The EU’s next long-term budget will shape Europe until 2034. Katharina Wiese argues that the current proposal risks deepening austerity and inequality instead of leading towards a fair, just, and democratic future.
Originally published in transform! europe.
Europe’s future stands at a crossroads. When the European Commission unveiled its proposal for the next Multiannual Financial Framework (MFF) – the Union’s seven-year budget plan for 2028–2034 – in July, it set the stage for a crucial debate. The coming two years of negotiations will determine not only the shape of the next budget but also the direction of Europe for the next decade.
On paper, the proposal promises stability, competitiveness, and crisis preparedness. In reality, it risks entrenching austerity, subsidising private profits, and undermining the very foundations of social cohesion and ecological transformation.
The MFF will be negotiated at a time when Europe faces three interconnected tasks:
➡ Driving the ecological transformation. Only by restructuring our energy and economic system can we ensure Europe’s long-term viability.
➡ Preventing the rise of the far-right. Polarisation and the growth of far-right movements such as Germany’s AfD threaten both social cohesion and democratic stability in Europe.
➡ Tackling social inequality. Every fifth child in Europe grows up in poverty. One in ten households spends more than 40 % of its income on housing – a clear indicator of the growing housing crisis, particularly in cities. Let alone the increasingly unequal distribution of wealth. The top 10% of Europeans own two-thirds of all wealth, while the bottom half own just 1.2%.
All this unfolds amid war in Europe and a worsening climate crisis costing billions each year. In such a context, the MFF is merely a technical framework – it is one of the EU’s most powerful instruments to shape its future.
A debate that misses the point
Months after the Commission presented its proposal, debates in national parliaments are only beginning. When I was invited as an expert before the Bundestag’s EU Committee, I expected debate about climate policy, social justice, industrial decarbonisation and democratic resilience. Instead, what dominated was Germany’s role as a “net contributor”.
This narrow framing ignores the enormous benefits Germany gains from coordinated European political action – from trade and industrial policy to climate cooperation and supply chain resilience. There was particularly strong criticism towards new EU “own resources,” such as levies on tobacco or electronic waste, claiming these would not relieve Member States but instead reduce their capacity to generate their own revenues. The German government’s resistance to joint EU borrowing – even for crises – contrasts sharply with its own plans for large-scale national borrowing for defence and infrastructure.
Reducing the MFF to a simple balance-sheet calculation of what Germany “pays in” versus “gets out” misses the real point. A stronger EU budget is not a cost; it is an investment in stability, prosperity, and resilience for all.
Misleading numbers – we need a higher budget
The Commission’s proposal cites a headline figure of €2 trillion. But after accounting for inflation and repayments of NextGenerationEU loans, the picture looks less impressive. In real terms, the budget will rise by just €250–300 billion more compared to the current period, a marginal increase of 0.02 percentage points of EU GNI.
It is positive that the proposal allows for joint borrowing and includes a crisis-response mechanism. Yet these tools are insufficient to deal with climate-driven disasters, health emergencies, or geopolitical shocks. Europe needs forward-looking investment in climate action and social transformation to prevent future crises.
The bigger problem lies in how the funds are allocated. The proposal emphasises de-risking strategies — using public funds to reduce risks for private investors through guarantees, loans, or insurance schemes. This approach prioritises private profit over public good. As a result, essential social and ecological transformations risk remaining underfunded.
Rather than expanding such instruments, the EU should prioritise direct, targeted grants for projects with high social value, such as renewable energy in structurally weaker regions, social infrastructure, or energy-efficiency measures. Public money should drive transformation and cohesion, not just underwrite private risk.
Priorities upside down
The Commission also wants to simplify the budget’s architecture, merging six categories into three. The winners are competitiveness, security, and defence. The losers are cohesion, climate, and biodiversity.
Although the share of climate-related spending is set to rise from 30% to 35%, in absolute terms this means more than €100 billion less than in the current period — largely because NextGenerationEU funds are not renewed. Even more worrying is the plan to fold the LIFE programme into a new “European Competitiveness Fund”, erase biodiversity as a standalone goal, and exclude defence spending from climate accounting. At a time when the ecological transition requires a decisive push, Europe risks moving backwards.
The principle that EU funds should “do no significant harm” is a welcome one, but its loopholes remain large enough to drive tanks through. Defence spending is exempted, “overriding public interest” projects are still allowed, and fossil projects may continue to receive indirect support. Greenwashing under the banner of the Green Deal would fatally undermine Europe’s credibility. If airports and raw material extraction continue to slip through as “green”, what does the principle really mean?
What about just transition?
Even more troubling is the proposal to scrap the Just Transition Fund. Without it, regions undergoing structural change would lose targeted EU support, leaving responsibility to national governments. This risks widening divides between countries and weakening European solidarity.
Centralising funding through national reform plans sidelines municipalities, trade unions, and civil society, reducing democratic accountability and risking politicised spending. Transformation happens locally; funding should too.
Currently, only 14% of the EU budget is earmarked for social measures such as poverty reduction, education, and employment — a shockingly low figure. Worse, tying funds to structural reforms under the European Semester risks austerity-style conditionalities that could force cuts to public services.
Europe cannot build resilience by weakening its social foundations. The next MFF must include clear commitments to fair wages, strong labour rights, quality public services, and robust social protection. Social cohesion and climate action must go hand in hand — not compete for resources.
Financing the future: who pays?
The question at the heart of this debate is simple: who should pay for Europe’s future?
The Commission’s proposed new “own resources”: levies on tobacco, e-waste, and corporate turnover would raise only around €33 billion annually.
There is a fairer alternative. Progressive taxation — such as windfall taxes on fossil profits, wealth taxes on extreme fortunes, a frequent-flyer levy, and a financial transaction tax — could raise up to €400 billion annually. These measures would ensure those who can afford it most contribute most, while reducing the burden on ordinary households. They would also promote gender equality, as women are over-represented in precarious work and under-represented in wealth ownership. Revenues could then be reinvested in care, education, and equality-promoting infrastructure.
What kind of Europe do we want?
The MFF is not a technocratic exercise — it is a political choice. Do we want an EU that cushions investors but leaves families in poverty? One that builds military arsenals while cutting biodiversity funds? One that sets climate targets while funding fossil loopholes?
Or do we want an EU budget that is truly future-proof, committing at least half of its funds to climate, biodiversity, and social projects, defending the Just Transition Fund, enforcing “Do No Harm” without exceptions, and introducing progressive new revenues?
The choice is still to be made. The MFF will shape Europe’s future until 2034. If civil society does not push for a fair, green, and democratic budget, the deal will be struck behind closed doors — locking us into the wrong path for decades.
This is not just about numbers. It is about what we value, who pays, and who benefits. It is about whether the EU chooses resilience, justice, and democracy — or austerity, inequality, and instability.
