FIIA Briefing Paper: The European Union’s next long-term budget – difficult negotiations ahead

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By Manuel Müller

Out now!

As authoritarian actors are on the rise and global strategic competition increasingly turns into great-power rivalry, the pressure is growing on the European Union to establish itself as a liberal geopolitical and geoeconomic force. But it will hardly be able to meet these expectations without the necessary financial capabilities. Economic analyses such as the 2024 Letta and Draghi reports have emphasised the need for more EU-level public investment to bolster competitiveness. European money is necessary to support strategic industries like defence or green tech, boost research and innovation, build up transnational transport and energy infrastructure, prepare candidate countries for accession, and keep an economically heterogeneous Union together.

That is the benchmark against which the EU’s next long-term budget must be measured. Although the current Multiannual Financial Framework (MFF) remains valid until the end of 2027, negotiations for the next one are already underway. This is by no means too soon: Adopting the long-term budget is one of the most difficult and daunting of all EU processes, and two years is more likely to be on the short side of how long it will take to reach an agreement.

More than two dozen veto players

This is not due to the actual amount of money at stake. The last long-term budget, adopted in December 2020, amounted to only 1.12% of the EU’s total gross national income (GNI) – a tiny fraction of the approximately 50% of GNI spent by public authorities across the EU as a whole. The national budgets of the member states move much more money than the EU does with much less political fuss; even the budget of the City of Helsinki makes up a higher share of Finnish GNI than the EU budget does of the Union’s.

The real difference lies in the procedure. While national budgets are usually approved simply by a majority of the members of the national parliament, the European long-term budget requires the agreement of the European Parliament as well as all member states: more than two dozen veto players, all of whom want to be able to claim some victory in the negotiations.

New FIIA Briefing Paper

This leads to very lengthy negotiations, in which common goals often take a back seat to conflicting national or institutional interests. Debates over the budget’s size and member states’ net contributions are often highly politicised and closely followed by national publics. Other contentious questions include the sources of revenue, the spending priorities, and the general governance structure of the EU budget.

In a new Briefing Paper for the Finnish Institute of International Affairs (FIIA), I outline the legal procedure and timeline for adopting the EU’s next long-term budget and analyse the key issues that will shape the discussions between member states and EU institutions in the coming months and years.

Based on past experiences, we can already now predict that these discussions will lead to a very late compromise, that this compromise will require a lot of political fudging and questionable side deals, and that the outcome will look more like patchwork than a grand achievement – unavoidable consequences of the veto-ridden procedure. If member states wanted less protracted negotiations that could produce a more ambitious and coherent long-term budget, they would have to abolish the unanimity requirements.

The full paper is available here.

Picture: Cover of the FIIA Briefing Paper, based on a photo by: European Union 2025 – Source: EP (Laurie Dieffembacq), via EP Multimedia Centre.