Who Pays for Europe? Understanding the Multiannual Financial Framework and Why Its Future Matters
By Gloria Aleotti
On 16 July 2025, the European Commission presented its proposal for the next ‘ambitious and dynamic’ Multiannual Financial Framework (MFF) for 2028 to 2034, the EU’s long-term budget. It amounts to almost 2 trillion euros (or, in other words, 1.26% of the EU’s gross national income), the largest amount ever recorded in the bloc’s history.
However, it was clear since the very beginning that not everybody, not even the EU institutions themselves, was on the same page. While some countries want zero increase in the budget, others want it to double. In short, reaching an agreement is Brussels' hottest political battle.
In any case, Europeans cannot afford to ignore what comes next. The next MFF will shape how the EU responds to an increasingly unstable world, marked by growing geopolitical instability, economic rivalry, security threats and the rise of far-right forces openly challenging the European project itself. But that’s not all. Because how the EU decides to spend its money will also shape its citizens’ everyday lives. Our lives.
From Technical Tool to Political Battleground
The MFF is the European Union’s long-term budget framework, designed to plan spending priorities and limits over the span of seven years. As a logical consequence, it plays a crucial role in responding to the challenges the EU faces. It supports the Union’s political priorities and finances large-scale projects that many member states would not be able to fund on their own, either because of their size or due to their cross-border dimension. By pooling resources and supporting cooperation among countries and citizens, the EU budget aims at strengthening the European economy and its geopolitical standing.
There have been six MFFs to date, including the current one (2021-2027). This EU budget has its legal foundation in Article 312 of the Treaty on the Functioning of the European Union (TFEU), according to which it ‘shall ensure that the Union expenditure develops in an orderly manner and within the limits of its own resources’, it ‘shall be established for a period of at least five years’, and the Union’s annual budget must comply with it. It was reformed by the Treaty of Lisbon, which transformed it from an interinstitutional agreement into a proper Council regulation to be adopted unanimously (but subject to the consent of the European Parliament under a special legislative procedure), which sets expenditure ceilings for broad categories of spending called ‘headings’.
The MFF didn’t always exist, nor did it always exist in its current form. So how did we get there?
In the 1980s, relations between EU institutions became increasingly tense due to a growing gap between available resources and actual spending needs. To address this, the idea of a multiannual financial perspective was introduced as a way to reduce institutional conflict, strengthen budgetary discipline and improve long-term planning. This approach was formalised for the first time in 1988 with the signing of an interinstitutional agreement (IIA) defining the financial perspective for the period 1988-1992. Also known as the Delors I package, it was designed to provide the funding necessary for the implementation of the Single European Act.
A second agreement then followed in 1993, covering the 1993-1999 period (the Delors II package). This framework allowed for a significant increase in the Structural Funds (which, in simple terms, are EU financial instruments designed to reduce economic, social and territorial disparities across Europe) and a rise in the ceiling for own resources (that is to say, the EU main sources of revenue used to finance its budget and that include, for example, contributions by member states based on their gross national income).
The system was consolidated even further with the Agenda 2000 package, which established the financial perspective for the period 2000-2006. One of its main objectives was to ensure sufficient resources for the EU’s enlargement to new member states. A fourth IIA was agreed on in 2006, setting out the financial framework for 2007-2013, continuing the evolution of the EU budget as a central feature of EU governance.
After the EU budget reform brought about by the Lisbon Treaty, the fifth MFF, the one covering the period 2014-2020, was actually the first one to record a real-term decrease in overall amounts. Thus, one of the Parliament’s preconditions for accepting it was a mandatory mid-term revision, allowing for a reassessment and adjustment of budgetary needs. The agreement also provided greater flexibility to ensure that planned funds could be fully used, as well as an agreement on moving towards a genuine system of EU own resources. A revised MFF for 2014-2020 was adopted on 20 June 2017, including additional funding for measures related to migration, as well as employment and economic growth.
Taken together, these developments highlight how, especially since the Lisbon Treaty reform, the MFF has become increasingly dependent on the political agreement between member states, but also between EU institutions. What was once a largely technical budget exercise has turned into a negotiation that requires compromise on fundamental priorities, in which the ability to reach a political deal is a decisive condition.
The Current State of Affairs: The 2021-2027 MFF
Going back to the present, the current MFF, covering the 2021-2027 period, is the one under which the EU is still operating today. On 2 May 2018, the Commission presented its legislative proposals. The proposed budget totalled 1,134.6 billion euros (in 2018 prices) in planned spending, representing 1.11% of the EU-27’s gross national income (GNI). It included increased spending on border management, migration, security, defence, development cooperation and research, while proposing reductions in areas such as cohesion policy and the Common Agricultural Policy. Following the COVID-19 pandemic and the severe economic consequences of the lockdowns, the Commission presented a revised proposal for the MFF in May 2020, amounting to 1.1 trillion euros. Shortly afterwards, it also proposed an additional recovery instrument, NextGenerationEU, worth 750 billion euros. Trilateral talks involving the Parliament, the Council and the Commission started in August of the same year, but an agreement was not reached until November.
It looks clear that since the adoption of the current long-term budget, the EU has been confronted with a series of unforeseen crises, including Russia’s war of aggression against Ukraine, rising inflation and interest rates, renewed migration pressures and growing instability in the Middle East. These developments have placed significant pressure on the MFF, exposing its limits and reducing its ability to respond effectively to emerging challenges. As a result, in 2023, the European Commission proposed the first-ever revision of the long-term budget, which was endorsed by EU leaders and later approved by the European Parliament. Additional measures included strengthening emergency and flexibility instruments to address unexpected events like energy and food crises, as well as the financial consequences of the War in Ukraine and rising borrowing costs linked to NextGenerationEU.
Reaching an agreement was far from straightforward from the very beginning. Negotiations proved to be particularly difficult due to a combination of political and economic pressures, such as disputes over the size of the EU budget, disagreements on spending priorities, Brexit, and later the outbreak of the COVID-19 pandemic. Tensions also emerged between member states and EU institutions. The negotiations became so contentious that Poland and Hungary had temporarily blocked part of the agreement.
Will the negotiations on the next EU long-term budget repeat history, turning into another political tug-of-war? Can clashes over priorities end up weakening the ambitions for a stronger, more competitive Europe? And, perhaps more importantly, why should we care?
Inside the Fight for the EU’s Next Long-Term Budget
The European Commission’s proposed new budget would be both the biggest and the most complex in EU history. And the fact that two years have been set aside for negotiations since the first proposal is undoubtedly a sign that Ursula von der Leyen is expecting a huge battle with national governments, all of which must unanimously agree on the budget’s content. For this reason, this is a moment of exceptional importance. In the words of Mario Draghi: ‘We have reached the point where, without action, we will have to either compromise our welfare, our environment or our freedom’. And with ‘we’ he means all EU citizens like you and me.
The plan is for the next MFF to be ‘more strategic, more flexible, more transparent’. The Commission proposal amounts to 1.98 trillion euros, although in practice, 165 billion euros are to be allocated to debt repayments for the bloc’s pandemic recovery fund. At the core of the proposal is a major restructuring of EU spending. While competitiveness and external action see significant increases, traditional areas such as agriculture and cohesion face cuts or structural reductions, a move that has already triggered strong opposition from farming groups.
Some countries, including France, agree that the EU budget needs to get bigger. Some others, like Germany and the Netherlands, are of the opposite opinion. The reason is clear. Countries that are net contributors, like the latter, contribute more to the budget than they receive in return. This often makes it politically difficult for their governments to explain to domestic audiences why the overall EU budget should be increased. MEPs have also joined the battle with demands for a 10% increase in spending and a more predictable financial plan. They also push for the exclusion of the debt servicing costs linked to the EU’s pandemic recovery fund from the long-term budget, proposing instead new revenue streams to finance both spending and debt repayment.
The battle is far from over. Negotiations on the MFF bring together a wide range of actors (from economic institutions to businesses - both large and small - as well as farmers and citizens themselves), all of them ultimately affected by how EU resources are allocated. At the same time, the process is deeply political and often highly contentious, reflecting national, collective and individual interests. Reaching an agreement remains a complex and delicate exercise, which will require compromise on some of the EU’s most sensitive priorities. What is certain, however, is that these developments will be followed closely across Europe and beyond.
