. The Commission has allocated €131 billion to defence, security, and space—five times the amount in the current MFF. Military mobility funding alone surges tenfold, driven by Russia's war in Ukraine and growing doubts about US security guarantees under any future administration. This shift marks a historic reorientation of EU spending, moving away from its traditional focus on agriculture and regional cohesion.
Parliament has signalled it may veto any budget that does not meet its demands, insisting on more funding for climate action, cohesion, and citizen programmes. The Parliament's position is that a stronger defence cannot come at the expense of the EU's social and environmental commitments.
Who Loses Out
Farmers, poorer regions, and civil society organisations face reduced allocations under the new framework. The Common Agricultural Policy (CAP), long the largest item in the EU budget, is set for cuts as the bloc prioritises security and competitiveness. Czechia, Slovenia, and Portugal are among the member states that would receive less under the revised formula for cohesion funds, which are designed to narrow economic disparities between regions.
The so-called frugal states—Germany, the Netherlands, Sweden, and Austria—are pushing for a leaner budget without resorting to joint debt. They argue that the EU should focus on core priorities and avoid burdening future generations. This stance puts them at odds with the Parliament and with southern and eastern member states that rely heavily on EU transfers.
The Battle Lines
The negotiations are shaping up to be a classic EU power struggle. The Parliament, which must approve the MFF, is demanding a 10% increase over the Commission's proposal, prioritising cohesion and defence. The budget battle has already drawn sharp lines, with the Parliament threatening to block any deal that does not meet its funding targets.
Meanwhile, the European Commission is caught in the middle, trying to balance the competing demands of member states and the Parliament. The final budget will require unanimous approval from all 27 member states, giving each country significant leverage. Hungary, for example, has already used budget negotiations to extract concessions on rule-of-law issues.
The stakes are high. A failure to agree on the MFF could delay funding for key programmes, from research and innovation to border security. It would also send a signal of disunity at a time when the EU faces external threats from Russia and economic competition from China and the United States.
What Comes Next
The negotiations are expected to continue through 2025 and into 2026, with a final agreement needed before the current MFF expires at the end of 2027. The outcome will determine not only how €2 trillion is spent but also the future direction of the European project. Will the EU become a security-focused bloc, or will it maintain its commitment to social cohesion and environmental sustainability?
For now, the answer remains uncertain. What is clear is that the era of ever-increasing spending on agriculture and regional aid is over. The EU is adapting to a new geopolitical reality, and its budget is the most tangible expression of that shift.
