As the European Union prepares its next Multiannual Financial Framework (MFF) for 2028–2034, the debate is no longer only about how much Europe should spend, but also about how it should raise and allocate its resources.
A new international study coordinated by EPICENTER, a Brussels-based network of free-market think tanks, brings together the perspectives of ten organisations from across the whole Europe. Rather than accepting the European Commission’s budget proposal as a starting point, the study presents an alternative vision focused on fiscal responsibility, subsidiarity, and competitiveness.
A bigger budget, financed by new EU revenues
The European Commission has proposed a budget of approximately €1.7 trillion for the period 2028–2034. To finance this expansion, it suggests introducing several new “own resources” for the EU budget, including revenues linked to emissions trading, carbon border adjustments, tobacco and nicotine products excise duties, electronic waste, and a new levy on large companies.
Supporters argue that these measures would provide stable funding for common European priorities. Critics, however, warn that some of the proposed revenue streams create unintended incentives or could undermine economic competitiveness.
The study highlights, for example, concerns surrounding the proposed CORE levy, which would be based on company turnover rather than profits. Such an approach could disproportionately affect low-margin sectors such as manufacturing, logistics, and distribution. It also questions whether an electronic waste contribution creates the right incentives if its success depends on Member States failing to meet recycling targets.
The debate over common debt
Perhaps the most controversial aspect of the Commission’s vision is the continued use of common EU borrowing. The study argues that instruments developed during the COVID-19 crisis were originally presented as exceptional measures. However, proposals linked to the new budget framework could gradually transform joint borrowing from a temporary response into a permanent feature of EU finances.
This debate goes far beyond accounting. It raises fundamental questions about fiscal responsibility, democratic accountability, and the balance between European and national decision-making.
An alternative approach
Instead of expanding both spending and borrowing, the EPICENTER study proposes a different path. It recommends limiting the overall EU budget to 1% of EU Gross National Income, resulting in a significantly smaller budget than currently proposed by the Commission.
The study identifies seven priorities for reform:
- Focus spending on areas with clear European added value, such as cross-border infrastructure, defence, basic research, and crisis coordination.
- Measure success through outcomes rather than the number of funded projects.
- Simplify and consolidate existing funding programmes.
- Respect the principle of subsidiarity and keep areas such as healthcare, pensions, and social policy primarily within national competences.
- Ensure fiscal neutrality when introducing new EU revenue sources.
- Use common debt only in exceptional circumstances and under strict conditions.
- Strengthen competitiveness through deregulation and a better-functioning Single Market rather than through permanent subsidies.
Why this matters
The discussion around the next EU budget is about much more than numbers. It will shape Europe’s economic model, investment priorities, and fiscal architecture for years to come.
As geopolitical pressures increase and Europe searches for ways to strengthen its competitiveness, policymakers face a fundamental choice: expand common spending and financing mechanisms, or focus on improving efficiency, fiscal discipline, and the functioning of the Single Market.
The EPICENTER study makes a clear case for the latter. Whether policymakers agree or not, it provides an important contribution to one of the most consequential economic debates currently taking place in Europe.
Readers interested in exploring the full analysis, executive summary, and supporting materials can find the complete project HERE.