PR | UEF acknowledges a higher proposed EU multiannual budget but it needs real own resources to guarantee stability, self-sufficiency and political accountability

18/07/2025
Press Release
UEF

The importance of EU regions must be acknowledged, as the renationalization of programs is detrimental to citizens.

The UEF advocates for Treaty reform and progress toward establishing genuine federal fiscal power.

Brussels, 18/07/2025  

The Union of European Federalists (UEF) notes the proposed increase to the 2028-2034 EU multiannual budget (Multiannual Financial Framework, MFF) from the current 1.08 per cent to 1.25 percent of the EU GNP. This is the largest ever proposed MFF both in relative and absolute terms (around 2 trillion euros), even if the real financial needs to deliver European and global public goods are even higher (around 2 per cent of EU GNP).
However, the UEF expresses deep concern regarding the proposed cuts to several programs, particularly cohesion policy, and the renationalizing of agricultural policy.
Furthermore, the proposed approach on own resources is insufficient to address the structural limitations of the EU’s current financial system and risks perpetuating a model of dependence on national budgets.
 
An insufficient budget with a renationalizing drive


The MFF proposal will need to finance the EU to cope with unprecedented challenges: a trade war with Donald Trump’s America; an actual war with Vladimir Putin’s Russia; intensified competition from China; conflict in the Middle East; climate change; international migration; and the rise of the far right, with its anti-EU political agenda. 
The proposed Multiannual Financial Framework (MFF), around € 2 trillion (€ 285 billion each year) represents 1,26% of the Union’s GDP. But 0,11% is devoted to the repayment of the debt made during the pandemic to finance the Next Generation EU, which any other sovereign emitter would have simply rolled out. This means the real budget is just 1,15% of GDP, that is grossly insufficient to fund Europe’s strategic objectives. The Draghi Report (2023) underlines that the Union must mobilize at least additional € 800 billion annually, of which 20% in public investments, i.e. 160 billions, to ensure long-term competitiveness and technological sovereignty. Yet the current budgetary architecture remains unfit for that purpose.
Meanwhile, calls for more defence spending are made without increasing sufficiently the overall size of the EU budget, implying that funds must be cut from cohesion, green transition, and innovation. This is an unsustainable trade-off.
The Commission’s MFF proposal proposes a renationalisation of spending programmes, thereby shifting more responsibility to Member States to the detriment of regional governments. This retreat undermines the very rationale of a common EU budget and misses a historic opportunity to build a stronger Union.


Real own resources needed and the road to a true, federal fiscal power

The Commission proposes new own resources and adjustments to existing ones, generating EUR 58.5 billion per year from the EU Emissions Trading System (ETS), the Carbon border adjustment mechanism (CBAM), the own resource based on non-collected e-waste, the tobacco excise duty, a Corporate Resource for Europe (CORE).
This is a progress but these are not genuine EU taxes.
Contrary to the functioning of federal systems, the EU budget is not the expression of a genuine fiscal capacity. Over 70% of its revenues come from direct national contributions. The so-called “own resources” are not true EU taxes, but rather national taxes collected under EU-regulated sectors (e.g. customs duties, agricultural levies) that are subsequently transferred to the EU. These resources lack both fiscal independence and meaningful scale, the two essential characteristics of a genuine fiscal power.
As such:

  • The EU budget remains dependent on the will of national governments, without the ability to raise revenue autonomously;
  • It is structurally limited to funding internal market development, and does not fulfil core fiscal functions, such as providing European public goods or carrying out redistributive policies.

As noted in the Monti Report on EU Own Resources (2017), for these to become true European taxes:

  1. They must be based on political decisions made at the EU level, thus with co-decision involving the European Parliament;
  2. Revenues must flow directly to the EU budget, independently of national channels;

Only by achieving these conditions can the EU develop a genuine fiscal capacity. This transformation necessitates a new legal framework that is democratically legitimate and supranational. Essentially, it requires a fundamental reform of the Treaties to confer fiscal sovereignty at the European level.
The UEF proposes four steps toward a European fiscal capacity, beginning with:

  • the continuation of the NGEU program with new scale and purpose (including defense, climate policies, etc.) as long as the overall EU budget remains too small; 
  • the adoption of the decision on own resources and the multiannual financial framework through the ordinary legislative procedure (allowed by a specific Passerelle clause article 312.2 TFEU), i.e. through co-decision between the European Parliament and the Council deciding by qualified majority voting to enable the Union to become the master of its own budget;
  • Progressive introduction of genuine European resources managed by the EU and not Member States, including:
    • A Digital Tax on non-resident Service Providers;
    • A Financial Transactions Tax;
    • The Emissions Trading System (ETS2) that cover the emission of road transport, buildings, and other sectors;
  • the elimination of the ratification by the Member States: Article 311 provides not only for unanimity in the Council, but also for approval by the Member States in accordance with their respective constitutional rules;

The European Parliament must stop accepting the logic of intergovernmental scarcity and instead act as a constitutional actor. The Parliament must demand a larger budget following its mandate of five years and not seven, protect current programs and the regional focus, call for fiscal powers, and support Treaty reform, as it did in its resolution of 22 November 2023.

The current Treaties permit some alignment of national tax systems and the introduction of new revenue sources for the EU budget, or even a specific budget for the eurozone. However, they significantly restrict the development of a true European fiscal authority because of the need for unanimous agreement and ratification under Articles 311, 312, 113, and 352 TFEU, which makes substantial reform extremely difficult under the existing framework.

The EU must become the master of its own budget—capable of setting strategic priorities, ensuring solidarity, and delivering results that only a continental scale of governance can provide.
“We stand at the crossroads of unprecedented global challenges. In this context, the proposed Multiannual Financial Framework, which is supposed to represent a step forward for the coming years, falls short of what is truly needed, primarily due to insufficient funding. To secure Europe's future, we must transition to our own real resources that ensure stability, self-sufficiency, and political accountability. The renationalization of key programs undermines our collective strength and dilutes the very essence of European solidarity. It is imperative that we empower the EU with a genuine fiscal capacity, enabling us to meet our strategic objectives and uphold our commitment to all European citizens.” said Domènec Ruiz Devesa, President of the UEF.

The recurring deadlocks during MFF negotiations show the need for a properly functioning European federation focusing on essential duties, eliminating national contributions that make Brussels dependent on member states and removing Brussels' scrutiny over state budgets. Instead, it would involve fiscal transfers sufficient for the EU to achieve its political goals, as set by representatives of European citizens and member states. Without addressing the need for a federal political compact, Europe risks repeating the same mistake of ineffective and slow processes, missing the opportunity to enhance freedom, solidarity, and protection for the EU, its citizens, and member states.

Sources

PRESS CONTACT

Mathilde Baudouin
Secretary General of the Union of European Federalists
secretariat@federalists.eu

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