The next EU budget: it's a make or break one for the EU’s future

This article draws upon the ideas put forward in Friends of Europe’s 10 policy choices for a Renewed Social Contract for Europe and incorporates the latest data from our citizen engagement unit, Debating Europe. The report Voices for Choices: data for decisions that matter is available online now. This is part of a series putting forward bold ideas for how the EU’s next Multiannual Financial Framework could look.

The European Commission will present its proposal for the next Multiannual Financial Framework (MFF) in July 2025, with a view to agreement before implementation in January 2028.

As policymakers prepare the next budget, they must make difficult decisions amidst a fraught geopolitical environment, rife with inordinate levels of public sector debt and debate over how best to spend money.

While investment may seem like a zero-sum game in the short-term, this does not remain the case over time, where smartly made investments will have knock-on effects in the medium- and long-terms, yielding a wider range of benefits.

At Friends of Europe, the priorities are clear: Europe must invest in ways that support a renewal of its social contract, allowing it to lead in key sectors while ensuring the resilience and well-being of communities. Empowered citizens, responsible businesses and thoughtful governments and institutions will have the skills and (emotional) investment necessary to support the green, digital and demographic transitions that are shaping our world and will continue to do so in the years to come.

While the EU’s long-term budgets typically span just seven years, policymakers must think further, investing now in ways that will create prosperity for Europeans in the 2050s – a decade in which there will be nearly one person over the age of 65 for every two working-age adults.

Building the foundation

A powerful budget will be built on a foundation of hindsight, foresight and data, creating a resilient pot from which to draw.

This approach will help Europe face crises to come and is a chance for the EU to show it can be trusted to keep communities safe – while citizens’ trust in national governments to protect them in hard times is low, trust in the EU to do so is only slightly higher.

At the same time, a resilient budget must be agile and shock-absorbent, allowing for flexibility in the face of sudden events that necessitate a shift in priorities. This level of adaptability should be intertwined with a willingness to engage in new relationships based on mutuality, trust and risk-sharing, which will pave a clearer path through the transitions ahead.

Cutting red tape

To facilitate the level of flexibility and adaptability required, policymakers must cut red tape in the budget design, focusing on implementation and policy coherence over the tedium of bureaucracy.

This should not come at the expense of a concerted approach to reporting and due diligence. But it should take a practical, forward-looking approach that distinguishes between small, medium and large investments, and the risks associated with each, to design reporting processes which demand the appropriate time investment on the part of beneficiaries.

Through this re-evaluation and foresight-based approach, the EU should create greater alignment amongst its various funding streams, connecting them in ways which underpin a coherent, joined up approach.

Bringing in the private sector

The next budget should take a bold approach, looking from the very beginning at how the private sector could and should be involved – as well as when and with what rationale.

By engaging the private sector as a partner and conscientious actor in creating resilient societies, the EU would ultimately unlock greater investment, allowing Europe to take the lead in key sectors.

But that’s not to say the approach won’t encounter criticism – citizens surveyed have virtually no trust in businesses to protect them in hard times, and using public-private partnerships to balance economic growth with social welfare receives less support than more direct social interventions. All the more reason for the private sector to take up the challenge to show what role it can really play and how it can look beyond profit to work alongside institutions and support citizens.

Social investments

While the long-term benefits of social investments often come up against short-term pressures, a comprehensive social investment strategy that formalises such efforts on a permanent basis will have knock-on effects in the medium- and long-term, which would otherwise not be achieved.

By budgeting wisely into areas like skills training, affordable housing and the green transition, among others, such measures will reduce public spending by increasing employment and improving health, ultimately enlarging the tax base to fund future initiatives and balance budgets over time.

In the end, these investments will help to create fertile ground for innovation and sustainable development, empowering people to navigate and thrive in the green, digital and demographic transitions.

Budgeting for the future

A budget is a statement of intent – how a government wishes to function and best serve its citizens. The EU has a chance now to set out a new modus operandi and build a forward-looking budget that not only responds to and plans for future challenges, but also benefits from the hindsight of recent years.

The crises of the 2020s have made one thing clear: a resilient budget must be shock-absorbent and flexible enough to respond to the challenges that even the keenest foundations of foresight don’t see coming.

As Europe undergoes profound and dramatic shifts in its demography and navigates the green and digital transitions, policymakers must budget for the future. The resilience and well-being of Europeans in 2050 and beyond depends on it.