The EU’s next seven-year budget faces several challenges. Among them are the growing needs to increase spending on defense and armaments, as well as to support the competitiveness of European companies. At the same time, new revenue sources will be necessary to meet rising demands in these priority areas.
“On July 16, the European Commission will present the proposal for the EU’s Multiannual Financial Framework (MFF) for 2028–2034. This budget must address many priorities and needs facing Europe today. Cohesion policy and agricultural policy remain important, but new challenges requiring massive financial resources have emerged — namely defense policy and improving the competitiveness of the European economy through investments and innovation,” Katarzyna Smyk, Director of the European Commission Representation in Poland, told Newseria agency.
Significant financial needs accompany these new priorities. However, as the expert emphasizes, member states are generally not interested in increasing contributions to the EU budget. The Commission is considering new revenue sources, but concrete proposals will only be available when the new MFF project is submitted.
“For example, there is discussion about introducing fees on parcels ordered on a mass scale — almost 5 billion shipments annually — which are online purchases made by Europeans from abroad. If their value is below €150, they currently do not incur customs duties. Imposing duties on such parcels would provide direct revenue to the EU budget,” explained Katarzyna Smyk.
The European Parliament recently supported the idea of removing the current duty exemption for goods valued below €150. This will be part of a broader reform of the EU Customs Code. The European Commission estimates that up to 65% of parcels entering the EU may have their declared value deliberately underestimated.
The EU budget will also allocate funds to support the development and investments of small and medium-sized enterprises (SMEs). As Smyk highlights, competitiveness is a priority during the current Commission term, so the new financial framework is expected to reflect the needs of the SME sector, which constitutes 99% of enterprises in Europe and provides 90 million jobs.
“Of course, we will know the details once the proposals are published. However, what is already known is that the new budget will establish a Competitiveness Fund aimed at addressing the financial needs arising from support for competitiveness, investments, and growth,” said the Director of the European Commission Representation in Poland.
Another initiative designed to boost competitiveness and stimulate investment is the Capital Markets Union. Proposed in March this year by the European Commission, it aims to redirect Europeans’ savings toward investments, increase citizens’ participation in capital markets by expanding investment opportunities, and improve financial literacy. This will help both increase citizens’ wealth and stimulate the economy, including the SME sector. The Commission notes that currently about 70% of EU household savings — valued at €10 trillion — are held in bank deposits.
“The goal is to make that money work for the European economy. Startups are being created in Europe in large numbers, but once they reach a valuation of €1 million, they tend to move abroad, usually to the United States. This trend must be reversed, and the Commission has proposed solutions to that effect. We expect discussions and negotiations ahead, but these are our goals,” emphasized Katarzyna Smyk.
However, the European Commission stresses that establishing the Capital Markets and Savings Union will require cooperation among EU institutions, member states, and all key stakeholders.
“This project is designed for the current Commission term. We need the agreement of all member states, and negotiations sometimes take a short time, sometimes longer. For example, the issue of harmonizing financial supervision arises here,” the expert pointed out. “For many countries, including Poland, this is a sensitive matter, and sensitive matters generally require more work and discussion. But it seems very positive that everyone understands these needs, recognizes the challenge, and expects action from Europe and the Commission.”
