# EU finances: Member States’ financial relationships with the EU in 2024 and the multiannual financial framework for 2028-34
* [*1 Review of payment flows in 2024*](#tar-1 "1 Review of payment flows in 2024")
* *[*Methodological information on determining net contributions*](#tar-2 "Methodological information on determining net contributions")
* *[*1.1 The EU budget for 2024 (excluding NGEU)*](#tar-3 "1.1 The EU budget for 2024 (excluding NGEU)")*
* **[*1.2 NGEU in 2024*](#tar-4 "1.2 NGEU in 2024")**
* ***[*1.3 Net contributions in 2024*](#tar-5 "1.3 Net contributions in 2024")****
* ***[*2 Outlook for the next multiannual financial framework*](#tar-6 "2 Outlook for the next multiannual financial framework")
* *[*2.1 More funds needed to service debt for NGEU loans*](#tar-7 "2.1 More funds needed to service debt for NGEU loans")****
* ***[*level*](#tar-8 "level")
* *[*2.2 New focal points for spending*](#tar-9 "2.2 New focal points for spending")*
* **[*2.3 Changes to the funding structure*](#tar-10 "2.3 Changes to the funding structure")**
* ***[*2.4 National reform plans*](#tar-11 "2.4 National reform plans")***
* ***[*2.5 New leeway for joint debt*](#tar-12 "2.5 New leeway for joint debt")******
* ***[*List of references2*](#tar-13 "List of references2")***
****Last year, the budget comprised expenditure of €146 billion, or just under 0.8 % of gross national income ( , down from around 1 % in 2023. Fewer funds went from the to the Member States, as many of them called up less cohesion funding. Instead, they primarily made use of funds from the NextGenerationEU () off-budget entity, which are due to expire in 2026. The combined payments from both the budget and came to around 1.3 % of , which was only slightly down on the previous year (− 0.1 percentage point).****{#par-a4uu27}
****Member States finance the budget primarily through contributions based on their respective . These contributions vary relatively little, while the payments to the Member States from the budget and differ greatly. This results in net contributors and net recipients. Germany was among the ten net contributor countries again in 2024, at 0.4 % of its (€18 billion). Of the 17 net recipient countries, Latvia received the most funds in net terms, at more than 3 %.*
*In July, the European Commission published an initial proposal for the new multiannual financial framework for 2028 to 2034, according to which the budget, as a percentage of , would rise roughly in line with the repayments and interest burdens for . Member States' payments would be correspondingly higher. At the same time, the European Commission is proposing various new borrowing options, primarily to fund additional loans to Member States.*
*The European Commission wants to gear the budget more towards European tasks and also make financing simpler and more transparent. Both of these objectives are to be welcomed, and increased efforts could be made towards them in the upcoming negotiations. However, it makes less sense to tie funds to reform plans for national tasks and projects monitored by the European Commission. This poses the threat of additional bureaucracy, and the responsibilities could become increasingly blurred. The experience with is at least ambivalent in this regard.****{#par-u18765}
***1 Review of payment flows in 2024*** {#tar-1}
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*****Member States vote on joint spending commitments and their funding for a period of seven years. For this purpose, they set out a multiannual financial framework** (). The current runs from 2021 to 2027. The majority of the spending goes to Member States in the form of grants, whilst a smaller share is used to fund joint expenditure, such as on border protection and humanitarian aid, for example. The annual budgets set out more precise spending plans for the duration of each financial framework. In the current financial framework, the budget amounts to around 1 % of .[\[1\]](#_ftn_root_1) The budget is financed largely through current contributions by Member States in proportion to their economic performance.***{#par-a418ua}
****supplements the regular** **budget from 2021 to 2026.** The off-budget entity was adopted by the Member States as a one-off crisis measure during the -19 pandemic. It is limited to six years and comprises grants and loans to Member States. The centrepiece of is the Recovery and Resilience Facility (). It accounts for all of the loans and around 80 % of the grants. The remaining 20 % of the grants is covered by existing spending programmes within the regular budget. The grants entail additional spending in the period from 2021 to 2026, averaging 0.5 % of per year.[\[2\]](#_ftn_root_2)**{#par-e88o3o}
****Whether a country is a net contributor to or a net recipient from the** **budget is determined mainly by differing levels of grants from the** **budget.** The payments contributed by Member States are roughly equivalent. However, countries with lower economic performance (measured in terms of per capita) tend to receive disproportionately high grants out of the budget. Net contributions can be calculated for as well. However, in some cases, the Member States apply for funds in larger blocks at irregular intervals. Net contributions to therefore fluctuate more strongly from year to year than those to the budget (see the supplementary information entitled "[Methodological information on determining net contributions](#Methodological-information-on-determining-net-contributions)").**{#par-au2i2e}
****The** **budget redistributes financial resources from economically stronger Member States to economically weaker ones.** It would be appropriate for the European Commission to report net contributions to the budget in a timely and transparent manner.[\[3\]](#_ftn_root_3) However, the net contributions should be interpreted with caution. The net contributions show that the financial burdens and financial relief associated with the Community budgets vary between the Member States. However, they do not reflect the costs and benefits of a country's membership in the .**{#par-ae64e5}
****Methodological information on determining net contributions**** {#tar-2}
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****In order to determine net contributions in a meaningful way, it is necessary to adjust the spending and revenue figures of the** **budget. The expenditure side takes account only of operating payments that go to the** **Member States.** In particular, it does not include administrative expenditure, as this cannot be attributed to individual Member States in any meaningful way. The budget also funds grants to countries outside the , such as for development and humanitarian aid, for example. These payments likewise have no impact on the net contributions of Member States described here.**{#par-o27eu8}
****On the revenue side, only the current contributions of Member States are taken into account when calculating net contributions.** These are determined on the basis of various national metrics: gross national income (-based own resource), (standardised) value added tax revenue (-based own resource), and the amount of non-recycled packaging waste (plastics own resource). The -based own resources play a special role in the budget. They represent the largest item and are adjusted in such a way that they always balance the budget. Alongside the current contributions from the Member States, the budget is also funded by customs duties. However, these are incurred mainly at the 's external borders and it is therefore not appropriate to attribute these to the Member States that collect them. There are other revenue items as well, such as receipts from fines for violating competition law or fines paid by Member States.**{#par-a699e9}
****When calculating net contributions from the NextGenerationEU** ()**off-budget entity, it is assumed that Member States fund** **grants in accordance with their** **shares.** This is deemed appropriate because the financial contributions roughly correspond to both current and prospective future shares. The net contributions calculated in this manner are the same as if the Member States funded annually via the regular budget.[\[1\]](#_ftn_417eb7f8_1) Debt service in the budget is not included in the operating expenditure taken into account here. This prevents expenditure items from being counted twice.**{#par-e3iei6}
1. **{#_ftn_417eb7f8_1} This financing key is also used for REPowerEU. For more information, see the supplementary information on REPowerEU in [EU budget and NextGenerationEU off-budget entity: Member States' financial relationships in 2023](https://publikationen.bundesbank.de/content/940582).**
### **1.1 The budget for 2024 (excluding )** {#tar-3}
****The** **budget for 2024 comprised expenditure of around €146 billion, which was €19 billion less than in the previous year.** [\[4\]](#_ftn_root_4) At just over 0.8 % of , expenditure was lower than usual (around 1 % of ). Administrative expenditure remained unchanged on the previous year at €12 billion. This corresponds to around 8 % of total expenditure. Expenditure on servicing debt came to €2 billion, or 1.5 % of total expenditure.**{#par-iaa675}
****Spending on cohesion policy, which fell by almost 40 %, was the decisive factor behind the decline in expenditure.** As a result, operating expenditure[\[5\]](#_ftn_root_5) also fell by a total of just over €20 billion to €132 billion. The share of spending on cohesion policy decreased to just 27 % (see Chart 2.1). Unlike in the preceding years, it was thus well below the share attributable to agricultural policy (42 %). The remaining 30 % of operating expenditure was distributed across the categories of research and infrastructure, external action, and security and Union citizenship. Just over €20 billion of operating expenditure went to recipients outside the , mainly in the area of external action (this is not included in the net contributions; see the supplementary information entitled "[Methodological information on determining net contributions](#Methodological-information-on-determining-net-contributions)").**{#par-eu7i4e}
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****The amounts of spending that went from the** **budget to Member States differed significantly between countries again in 2024 (see Chart 2.2).** At just under 3½ % of its , Latvia received the most funds. At less than ½ % of their respective , the least funds went to the Netherlands, Germany, Sweden, Austria and Denmark.**{#par-a256i1}
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****All countries called up significantly less cohesion funding in relation to their** **than in the preceding years. This is likely to be due to the fact that they primarily made use of funds from the Recovery and Resilience Facility before they expired.** Overall, cohesion funding fell from 0.37 % to 0.17 % of on average over the period from 2021 to 2023. This decline was particularly large in Hungary and Poland, at 1.7 and 1.4 percentage points, respectively. Cohesion funding in relation to national also fell by more than 1 percentage point in Slovakia, Estonia, Lithuania, Croatia and Romania. In Spain, Italy, Portugal and Slovenia, cohesion funding as a proportion of had already fallen significantly before this time. The aforementioned countries all received above-average amounts of funds. It seems reasonable to assume that the funds replaced some of the cohesion funding, as Member States are required to apply for funds by the end of September 2026, when they are due to expire. Cohesion funding is likely to rise significantly from 2027 at the latest as a result of catch-up effects.**{#par-a8o47u}
****Member States' payments into the** **budget came to €128 billion in 2024.** On (unweighted) average, Member States paid just over 0.7 % of their respective into the budget (see Chart 2.3). In line with the lower expenditure, the payments into the budget were also somewhat down compared with the average of the previous years. The gap between the countries with the lowest and highest payments was just under 0.4 percentage point. This was thus roughly on par with other years. As usual, the largest share was attributable to -based own resources (€95 billion). Customs revenue amounted to €21 billion.**{#par-i36474}
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### **1.2 in 2024** {#tar-4}
****In 2024, disbursed** **grants totalled €80 billion, or just under 0.5 % of** (see Chart 2.4), with €56 billion of this figure attributable to the (including REPowerEU). Latvia, Croatia and Spain received the most funds in relation to their respective (between 1.5 % and 1.3 %), while Luxembourg, Sweden and Austria each received less than 0.1 %. These differences are due not only to the varying levels of the allocated grants, but also to the fact that Member States apply for grants in larger blocks and, in some cases, at irregular intervals (see Chart 2.5).**{#par-oi5ue4}
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****Overall, 16 % of the allocated** **grants were disbursed in 2024 (see Chart 2.5).** This was up somewhat on the previous years (13 % each). Again, there were significant differences between countries. Four countries did not call up any or any significant portion of their allocated funds (Sweden, Austria, Luxembourg and Bulgaria), while Germany called up the most, at 45 %. The Netherlands, Hungary and Ireland received funds for the first time in 2024.**{#par-e8uoa5}
****Out of the total** **grants available, 55 % have been disbursed to Member States since 2021.** Outflows will need to accelerate further to prevent the funds from expiring, because the European Commission is allowed to disburse them only up until the end of 2026. Germany had been disbursed 66 % of its allocated resources by the end of 2024. In addition, ten further countries had received more than half of their allocated funds by the end of 2024 (Czech Republic, Portugal, Estonia, Slovakia, Spain, Croatia, Denmark, Italy, Malta and France). Sweden is the only country not to have been disbursed any funds by the end of 2024. However, Sweden, too, received its first payment in July 2025.[\[6\]](#_ftn_root_6)**{#par-u53857}
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### **1.3 Net contributions in 2024** {#tar-5}
****Looking at the** **budget and** **as a whole, ten countries were net contributors in 2024 (see Chart 2.6 for the individual countries, broken down into** **budget and** ). The largest net contributions were from Austria, Sweden and Ireland, at more than 0.5 % of their respective . Germany was also a net contributor. However, it did not rank among the frontrunners in 2024, as it received a significant portion of its grants. The German net contribution to was therefore low. Seventeen countries were net recipients from the budget and the off-budget entity. Among these, Latvia received the highest net grants at almost 3½ %, followed by Croatia, Estonia and Greece at around 2 %.**{#par-a37o49}
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**2 Outlook for the next multiannual financial framework** {#tar-6}
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****In July, the European Commission published a package of initial comprehensive proposals for the multiannual financial framework for 2028 to 2034.** [\[7\]](#_ftn_root_7) Now, the Member States and the European Parliament must draw up a position on this. As the new financing period does not begin until 2028, an agreement is not to be expected before 2027. The European Commission's package contains detailed proposals regarding the scope and structure of future spending programmes. It also outlines how the Member States would finance these in the future. In addition, there are plans for the European Commission to be able to take on additional joint debt in crisis situations, for which the Member States would bear liability via the budget. Selected aspects of the European Commission's proposals are described below.**{#par-u95i48}
### **2.1 More funds needed to service debt for loans** {#tar-7}
****The European Commission is proposing to increase the maximum scope of the** **budget from up to 1.13 % of** **per year at present to 1.26 %.** [\[8\]](#_ftn_root_8)**This increase is needed mainly for servicing** **debt.** For the period from 2028 to 2034, a total budget of €1,763 billion[\[9\]](#_ftn_root_9) is envisaged. The European Commission is budgeting €150 billion to service debt (just under 9 % of the envisaged funds).[\[10\]](#_ftn_root_10) This will be used for interest and repayments.**{#par-i773i5}
****The spending set out in the multiannual financial framework is intended to take account of greater fluctuations in inflation in future.** Spending is normally set out for the entire planning period in constant prices of a given base year. This base year is 2018 for the current financial framework and 2025 for the next one. In order to take account of inflation, these figures have thus far been extrapolated at 2 % annually, irrespective of the actual rate of inflation. The European Commission wants to adjust this approach in the event of particularly high or particularly low inflation rates. It is proposing to apply the actual rate of inflation if it is above 3 % or below 1 %.[\[11\]](#_ftn_root_11) This would be likely to stabilise expenditure in relation to .**{#par-ao5a67}
****Development of deficits and debt at the** **level**** {#tar-8}
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****The** **budget is fundamentally balanced and posts no deficits. Due to** ,**however, the** **level temporarily records deficits, followed later by surpluses for repayments.** As an exception, grants result in deficits at the level in the period from 2021 to 2026 (see Chart 2.7).[\[1\]](#_ftn_492ca764_1) At the end of the 2026 disbursement period, the debt in question is likely to amount to around 2.2 % of gross national income (). From 2028 onwards, the debt taken on for this purpose will be gradually repaid. To this end, the budget will need to achieve surpluses over a large number of years. The debt ratio will then fall again (partly due to rising in the denominator). The interest burden arising from the accrued debt will prospectively amount to less than 0.1 % of annually until the end of the next financial framework in 2034 (see Chart 2.8).**{#par-ii2482}
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****In addition to debt taken on for grants, the****is increasingly borrowing for loans to Member States and Ukraine.**[\[2\]](#_ftn_492ca764_2) In this context, the greater debt is offset by the larger claims from the issued loans, meaning that it does not result in deficits. As early as 2019, these debts and claims amounted to €52 billion, or almost 0.4 % of (see Chart 2.9). These mainly comprised loans from the European Financial Stabilisation Mechanism () as well as macro-financial assistance to non- countries. The latter accounted for just under €5 billion of this figure. It also includes two lending programmes to Member States that were introduced during the coronavirus pandemic: the short-time work scheme from 2020 onwards and loans from 2021 onwards. By the end of 2024, these two lending programmes represented the largest share of the outstanding loans, accounting for 1.2 % of . In addition, loans to Ukraine have been gaining significance since 2022. At the end of 2024, they totalled around €40 billion, or 0.2 % of . Overall, by the end of 2024, the volume of loans secured by the budget had risen to just under €300 billion (1.7 % of ).**{#par-o3a845}
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****From 2026, there will be an additional €150 billion in loans for the** **'s new Security Action for Europe** ()**debt instrument.** is part of the "Readiness 2030" initiative adopted by the Council at the end of May 2025.[\[3\]](#_ftn_492ca764_3) The loans earmarked for this purpose are intended to fund up to €150 billion of investment in defence capabilities. These loans, as well as those mentioned above, will not represent a burden on the budget if the credit claims are serviced as planned. The interest payments on own debt are offset by the interest income from credit claims.**{#par-e8o326}
1. **{#_ftn_492ca764_1} This analysis is based on a definition of "deficit" similar to the one used in the national accounts. For instance, credit-financed loan issuance is recorded under financial transactions, which does not affect the deficit, as it has no impact on a country's net worth. Consequently, the deficits are solely a result of credit-financed grant payments.**
2. **{#_ftn_492ca764_2} The Member States secure the joint debt for this purpose via a financial buffer in the budget (for more information, see the section entitled "New leeway for joint debt" in the main text). Some loan programmes have additional safeguards that take effect before the financial buffer is used. This applies to, amongst others, some of the loans to Ukraine, the loans, and the macro-financial assistance to non- countries. Furthermore, the joint debt for loans and grants has an extra level of security. For these loans and grants, the own-resources ceiling has been temporarily raised by 0.6 % of .**
3. **{#_ftn_492ca764_3} See [defence-industry-space.ec.europa.eu](http://www.defence-industry-space.ec.europa.eu).**
### **2.2 New focal points for spending** {#tar-9}
****In the negotiations for the next multiannual financial framework, the Member States can adjust the focal points of spending in the****budget towards new challenges.** Thus far, a large share of expenditure has been attributable to agricultural policy and cohesion policy. The spending on agricultural policy focuses on supporting farmers' income, while cohesion policy aims to promote economic convergence within the . As a result, the funds for these two areas of activity go mainly to the economically weaker Member States. In the current financial framework, these areas account for two-thirds of total expenditure.**{#par-e127i3}
****The European Commission's proposal would strengthen the areas of research, infrastructure and defence (see Chart 2.10).**It envisages a larger share of funds being allocated to these areas. In addition, the European Commission wants to pool these areas under one category in future. Within an ongoing financial framework, it is easier to move spending between different areas in the same category. The European Commission is proposing to allocate 0.37 % of to this new category.[\[12\]](#_ftn_root_12) This is double the amount compared with the current financial framework. The amount spent on defence would rise particularly sharply, from 0.01 % in the current financial framework to 0.08 % of in future. In addition, the areas of external action and migration, security and border protection would also be strengthened.**{#par-e9o17i}
****By contrast, the European Commission is proposing significantly less funding for agricultural policy, while funding for cohesion policy would remain virtually unchanged.**The share of funding for agricultural policy in would be reduced by half to just under 0.2 %. However, funding for cohesion policy would remain virtually unchanged at 0.34 %. For the purposes of this comparison, the funds that are to be allocated to the area of research, infrastructure and defence in future are excluded from the current financial framework. Administrative expenditure would also remain practically unchanged at 0.08 % of .**{#par-e1eie7}
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****In the areas receiving greater focus, there are good reasons for implementing expenditure on a joint European basis.** Undertaking major research and infrastructure projects in a centralised way offers advantages, such as through economies of scale or if they would be unfeasible at the national level. In the areas of external action and migration, a joint European approach is likely to be more effective than solo efforts by individual national governments. In the area of border protection, joint protection of the 's external borders makes sense due to freedom of movement within the . Furthermore, network and external effects, in particular, speak in favour of also stepping up activity for climate protection and safeguarding the supply of energy at the European level. However, in each case, it is important to review whether this would bring benefits compared with purely national approaches. By contrast, agricultural policy and cohesion policy largely comprise grants to Member States without any particular European connection. If the primary intention here is redistribution between the Member States, this could be implemented in a more transparent way.**{#par-e5u513}
****In defence policy, more intensive cooperation and collaboration in Europe appears urgently needed.** Since Russia's invasion of Ukraine, the Member States have undertaken to increase their defence capabilities.[\[13\]](#_ftn_root_13) A joint approach would be essential in many areas. This is the case, for instance, with large-scale armament projects promising Europe-wide protection. It would also undoubtedly make sense to coordinate weapons systems so that Member States are able to deploy them easily and jointly should the need arise. At the same time, it is also important to involve non- countries that have similar security and defence interests, such as the United Kingdom. And, not least, it is necessary to find suitable decision-making and financing structures that facilitate a well-coordinated and swift approach. It remains to be determined which role the existing structures will play in this regard. New coordination instruments should be considered if they are better able to guarantee more efficient defence. Generally, multiple factors suggest that essential ongoing defence spending should not be funded by debt, but by current revenue.**{#par-ao98o2}
### **2.3 Changes to the funding structure** {#tar-10}
****The European Commission is proposing five new own resources for funding the** **budget that would yield a total of €44 billion each year (0.25 % of** **).** [\[14\]](#_ftn_root_14)
These are:**{#par-u63eo5}
* **own resource based on the volume of uncollected electrical and electronic waste (€15 billion);**
* **own resource based on excise duty on tobacco (€11.2 billion);**
* **own resource based on the emissions trading system (30 % of national revenues; €9.6 billion);**
* **a lump-sum progressive contribution based on the amount of net revenue of large companies with net annual turnover in excess of €100 million (€6.8 billion);**
* **own resource based on the carbon border adjustment mechanism (75 % of national revenues; €1.4 billion).**
****The European Commission also wants to adjust and, in some cases, simplify the existing own resources.** It is proposing three changes to the existing own resources:**{#par-a9818e}
* **The share of customs revenue that Member States retain as collection costs for the customs revenue that they levy is to be reduced from 25 % to 10 %. This is intended bring them more into line with the actual collection costs, which are likely to be well below 25 %. This high level of reimbursement primarily benefits the Netherlands and Belgium. These two countries, with their large international ports, regularly accrue an above-average share of the 's customs revenue.[\[15\]](#_ftn_root_15) To this extent, the high reimbursement of collection costs represent a hidden rebate.**
* **In order to increase transparency in the calculation of own resources, country-specific correction mechanisms are to be abolished.**
* **The rate of call for the plastics own resources is to be increased in order to take account of inflation developments.**
****New own resources do not reduce the financing burden on the Member States.** The impression is sometimes conveyed that new own resources would relieve Member States because their contributions would be lower. However, in most cases, the Member States surrender part of their national tax revenue to the . This would be the case with the proposed tobacco own resource, for example. In other cases, the Member States would forego their own options for taxation. For instance, while the proposed corporate resource would not be levied at the national level, it would increase the burden on domiciled companies. In any case, the financial burden would be borne by the citizens of the Member States.**{#par-e9a952}
****The proposed adjustments to the existing own resources would simplify the system of own resources. This is to be welcomed. However, new own resources would likely entail new rebates and reduce the transparency of the system of own resources again. The** **budget could be funded in a significantly simpler and more transparent manner via the** -**based own resource alone.** The wide range of correction mechanisms and hidden rebates mean that the system of own resources is complicated and lacks transparency overall. They are the result of political negotiations and also reduce the financial contributions of some countries at the expense of others. The proposed new own resources would also shift the financing burden between the Member States. These effects are relevant for negotiations and could, in turn, entail new demand for rebates. Otherwise, Member States that would incur higher contributions as a result of changes to the system of own resources would likely have only very limited acceptance for such changes. Ultimately, it is to be expected that Member States will continue to finance the budget roughly in line with their shares in future, too. It therefore makes sense to switch financing to this simple and transparent benchmark entirely.**{#par-u33a1u}
****There are many arguments for allocating revenue from the** **trading system and the carbon border adjustment mechanism to the European level as well.** This is already the case for customs revenue. This revenue results from the joint European customs policy, whereby the customs revenue accrued is collected by the Member States, particularly in countries with large international seaports. To compensate costs incurred at the national level, the Member States receive a flat-rate reimbursement of their collection costs (25 % of customs revenue). A similar procedure would appear to make sense for the revenue from the trading system, too. This revenue results from the joint European climate policy. At present, revenue is allocated to the Member States roughly in line with their historic carbon pollution shares. However, the arguments for this allocation method do not seem very convincing, as the damage caused by carbon emissions does not stop at national borders. By contrast, allocation to the level is already envisaged for revenue from the carbon border adjustment mechanism. This mechanism will apply from 2027 and impose duties on imports for products that do not yet contain a carbon price component comparable to the . As is already the case for customs duties, three-quarters of the revenue will go to the budget.**{#par-e74ui2}
### **2.4 National reform plans** {#tar-11}
****The European Commission wants to agree plans with the Member States bilaterally and deploy selected** **budgetary resources for these in future.** [\[16\]](#_ftn_root_16)**To this end, the Member States would present national and regional partnership plans that also contain investments and reforms.** These plans would cover all areas for which pre-agreed resources exist -- agricultural policy, cohesion policy, and migration, security and border protection.[\[17\]](#_ftn_root_17) The national plans would also contain investments and reforms. The disbursement of the funds would be tied to Member States implementing the promised reforms and achieving milestones as agreed.**{#par-e12i41}
****Amongst other things, the European Commission expects this would enable it to deploy financial resources more closely in line with the** **'s political priorities. However, it does not appear certain that this will succeed.** Instead, it is expected that this would harbour significant bureaucratic burdens. This is indicated, not least, by experiences with the , for which the Member States likewise negotiated plans with the Commission. The European Court of Auditors has pointed out the weaknesses of the on multiple occasions: the resources were not deployed sufficiently effectively for the targeted objectives in the areas of digital and green transformation.[\[18\]](#_ftn_root_18) Funds were also able to be disbursed without the Member States having implemented the agreed objectives. In general, the European Court of Auditors takes a critical view of the fact that the European Commission reimburses costs that have not actually been incurred. Instead, the funds are disbursed as planned if the Member States achieve the agreed milestones. However, the European Court of Auditors does not consider these to be sufficient.[\[19\]](#_ftn_root_19) Irrespective of this, a stronger, broad-based influence of the European Commission does not generally seem to make sense. There is much to be said for focusing on policy areas that actually have a strong European connection, such as the single market or joint climate policy.**{#par-u28a2i}
### **2.5 New leeway for joint debt** {#tar-12}
****The European Commission's proposal allows for more leeway for joint debt of up to €645 billion (3.6 % of 2024** **).** [\[20\]](#_ftn_root_20)The European Commission wants to include some of the joint debt as a fixed part of the budget. This would be disbursed as loans to the Member States (€150 billion) and to Ukraine (€100 billion). In addition, up to €395 billion would be made available for a precautionary crisis mechanism. This would be used to grant loans to Member States in the event of a crisis.[\[21\]](#_ftn_root_21)**{#par-e74852}
****The own-resources ceiling would rise in order to secure the joint borrowing.** This ceiling determines the extent to which Member States can be called upon to fund the budget each year (as a proportion of their respective ). Its spread against the expenditure ceilings set out in the financial framework serves as a financial buffer. This buffer can be used in the event of unforeseen developments. In addition, it also secures the servicing of debt used to grant loans via the budget. As long as this debt is used to fund loans to Member States and other countries, the debt is, in principle, serviced by the borrowing countries (interest and repayments). If, however, a borrower defaults, all of the Member States bear liability up to the agreed own-resources ceiling.**{#par-u46u37}
****The own-resources ceiling would rise from a regular 1.4 % to 1.75 % of** **. This would also secure additional** **borrowing of up to €250 billion (1.4 % of 2024** **).** The proposed increase of the own-resources ceiling is attributable to the larger scope of the budget only to a limited extent. Instead, it would serve more to increase the buffer, enabling additional new joint debt to be secured. The European Commission wants to use this to finance loans -- €100 billion to Ukraine and €150 billion to the Member States. The latter would feed into the new Catalyst Europe instrument, which is intended to supplement the partnership plans with a loan component. This would mean that Member States would also be able to apply for loans in addition to the grants envisaged in the bilaterally agreed plans.**{#par-ueuu4a}
****Furthermore, in the event of a crisis, it would be possible to raise the own-resources ceiling by a further 25 percentage points on a temporary and earmarked basis.** [\[22\]](#_ftn_root_22) This is intended to secure any potential further joint borrowing in the event of a crisis, as described above. The Council would decide when to deploy this crisis measure and how it would be structured. The European Parliament would have to grant its approval. If the Council were to activate the crisis measure, it would authorise the European Commission to borrow up to €395 billion on the capital market (2.2 % of 2024 ). These funds would be available to the affected Member States in the form of loans in order to mitigate the impact of the crisis. These kinds of loans are attractive for Member States with higher financing costs. They would benefit from more favourable interest rate conditions compared to those on the market. As the funds would be disbursed exclusively as loans, the borrowing Member States would, in principle, be liable for interest and repayments. However, the other Member States would have to secure the joint borrowing in the budget by means of a higher own-resources ceiling earmarked for this purpose.**{#par-o48oi4}
****This kind of precautionary crisis mechanism does not appear to make sense in view of the existing crisis architecture.** The European Commission wants to enable the to provide financial assistance to Member States more easily in the event of a crisis than has been possible thus far. However, the euro area already has the European Stability Mechanism. Additional provisions for crises in the budget therefore do not seem necessary.**{#par-o55o35}
**List of references2** {#tar-13}
---------------------------------
**Deutsche Bundesbank (2024), [EU budget and NextGenerationEU off-budget entity: Member States' financial relationships in 2023](https://publikationen.bundesbank.de/content/940582), Monthly Report, September 2024.**{#par-e4o94i}
**European Commission (2025a), Consolidated annual accounts of the European Union: 2024 Integrated financial and accountability reporting, Publications Office of the European Union, 2025.**{#par-uai446}
**European Commission (2025b), A dynamic budget for the priorities of the future -- The Multinational Financial Framework 2028‑2034, (2025) 570 final, Brussels, 16 July 2025.**{#par-o91a63}
**European Commission (2025c), Proposal for a Council Decision on the system of own resources of the European Union and repealing Decision (, Euratom) 2020/2053, /2025/574 final, Brussels, 16 July 2025.**{#par-ui765i}
**European Court of Auditors (2025a), Support from the Recovery and Resilience Facility for the digital transformation in member states -- A missed opportunity for strategic focus in addressing digital needs, Special report 13/2025.**{#par-e7u841}
**European Court of Auditors (2025b), Performance-orientation, accountability and transparency -- lessons to be learned from the weaknesses of the , Review 02/2025.**{#par-oai6o7}
**European Court of Auditors (2024), Green transition -- Unclear contribution from the Recovery and Resilience Facility, Special report 14/2024.**{#par-a3a294}
1. **{#_ftn_root_1} has been defined as the benchmark for the budget. It differs from gross domestic product () by the balance of primary domestic and foreign income. accordingly encompasses the entire income of all residents, regardless of whether it is generated domestically or abroad. The difference between the and of a given country is normally small; in the cases of Ireland and Luxembourg, however, is significantly higher than .**
2. **{#_ftn_root_2} Overall, comprises grants and loans totalling €830 billion (in current prices). Grants of up to €420 billion and loans of €390 billion were allocated initially. In the wake of the energy crisis, further grants of around €20 billion for REPowerEU were added and are being financed using revenue from trade in emissions allowances (see the [EU budget and NextGenerationEU off-budget entity: Member States' financial relationships in 2023](https://publikationen.bundesbank.de/content/940582)).**
3. **{#_ftn_root_3} In recent years, the European Commission published the file with the budget payment flows from the previous year at the end of each July. This year, the figures for 2024 have only been public since the end of September.**
4. **{#_ftn_root_4} See European Commission (2025a). In addition, country-specific figures are based on payment flows into the budget, which the European Commission publishes on its website. See [commission.europa.eu](http://www.commission.europa.eu). Current Eurostat data were used for .**
5. **{#_ftn_root_5} Expenditure excluding administrative expenditure and debt service.**
6. **{#_ftn_root_6} See [Recovery and Resilience Scoreboard](https://ec.europa.eu/economy_finance/recovery-and-resilience-scoreboard/country_overview.html).**
7. **{#_ftn_root_7} The entire package of proposals can be found on the [website of the European Commission](https://commission.europa.eu/strategy-and-policy/eu-budget/long-term-eu-budget/eu-budget-2028-2034_en).**
8. **{#_ftn_root_8} See European Commission (2025b). *(Editor's note, addition on 10 November 2025: The 1.13% of EU GNI stated here includes NGEU grants that supplement the regular EU budget programmes. Excluding these, the EU budget amounts to around 1% of EU GNI.)***
9. **{#_ftn_root_9} Unless stated otherwise, all figures for the European Commission's proposals are quoted in 2025 prices.**
10. **{#_ftn_root_10} The European Commission is planning a fixed annual amount of €24 billion, in contemporary prices. The amount will therefore decrease over time both in 2025 prices and as a percentage of .**
11. **{#_ftn_root_11} The European Commission uses the deflator as a measure of inflation.**
12. **{#_ftn_root_12} This includes funds of around 0.04 % of that were allocated to cohesion policy in the last financial framework.**
13. **{#_ftn_root_13} See [Versailles Declaration](https://www.consilium.europa.eu/en/press/press-releases/2022/03/11/the-versailles-declaration-10-11032022/) of 10 and 11 March 2022.**
14. **{#_ftn_root_14} See European Commission (2025c).**
15. **{#_ftn_root_15} The collection costs in some countries were above the average of 0.04 % of again in 2024. They were highest in relation to respective in Belgium (0.13 %), followed by Slovenia and the Netherlands (0.08 % each).**
16. **{#_ftn_root_16} See European Commission (2025b).**
17. **{#_ftn_root_17} The Commission's proposal pools these areas into one category. This also includes funds for servicing debt.**
18. **{#_ftn_root_18} See European Court of Auditors (2024, 2025a).**
19. **{#_ftn_root_19} See European Court of Auditors (2025b).**
20. **{#_ftn_root_20} In contemporary prices.**
21. **{#_ftn_root_21} In contemporary prices.**
22. **{#_ftn_root_22} The own-resources ceiling has already been raised by 0.6 percentage point on a temporary and earmarked basis for borrowing until this has been repaid in full. Unlike the proposed new crisis mechanism, this is intended to fund not just loans, but also grants to the Member States.**
*[COM]: Communication from the Commission
*[**ETS**]: Emissions Trading System
*[**MFF**]: multiannual financial framework
*[GNI]: gross national income
*[**SAFE**]: Security Action for Europe
*[ETS]: Emissions Trading System
*[GNI)]: gross national income
*[RRF]: Recovery and Resilience Facility
*[VAT]: value added tax
*[SAFE]: Security Action for Europe
*[MFF]: multiannual financial framework
*[**EU**]: European Union
*[NGEU]: NextGenerationEU
*[ETS1]: Europäisches Emissionshandelssystem 1
*[EU]: European Union
*[COVID]: coronavirus disease
*[SURE]: support to mitigate unemployment risks in an emergency
*[GDP]: gross domestic product
*[**NGEU**]: NextGenerationEU
*[CBAM]: carbon border adjustment mechanism
*[EFSM]: European Financial Stabilisation Mechanism
*[**GNI**]: gross national income
*[EU's]: European Union
*[**RRF**]: Recovery and Resilience Facility