New EU budget: More funds available, but on different terms

The European Union is proposing a new financial framework for 2028-2034, increasing the budget by nearly 10% to approximately 2 trillion euros, equivalent to 1.26% of the EU's gross national income. This budget, however, marks a significant departure from previous models, prioritizing flexibility to respond to ongoing crises, from geopolitical threats to energy shocks.

Poland, like other member states, will need to adapt to a new system that de-emphasizes the traditional "national envelope" of allocated funds. The new framework leans heavily on centrally managed instruments, such as the European Competitiveness Fund (ECF), which will become a primary source for innovation, digitalization, and green transition funding. This shift means Polish companies must become more proactive in applying for funds directly from Brussels, rather than relying solely on national or regional allocations.

A major development in the new budget is the substantial increase in funding for security and defense. This area is projected to see a near ninefold increase, rising from under 15 billion euros to a significant 131 billion euros, encompassing defense capabilities and space exploration. Within this, "military mobility" is set to receive a considerable boost, with funding rising from 2 billion to 18 billion euros. This presents a particular opportunity for Poland, as three of the four strategic military mobility corridors in Europe are slated to pass through the country, potentially driving major infrastructure investments.

While the increased focus on defense and strategic investments offers opportunities, the new climate policy also presents risks for industry. Businesses are calling for technological neutrality to navigate these challenges. The shift towards greater flexibility and central management of funds signifies a move away from the rigid allocations that hindered responses to crises like the war in Ukraine and the pandemic, aiming for a more agile and responsive EU budget.

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In the current budget, as much as 90% of funds are locked in rigid allocations for specific purposes, which almost made it impossible to react to constantly erupting crises, such as the war in Ukraine or the pandemic. In the new distribution, the lever is to be shifted strongly towards flexibility.