The proposal for the next Multiannual Financial Framework: A bold step towards more strategic investment
The Commission has understood that meeting the challenges of our times with the limited resources of the current MFF is magical thinking. With a bold 2 trillion MFF proposal, it provides a strong answer to the trillion-euro question, raised by EPC analysts three years ago: how to tackle the EU’s chronic investment shortfall and keep up with the US and China amidst escalating global economic and geo-political competition.
The Competitiveness Fund is arguably the most important and revolutionary element of the MFF proposal, marking a shift towards large-scale strategic investment into the triple clean, digital, and security transition. With a proposed size of €451 billion, the Fund has the firepower to de-risk and mobilise significant private and public investment. It concentrates on technological innovation, manufacturing, and infrastructure, where the economies of scale and spill-over effects of EU funding can provide the most added value and where the EU’s funding gap compared to the US and China has been most drastic.
Moreover, the proposed Competitiveness Fund addresses many structural shortcomings of the previous MFF. It unifies 14 programmes based on a single rulebook, focused investment windows, and an open implementation architecture à la InvestEU, which would make EU spending more streamlined, directional, and effective.
Now it is time for member states to step up and help turn as much of this ambitious proposal into reality as possible. Regardless of the outcome of the upcoming negotiations, however, off-budget instruments will likely be necessary in certain areas, such as defence.
An off-budget, public-private equity fund should also be considered to finance scaleup innovation in strategic fields such as AI, chips, quantum, robotics, cleantech and mining, complementing the Competitiveness Fund which cannot easily invest through direct equity. This will be crucial to compete with the US and China, who have made equity funding a cornerstone of their strategic investment strategy.
Philipp Lausberg is a Senior Policy Analyst in the Europe's Political Economy programme at the European Policy Centre.
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