Questions and answers on the Draft Annual Budget 2027
Questions and answers on the Draft Annual Budget 2027
Full overview of the Commission proposal for the Draft Annual Budget 2027
The Commission proposes to allocate €200 billion to the various EU priorities (in commitments), as follows:
- €54 billion for the Common Agricultural Policy, and €0.8 billion for the European Maritime, Fisheries and Aquaculture Fund, to support Europe's farmers and fishers, but also to strengthen the resilience of the agri-food and fisheries sectors, providing the necessary scope for crisis management.
- €44 billion for regional development and cohesion to support economic, social and territorial cohesion, as well as infrastructure supporting the green transition and the Union's priority projects.
- €14.5 billion to invest in people, and reinforce social cohesion through the European Social Fund Plus (ESF+).
- €15.5 billion to support the EU's partners and interests around the world. This includes €10.1 billion under the Neighbourhood, Development and International Cooperation Instrument — Global Europe (NDICI — Global Europe), €2.1 billion for the Instrument for Pre-Accession Assistance (IPA III) and €0.5 billion for the Growth Facility for the Western Balkans, as well as €2 billion for Humanitarian Aid (HUMA).
- A further €4 billion will be available in grants under the Ukraine Facility, complemented by €2.2 billion in loans.
- Moreover, €90 billion in loans will be made available to Ukraine over the period 2026–2027 through the new Ukraine Support Loan instrument. The Draft Budget for 2027 includes €1.15 billion to cover the related debt service costs.
- €13.8 billion for research and innovation, of which mainly €12.8 billion for Horizon Europe, the Union's flagship research programme. The Draft Budget also continues to include the financing of the European Chips Act under Horizon Europe and through the redeployment of other programmes.
- €4.7 billion for European strategic investments, of which, for instance, €3.1 billion for the Connecting Europe Facility to improve cross-border infrastructure, €1.1 billion for the Digital Europe Programme to shape the Union's digital future, and €278 million for InvestEU.
- €2.3 billion for space, mainly for the European Space Programme, which will bring together the Union's action in this strategic field.
- €17.3 billion for resilience and values, including €4.5 billion for Erasmus+ to create education and mobility opportunities, €417 million to support artists and creators across Europe, and €315 million to promote justice, rights, and values.
- €2.3 billion for environment and climate action, including €846 million for the LIFE programme to support climate change mitigation and adaptation, and €1.3 billion for the Just Transition Fund to make sure no one is left behind in the green transition.
- €3.4 billion for protecting our borders, including €2 billion for the Integrated Border Management Fund (IBMF), and €1.1 billion (total EU contribution) for the European Border and Coast Guard Agency (Frontex).
- €2.4 billion for migration-related spending, of which €2.1 billion to support migrants and asylum-seekers in line with our values and priorities.
- €2.3 billion to address defence challenges, including €1 billion to support capability development and research under the European Defence Fund (EDF), €844 million for the European Defence Industry Programme (EDIP), €115 million to stimulate defence innovation under the proposed AGILE programme and €256 million to support Military Mobility.
- €1 billion to ensure the functioning of the Single Market, including €622 million for the Single Market Programme, and €212 million to strengthen anti-fraud, and support taxation and customs.
How much does the Commission propose to allocate in payments?
Based on a thorough technical analysis of payment needs for each of the EU programmes in 2027, the Commission proposes a total level of payment appropriations of €212 billion. This total amount reflects the growing needs for payments in 2027, now that all EU programmes are running at cruising speed, in particular for cohesion policy.
The Commission's technical work on payment needs in 2027 also includes an assessment of updated Member States' forecasts for payments related to cohesion policy and rural development. This assessment confirmed the Commission's previous long-term forecast dating from July 2025, which was meant to give the European Parliament, the Council and other stakeholders an early insight into the medium-term evolution of EU budget revenue and expenditure, to facilitate planning.
Why is the level of payments in the draft budget 2027 7% higher than in the previous year?
The proposed level of payments for 2027 of €212 billion is indeed 7% higher than for 2026. This reflects the character of the EU budget as an investment budget, with payments taking place over a longer period of time, in function of progress made with the implementation of projects and actions.
This is the normal pattern which we have also observed at the end of previous long-term budget periods.
Therefore, these growing needs for payments are known well in advance.
What impact will this increase in payments have on contributions from the Member States to the EU budget?
The EU budget is financed wholly from own resources, plus other revenue. Therefore, the increasing needs for payments as described above lead to increasing the Gross National Income (GNI) own resources contributions from the Member States, to ensure that EU budget revenue and expenditure remain in balance. Also here, the pattern of gradually increasing payment needs and correspondingly increasing GNI contributions to balance the budget is well-known over time.
How does the Draft Budget reflect the EU's priorities?
The Draft Budget 2027 supports the Union's priorities of competitiveness, security, defence, asylum and migration management, the clean and digital transitions, preparedness, and resilience.
It includes increased funding for flagship programmes which contribute to economic security and a competitive economy. At the same time, it maintains strong support for agriculture, helping safeguard the Union's food security while promoting economic stability and the development of rural areas.
How does the Draft Budget for 2027 relate to the proposal for the next long-term budget?
The Draft Budget for 2027 is the final annual budget under the current long-term EU budget for the 2021–2027 period. It is proposed in line with the current Multiannual Financial Framework (MFF).
The negotiations on the next long-term budget (to start in 2028), are continuing in parallel.
Is there anything from the Draft Budget 2027 that carries over into the next long-term budget?
The Draft Budget 2027 provides adequate funding for the Union's priorities. No costs are carried into the next long-term budget, other than the ‘normal' payments to cover the contractual obligations stemming from the 2027 budget, which is a regular feature of the EU budget as an investment budget (see the question on the difference between commitments and payments below).
In addition, some of the Union's ongoing borrowing operations will have an impact on the next long-term budget for 2028-2034. This concerns, in particular, the repayment of NextGenerationEU, the Union's post-COVID recovery fund, as well as the funding provided to Ukraine, including through the newly agreed Ukraine Support Loan (see below).
The Commission has proposed a fixed annual amount to cover the related interest costs and repayment of principal in the long-term budget for 2028-2034, to ensure full predictability.
When will the Draft Budget for 2028 be adopted?
The annual budget for 2028 will be proposed by the Commission in 2027, following the agreement on the next Multiannual Financial Framework.
As with every annual budget, it will then be negotiated by the European Parliament and the Council, with the objective of adoption before the end of 2027.
What would happen if there is no timely agreement on the next Multiannual Financial Framework?
The Treaties provide safeguards to ensure the continuity of EU funding if a new Multiannual Financial Framework (MFF) is not agreed in time.
Under Article 312 of the Treaty on the Functioning of the European Union, the ceilings and other provisions corresponding to the last year of the current MFF [= 2027] would be provisionally extended until a new framework is adopted.
Consequently, while payments on legal commitments from the 2021-2027 programmes will continue as planned, new budget expenditures would be possible beyond 2027 where there is a corresponding legal basis for it. Funding for programmes without such a legal basis would cease until relevant successor programmes are adopted.
A timely agreement on the next long-term budget is thus crucial to provide predictability for beneficiaries, support new policy priorities, and ensure that the Union can respond effectively to future challenges.
How is defence financed, and how are SAFE loans reflected in the Draft Budget for 2027?
The Union continues to strengthen Europe's security and defence capabilities in response to an increasingly challenging geopolitical environment.
The Draft Budget for 2027 supports the implementation of the ReArm Europe Plan/Readiness 2030, aimed at reinforcing Europe's defence preparedness, industrial capacity, and strategic autonomy.
It provides support for defence-related research, capability development, and military mobility, notably through the European Defence Fund (EDF). The draft budget also supports the implementation of the European Defence Industry Programme (EDIP) as adopted in December 2025, aimed at strengthening the competitiveness and responsiveness of the European defence technological and industrial base. It also includes financing for the new AGILE initiative to accelerate the transition from innovation to deployment for defence spending, for which the Commission presented a proposal in March 2026.
In addition, the Security Action for Europe (SAFE) instrument enables the Commission to provide up to €150 billion in loans to Member States, backed by the EU budget available until 31 December 2030, to support joint defence procurement and investments. The first pre-financing payments to Member States under SAFE have started in May 2026.
Does increased defence spending come at the expense of Cohesion policy or agriculture?
No. Increased support for defence does not come at the expense of Cohesion policy or agriculture. Both remain core priorities of the EU budget, with planned funding of around €100 billion in 2027.
At the same time, the Union must also respond to new priorities such as security, defence, preparedness, migration management, energy resilience, and competitiveness. The Commission proposal seeks to balance these objectives within the limits of the current long-term budget.
Is funding for research, innovation, and space reduced?
The Draft Budget for 2027 will provide almost €22 billion to fund priority interventions in research and innovation, space, strategic infrastructure, and the strengthening of the Single Market. The small reduction compared to the 2026 annual budget is mostly driven by the specific profile of the ITER programme to develop fusion energy, where funding was concentrated in the early years of this current MFF in line with specific investment needs, and by the reprofiling of the Horizon programme in the MFF mid-term revision.
Is funding for external action reduced?
The Draft Budget for 2027 provides a robust package of €15.5 billion for external action. This is broadly comparable to the 2026 annual budget and reflects the choice to frontload assistance to third countries at the beginning of this MFF.
The funding for external action in the Draft Budget will ensure continued support for Syrian refugees and humanitarian assistance across the world. It will also contribute to finance the €1.6 billion package for Palestine agreed in 2025, as well as provide €200 million in support to Greenland.
How will the Draft Budget for 2027 support Ukraine?
The Ukraine Support Loan is a €90 billion limited recourse loan covering military assistance and general budget support, to be disbursed in 2026 and 2027. To complement this support, the Draft Budget for 2027 includes a total of €1.15 billion to cover the loan's debt service costs.
In addition, the Ukraine Facility will continue to provide support to Ukraine in 2027, with €4 billion of non-repayable support and €2.2 billion in loans. Finally, Ukraine will also benefit from a borrowing cost subsidy on the €18 billion of MFA+ loans disbursed in 2023, totalling €590 million.
How is the new Ukraine Support Loan financed in the Draft Budget for 2027?
The new Ukraine Support Loan will provide Ukraine with urgently needed military assistance and general budget support, for a total amount of €90 billion in 2026 and 2027. The planned disbursements under the Ukraine Support Loan in the second and third quarters of 2026 amount to €30 billion, which will lead to debt service costs of €1.15 billion in 2027.
To finance these costs, the Commission proposes a balanced mix of savings and use of special instruments, leaving the planned remaining availabilities for 2027 essentially untouched.
How are the increased borrowing costs for NextGenerationEU covered?
Considering the increase of interest rates since 2022, a new ‘cascade mechanism' has been put in place as of 2025 to cover the additional needs for the NGEU interest payments. It includes several steps to finance the additional costs, by making use of availabilities to redirect existing funding within the budget, mobilising special instruments within the long-term budget, and the mobilisation of a new and exceptional instrument over and above the MFF ceilings if financing for the interest payments cannot be found within the existing EU budget.
In the Draft Budget for 2027, and in line with the approach agreed with the European Parliament and the Council for the 2025 annual budget, the Commission proposes to finance the additional needs for the borrowing costs through a combination of the unallocated margin in heading 2b (resilience and values), the Flexibility Instrument, and the EURI instrument for the remaining amount, which is fully covered by past decommitments. Therefore, there is no need to recourse to the so-called ‘financial backstop' (a contingency measure to ensure that there is sufficient funding available to address unforeseen circumstances or to stabilise financial systems when necessary).
What are commitments and payments?
Commitments are the total volume of contractual obligations for future payments that can be made in a given year. Commitments must then be honoured with payments, either in the same year or, particularly in the case of multi-annual projects, over the following years.
Payments are the actual money paid in a given year from the EU budget to cover commitments of the current, and previous years.
For instance, when the EU decides to co-fund the building of a bridge in a Member State, the total amount which the EU agrees to cover is a commitment. The bills for the work done are the payments that are paid over the coming years in line with the implementation of the life cycle of the project. The commitment is made in year N. The payments from the EU budget may follow in the same year N, but also in following years, depending on the financial rules on when the invoices are reimbursed (N+x).
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