Brussels is preparing a significant reconfiguration of the European Union’s €1 trillion budget framework for 2028–2034, according to a leaked draft seen by the Financial Times.
The reform centres on the redistribution of more than €750 billion in common agricultural and regional development funds, with a shift in focus towards newer eastern member states and countries bordering Russia and Belarus.
The proposed changes, to be formally unveiled by the European Commission this Wednesday, mark one of the most substantial overhauls of the EU’s financial architecture in recent years. Under the draft plan, the existing funding streams — currently divided across multiple programmes, including €392 billion earmarked for cohesion policy and €387 billion for the Common Agricultural Policy (CAP) — would be consolidated into a single national “envelope” for each member state.
This reorganisation would grant national governments greater discretion in how they deploy EU resources, including the flexibility to shift funding between policy priorities such as agriculture, regional development, and defence. According to the draft proposal, the Commission argues that “a single envelope per member state would ensure efficient and flexible allocation of funding across policy areas, allowing member states to address new priorities such as defence capabilities or preparedness.”
Eastern States to Benefit Most
The revised allocation method proposes a departure from the existing system, which categorises regions based on development levels. The new approach introduces a complex formula to determine national envelopes, which analysts suggest will favour countries in eastern Europe with large agricultural areas and comparatively low per-hectare payments.
Romy Hansum, a fellow at the Jacques Delors Centre in Berlin, noted that “poor countries will win more at the expense of those countries that are on average wealthier but have some poorer regions, especially France, and to some extent Spain and Germany.”
The proposal also aims to address what Brussels terms the “agri-prosperity gap” by narrowing the funding disparities per hectare between older and newer member states. As a result, nations such as Poland, Romania, Hungary, and Bulgaria — where large agricultural sectors receive lower per-hectare subsidies — are likely to gain significantly from the adjustment.
Winners and Losers
While direct agricultural subsidies are expected to remain ringfenced, the shift will likely come at the cost of regional development funding for countries that currently receive substantial shares of both, including France and Italy. Under the proposal, funds currently channelled to regional and local governments may instead be administered centrally by national authorities, prompting concerns over diminished oversight and regional influence.
This aspect of the plan has already drawn criticism from established beneficiaries of cohesion funds. Kata Tüttő, president of the EU’s Committee of the Regions, warned that the restructuring risks becoming “an overly-complicated way to offer a blank cheque to national governments.” The Committee, which represents regional and local authorities across the EU, has traditionally played a key role in the implementation of cohesion policy.
The proposal introduces modest limits on the extent of change, with a clause ensuring that no member state will receive less than 80 per cent or more than 105 per cent of its current allocation. Nevertheless, the balance of funding is expected to tilt eastward, reinforcing Brussels’ strategic objectives in external border management and regional stability.
Security and Migration Priorities
Alongside agricultural and cohesion funding, the new budget framework places increased emphasis on investment in external and internal security. In particular, the plan identifies countries with external land borders — including Finland, Poland, and the Baltic States — as priorities for enhanced defence and security funding. Member states experiencing high levels of migrant arrivals, such as Greece, Italy, and Malta, are also expected to see increased support in line with the EU’s broader migration and asylum management objectives.
Political Implications
The Commission’s proposal comes amid growing geopolitical instability on the EU’s eastern flank and a renewed focus on strategic autonomy, including defence readiness. However, the reforms will require unanimous approval from all 27 member states — a process likely to involve protracted negotiations.
Wealthier Western countries, which stand to lose regional funding, may resist the redistribution, while governments in Eastern Europe will seek to consolidate gains. The centralisation of funding authority at the national level may also spark debate over the role of local governance within the EU’s multi-level structure.
If approved, the reforms would take effect with the next multiannual financial framework starting in 2028. As negotiations begin, the proposal sets the stage for a realignment of EU funding that reflects the bloc’s shifting strategic priorities — from internal economic cohesion to external resilience and security.
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