Last week, the European Commission presented its proposal for the new long-term budget: the Multiannual Financial Framework (MFF) for 2028 to 2034. Around €2 trillion, or €2,000 billion. An impressive amount and, for some, a shock in terms of volume. However, the real shift lies in the political and strategic commitment. Our advisor Roel Yska discusses what this means for the Netherlands.
Whereas previous MFFs were mainly technocratic in nature, this time the Commission is attempting to steer the process in a targeted manner: towards strategic autonomy (i.e. reducing our dependence on China, Russia and the US in important areas), innovation, defense capabilities 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.
This proposal is uncomfortable for the Netherlands on several fronts. As a net contributor (the Netherlands contributes more to the budget in Brussels than it receives in return), the financial picture is not looking any better: more contributions, while the "discounts" for these countries are under pressure. At the same time, the Commission is proposing to collect its 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 is therefore opposed to these plans. Not only from a financial point of view, but also on principle: according to the cabinet, fiscal control belongs primarily to the member states.
What does make the Netherlands happy is the focus on competitiveness and innovation. The new European competitiveness fund of more than €400 billion is in line with previous Dutch calls for a stronger European industrial policy. At the same time, however, there are concerns about the balance: if that money is financed through increased burdens on the business community, the net effect could be negative. This tension is also reflected in the response of the Dutch business community: investments in innovation are welcome, but not if they are offset by higher levies.
Agriculture faces a familiar dilemma. The Commission proposes to gradually phase out income support for farmers and incorporate it into broader cohesion programs. Currently, around 30% of the entire EU budget goes to agriculture. Any reduction in the agricultural budget makes a proposal politically complicated, especially in countries where the agricultural sector is strongly represented. The Dutch position is still formally cautious, but this is expected to be one of the biggest obstacles in the negotiations.
On the geopolitical front, the Commission is taking a clear stance. The sharp increase in defense-related spending and the integration of border control and migration into a single broad pillar are signs of broader changes: the EU must become less dependent, more capable, and able to respond more quickly. This is in line with the broader discussion on strategic autonomy, in which the Netherlands has also recently become more actively involved.
The reactions to the proposal show how divided Europe is. Poland is very satisfied as the biggest beneficiary. Germany calls it an "unacceptable" plan and refers to its role as the largest net contributor. France is seeking balance. The Netherlands is digging in its heels for the time being. And that is precisely what characterizes this phase: the proposal marks a political commitment, not an end point.
What does this mean in concrete terms? Over the next two years, the budget process will determine how the EU positions itself in an increasingly fast-changing world. For Dutch companies, regions, and sectors, now is the time to determine their own strategic approach. Not only in terms of content, innovation, agriculture, and energy, but also in terms of position: who will be at the table, and who will be watching from the sidelines?
Would you like to know what these proposals mean for your organization or sector? Or how you can influence this negotiation process? Please contact Roel (roel@castro.lu).