The European Commission last week presented its proposal for the new long-term budget: the Multiannual Financial Framework (MFF or MFF in English) for 2028 to 2034. Some 2 trillion, or 2,000 billion, euros. An impressive amount and, for some, a shock in terms of volume. The real shift, however, is in the political and strategic stakes. Our advisor Roel Yska discusses what this means for the Netherlands.
Whereas previous MFFs were mostly technocratic in their approach, this time the Commission tries to be goal-oriented: on strategic autonomy (i.e. that we are less dependent on the Chinese, Russians and also the Americans on important issues), innovation, defense capacity and cross-border infrastructure. At the same time, the instruments are being simplified: fewer programs, more flexibility and room for performance-based spending. But the presentation was messy, with unclear figures and last-minute changes, a sign that tensions within the Commission and between member states are palpable.
For the Netherlands, this proposal is uncomfortable on several fronts. As an already net contributor (the Netherlands contributes more to the budget in Brussels than is transferred back), the financial picture does not get any better: more remittance, while the "rebates" for these countries are under pressure. At the same time, the Commission is proposing to raise own resources through new European taxes, including a levy on the turnover of large companies. That sounds attractive to Brussels, but it could take money away from national governments. The Netherlands therefore opposes these plans. Not only from a financial point of view, but also because of the principle: according to the Cabinet, fiscal control belongs primarily with member states.
What does make the Netherlands happy is the focus on competitiveness and innovation. The new European competitiveness fund of over 400 billion euros is in line with earlier Dutch pleas for a stronger European industrial policy. But at the same time there is concern about the balance: if that money is financed through increased burdens on business, the net effect could be negative. This tension is also reflected in the reaction of Dutch industry: investments in innovation are welcome, but not if they are matched by higher taxes.
There is a familiar dilemma on agriculture. The Commission proposes that income support to farmers be gradually absorbed into broader cohesion programs. Currently, some 30% of the entire EU budget goes to agriculture. Any contraction of the agricultural budget makes a proposal politically complicated, especially in countries where the agricultural sector is strongly represented. The Dutch line is still formally reluctant, but this is expected to be one of the biggest obstacles in the negotiations.
On the geopolitical front, the Commission is taking an emphatic stand. The sharp increase in defense-related spending and the integration of border control and migration into one broad pillar are signs of a broader change: the EU must become less dependent, be able to do more itself, and respond more quickly. This ties in with the broader discussion on strategic autonomy, in which the Netherlands has also recently become more actively involved.
Reactions to the proposal show how divided Europe is. Poland is quite pleased as the largest beneficiary. Germany speaks of an "unacceptable" plan and refers to its role as the largest net contributor. France is looking for balance. The Netherlands, for now, is keeping its heels in. And that is exactly what typifies this phase: the proposal marks a political commitment, not an end point.
So what does this mean in concrete terms? Over the next two years, the budget process will determine how the EU positions itself in a world that is changing ever faster. For Dutch companies, regions and sectors, this is the moment to determine their own strategic commitment. Not only on content, innovation, agriculture, energy, but also on position: who will soon be sitting at the table, and who will be watching from the sidelines?
Wil je weten wat deze voorstellen betekenen voor jouw organisatie of sector? Of hoe je in dit onderhandelingstraject invloed kunt uitoefenen? Neem contact op met Roel (roel@castro.lu).