Public investment in the proposed 2028-2034 EU budget

Policy Brief

Does the EU budget provide sufficient public investment for digitalisation, Just Transition, geoeconomic resilience and defence to prevent rising costs threatening fiscal sustainability in the future? Cédric Koch and Dominika Biegon do an in-depth analysis of the Commission’s proposal for the next EU MFF 2028-34  to assess its ability to address the EU’s current and future challenges. 

The main conclusion: contrary to the European Commission’s official statements, the MFF proposal is far from ambitious. When budget volumes – the proposed increase to €1,763 billion (at 2025 prices) compared with the current MFF of €1,234 billion (at 2025 prices) – are considered relative to the size of the EU economy, it becomes clear that the proposal largely just offsets inflation and the repayment of Next Generation EU (NGEU) bonds.

Also, despite a stronger investment focus in the proposed MFF, the public investment gap remains substantial from 2028 onwards: around 1.5% of gross national income at the EU level and additionally over 2% at the national level as necessary additional investments remain each year. While public investment gaps in defence and resilience are likely to narrow, they widen considerably in the field of decarbonisation.

To address these shortfalls without raising member state contributions, the authors propose and discuss three reform avenues to strengthen public investment during the next EU budget period:

1. Reform the EU fiscal rules to be more friendly to national investment.
2. Expand EU own resources more ambitiously to fund more EU-level investment.
3. Use the national escape clause more comprehensively to fully unlock off-budget loan instruments.

This policy brief was produced as part of the EU Investment Capacity Group, an initiative by FEPS and Friedrich-Ebert-Stiftung to stimulate the elaboration of policy proposals within the progressive family around the next MFF.

A draft of this publication was presented and discussed with the Group at the Investment capacity in the MFF proposal event at FEPS HQ on 13 October 2025.