A Turning Point for EU Investment: What an almost EUR 2 Trillion EU Budget Means for Business

With the proposal on Multiannual Financial Framework (MFF) on 16 July 2025, Brussels funding landscape has entered a new area. The European Commission unveiled its proposal for the MFF 2028–2034: A record-breaking EUR 1.9 trillion budget (or 1.26% of the EU’s gross national income on average between 2028 and 2034) designed to reshape Europe’s economic model. Framed as a strategic response to global competition, war in Ukraine, climate goals, and digital transitions, the proposal marks the EU’s most ambitious financial plan to date.

With priorities shifting toward competitiveness, innovation, and resilience, now is the time to understand what is on the table and how to position for it.

1. Strategic Autonomy at the Core

Central to the Commission’s proposal is a profound reprioritisation of EU spending. The traditional pillars of agricultural subsidies and cohesion policy, long dominant in past budgets, are being rebalanced to meet modern challenges.

• A newly created European Competitiveness Fund (EUR 451 billion) consolidates digital, industrial, space, and innovation programmes.

• Funding for Horizon Europe, the EU’s research and innovation framework, is expected to grow significantly, supporting technology, AI, and green innovation.

• Defence and security funding is set to quintuple, supporting dual-use innovation and strategic autonomy.

• Nearly EUR 100 billion is earmarked for Ukraine, under a broader EUR 200 billion envelope for global diplomacy and enlargement efforts.

These changes reflect a growing consensus in Brussels: Europe must act more like a “geopolitical union”.

2. Major Implications for the Private Sector

The expansion of innovation, digitalisation, defence, and climate-related funding means more direct and indirect opportunities for private firms. This concerns particularly those positioned in clean tech and energy transition, cybersecurity and defence innovation, digital infrastructure and AI, mobility and smart logistics and dual-use technologies.

The EU aims at consolidating its instruments and will reduce the fragmentation of its funding by launching 27 national and regional “partnership plans”, integrating various programmes under cohesive strategies. This streamlining offers businesses more clarity but also makes early engagement at national level crucial.

While the proposal is ambitious, it also relies heavily on new EU-level revenue sources. These include an expanded Emissions Trading System (ETS) levy, a Carbon Border Adjustment Mechanism (CBAM), digital and tobacco taxes, a new “e-waste” levy and a corporate tax on large firms.

Though intended to reduce Member State contributions and fund repayment of post-COVID debt, these measures face strong political resistance from fiscally conservative Member States like Germany, the Netherlands, and Sweden.

3. A Divided Council, a Long Road Ahead

Political negotiations will now begin between the European Commission, Parliament, and Member States. Already, key governments have voiced concern like Germany a day after the Commission President von der Leyen unveiled the proposal. The German government called the proposal “unacceptable,” criticising both its size and the new taxes on business. Other “frugal” states object to what they see as a centralisation of spending powers in Brussels, and question the fiscal sustainability of the budget.

The proposal thus sets the stage for a two-year political debate, mirroring the contentious 2020 negotiations that gave rise to the NextGenerationEU fund. Yet despite the discord, the direction of travel is clear: The EU is retooling itself for global competitiveness, and business must prepare accordingly.

The proposed EU budget is not only a financial document but also a strategic roadmap for Europe’s future. For the private sector, this shift opens the door to co-investment, innovation partnerships, and long-term funding access.

However, navigating the new budget will require agility, foresight, and strategic positioning. At Ridens Public Affairs, we help companies interface with EU institutions and Member States, ensuring you are not just aware of opportunities, but ready to act on them.