POLICY BRIEF November 2025 PUBLIC INVESTMENT IN THE PROPOSED 2028-2034 EU BUDGET NEEDS, GAPS AND OPTIONS ABSTRACT While the political debate on the Multiannual Financial Framework(MFF) has until now concentrated on the architecture of agricultural and cohesion spending, we argue that the European Commission‘s proposal for the next EU MFF 2028-34 should also be assessed ba­sed on its ability to address the EU’s current and future challenges. Does the EU budget provide sufficient pu ­blic investment for digitalisation, just transition, geoe­conomic resilience and defence to prevent rising costs threatening fiscal sustainability in the future? Based on an in-depth analysis of the Commission‘s proposal and contrasting it with studies on investment needs across policy fields and the current budget, we draw the following conclusions. Firstly, contrary to the European Commission‘s official state ­ments, the MFF proposal is far from ambitious. When budget volu­mes – the proposed increase to€1,763 billion(2025 prices) compared with the current MFF of€1,234 billion(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. Mem ­ber states would face some contribution increases in 2028, but these equally largely reflect lower-than-expected contributions today due to the inflation crisis, rather than financing a marked growth of the EU budget. The picture worsens when off-budget instruments are considered. In particular, NGEU significantly boosted the financial capacity of the current MFF period, a boost that is not fully compensated for, even when including all off-budget and loan instruments, such as Catalyst Europe, Security Action for Europe(SAFE) and the Crisis Response Mechanism. Secondly, despite a stronger investment focus in the proposed MFF, the public investment gap remains substantial from 2028 onwards if the proposal were to pass as it stands: around 1.5% of gross national income at the EU level and over 2% at the national level in necessary additional investments remain each year. While public investment gaps in defence and resilience are likely to narrow, they widen considerably regarding decarbonisation. To address these shortfalls without raising member state contributions, we pro ­pose and discuss three concrete 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 plan­ned off-budget loan instruments. AUTHORS DR CÉDRIC KOCH Independent Policy Analyst DR DOMINIKA BIEGON Head of Unit for European Economic Policy at the German Trade Union Confederation IN PARTNERSHIP WITH