European Finance

European Budget 2028-2034, the EU Commission's missed revolution

The possibility of imposing one's own tax and borrowing for emergencies is affirmed

by Gianluigi Bizioli

12 August 2025

3' min read

Key points

Two novelty profiles
The obstacles

3' min read

Do the proposals presented by the EU Commission on 25 July concerning, respectively, the Multiannual financial framework 2028-34 (MFF) and the new system of own resources represent a 'Copernican' revolution for the public finance of the Union? The answer depends on the perspective one takes.

If, as a starting point, we assume the expectations and hopes generated by the Draghi Report on competitiveness, the answer is certainly negative. The Report, in fact, envisaged an annual financial commitment of 750-800 billion to realise the objectives identified therein, corresponding to 4.4-4.7% of the Union's GDP (in 2023 prices, p. 63 of the Report). The annual quantitative size of the budget proposed by the von der Leyen Commission ranges from a maximum of EUR 294 billion to EUR 269 billion, between 1.31% and 1.13% of GDP. In quantitative terms, therefore, the MFF does not produce any breakthrough, and no 'Copernican' revolution, to create the conditions to keep up with the USA and China.

The judgement becomes more nuanced if the perspective becomes the status quo. Although the increase in resources is described as 'ambitious' by the proposal, it is undoubtedly the least courageous part. Since numbers do not lie, a very simple comparison is sufficient to prove this claim. The Union's budget 2025, the second one that does not include the funds of the Next Generation Eu, envisaged commitments of EUR 152,896 million (amount determined in 2018 prices), whereas the first budget of the new MFF will be EUR 253,919 million (determined in 2025 prices). Equalising both values to 2025 prices according to Eurostat data, the increase of the first budget of the new Mff is around 29 per cent. Although this is not a negligible increase taken in isolation, it is still (significantly) lower than the budgets covered by the Ngeu. Increased resources, but no revolution.

Two novelty profiles

The revolution - which we have already downgraded to non-Copernican - concerns, differently, the qualitative side of the revenue. The Commission proposes a new properly European tax - on a par with the already existing tariffs - and, albeit very timidly, introduces the power to use the public debt to finance solidarity interventions, i.e. resulting from exceptional crises.

With regard to the first profile, the Commission overcomes the absence of a specific legislative provision in the Treaties attributing to the Union the power to institute its own taxes and, also, the scepticism of much doctrine, by providing, in Article 3(1)(b) of the proposal for a directive on the system of own resources, for a 'contribution' imposed on residentcompanies and permanent establishments of non-resident companies on the basis of 'annual net revenues from sales and services'. Leaving aside the criticism of the assumption, which refers to net revenue (and not to net income), the choice is decidedly courageous because (i) it connects, albeit indirectly, the levy to the benefits that companies derive from the Internal Market and (ii) it disconnects a part of the budgetary resources from the contributions attributable to each Member State. The latter financing mechanism in fact lends itself to the 'threat' of the juste retour, i.e. of the so much I pay and so much I have to get in terms of European public goods.

With regard to the second profile, in order to circumvent the excessive rigidity of the EU budget, the MFF proposes the establishment of a new extraordinary mechanism to respond to economic, political and social crises represented by the possibility of borrowing by the Commission on the capital markets for the amount necessary to grant loans to Member States.

The obstacles

These are the proposals of the Commission, which, however, have to overcome internal and exogenous obstacles. The own resources decision and the regulation for access to the loan must be approved unanimously by the Member States, since the regulation, in terms of composition and amount, of own resources is strictly within the competence of the states. The decision must also be approved by the national parliaments.

The exogenous factor is that resulting from the current international scenario and, specifically, from the Union's obligations to purchase energy and US military equipment. Specifically, the impact of these commitments on the EU budget (and/or that of the member states) will have to be assessed.