25.09.2025

The next EU Budget: a vehicle for sustainable and inclusive wellbeing?

The process to agree the EU's next seven-year budget is underway. Here our colleagues Magalí Brosio and Audrey Dessoy blog about what we know so far about the proposals and their implications for sustainable and inclusive wellbeing.

How the next EU Budget will be allocated is a crucial test of how policy priorities are translated into action, and ultimately into outcomes affecting the lives of people all over Europe.

As a reminder, the European Union has a seven-year budget (known as the Multiannual Financial Framework or MFF, in EU-speak). The next budget will cover the years 2028 to 2034 and is being negotiated now.

In July, the European Commission published its opening proposal. It has suggested a total budget of €1.8 trillion – equivalent to 1.26% of the EU Gross National Index. This is up from €1.2 trillion or 1.02% for the seven-year period we're in now.

If we unpack the draft proposals, and draw on detailed analyses and reflections by partners and experts, two aspects of the proposed EU Budget 2028-34 strike us as particularly pertinent for the transition towards an economy centred on sustainable and inclusive wellbeing.

1. There might be more money, but more will still be needed

This time last year, a major report on Europe's economic competitiveness published by Mario Draghi, the former Italian prime minister, set out far-reaching recommendations for the future of the European economy and single market. Labelled the EU's new "economic doctrine" by Commission Executive Vice-President Stéphane Séjourné, it has shaped the Commission's policy agenda in a major way.

Now, a new 'European Competitiveness Fund' is one of the flagship elements of the proposed budget. Designed to accelerate Draghi's vision, it aims to strengthen European supply chains, and foster technological innovation, including green technologies. It is focused on four key areas: Clean transition and decarbonisation; Digital transition; Health, biotech, agriculture and bioeconomy; and Defence and space.

However, the size of the fund falls far short of what would be needed to fully deliver on the agenda outlined by Mr Draghi. According to the Italian economist, a minimum annual additional investment of €750 to €800 billion is needed. The amount allocated to the new Competitiveness Fund is €409 billion. Clearly more additional funds will still need to be found to deliver the shift envisioned in the report.

The funding gap is even more challenging if we zoom in on the need for green investments: The European Commission has estimated that to meet the 2030 emissions reductions target there is a need to raise annual investment to €1241 billion, which was 7.8% of the EU GDP in 2022.

For sure, private capital is also needed and part of the solution. Mobilising private investments in the green transition is not simply about access to capital – it requires a holistic understanding of the barriers, including deep-rooted, implicit barriers. ZOE's Private Finance Policy Toolbox collects over 150 tools across three levels of investment barriers to help policy-makers unlock the investments needed.

A false dichotomy

In recent years, we've observed that wellbeing as an over-arching aim has gradually taken a back seat in EU discussions, increasingly replaced by competitiveness. This is despite it being a founding aim of the EU, "to uphold the wellbeing of its people" (Article. 3 of the Treaty of the EU). We have argued that this is a false dichotomy. For us, competitiveness is not an end-goal in itself and should be reframed to advance sustainable and inclusive wellbeing in the long-term.

Concerning the allocation of the funds, the picture is mixed. The Commission has proposed to earmark 14% for social priorities and 35% for climate spending. These are important areas for people's wellbeing so funding is welcome. However, when adjusted for inflation this is a real-terms reduction of spending in these areas and implies a deprioritisation.

More specifically, there are concerns over the future of the LIFE Programme, the Union's flagship fund dedicated to nature and biodiversity, since the programme is to be absorbed by the Competitiveness Fund with a much narrower scope.

2. There might be more money, but how will we know if it's well spent?

Assessing the performance of the MFF is no simple task – but it is essential. Only with robust assessment can we determine whether the EU budget is truly achieving its intended objectives.

The next EU budget should be guided by a stronger focus on outcomes rather than inputs. Tracking financial absorption rates and compliance remains important, but these measures alone do not show whether EU spending is achieving its intended purposes. To make sure that public resources provide genuine value, the budget framework needs to integrate clear, outcome-focused metrics.

This means defining measurable objectives aligned with EU strategic priorities (e.g., climate neutrality, digital transformation, social inclusion) and linking them to the outcome metrics that capture real-world impacts, rather than just counting activities. This can enable the use of data to adapt and reprioritise funding where outcomes fall short, creating a genuine feedback loop. Focus on outcome metrics can ensure that every Euro spent contributes meaningfully to the Union's long-term ambitions.

A single system

To support this shift, the European Commission is working to establish a single system for tracking expenditure and performance, though many details about how this monitoring framework will function remain unclear. Strengthening outcome-focused assessment will be key to making the EU budget more effective, transparent, and aligned with its strategic objectives. To support this and through our work with the MERGE Project consortium, we have emphasised the importance of:

Meaningful, measurable, and adaptable indicators that truly reflect outcomes rather than inputs;

Monitoring systems designed for both usability and depth, without adding unnecessary bureaucratic burden;

Stronger political and institutional alignment with long-term EU goals.

The EU's goal to reduce administrative burdens – supported by Mario Draghi – should not come at the expense of meaningful and effective monitoring. Strong sustainable and inclusive wellbeing indicators can be used to evaluate how EU resource allocation translates into real improvements in people's lives, and whether the money is being well spent.

There is a long way to go yet before the next EU budget is agreed by all Member States. We'll be continuing to watch how much money there is, and how the outcomes of the spending are being assessed.

Contact

Magalí Brosio