Key messages
- This ARI comes at a decisive moment: the Council’s negotiating mandate was agreed in June 2026, the European Parliament will adopt its position this autumn and afterwards trilogues on the ECF are about to begin. This leaves a narrow window to shape the Fund’s design before the aim of adopting all MFF legislation in 2027, in time for programmes to start in January 2028.
- The European Competitiveness Fund (ECF) is a central instrument of the proposed MFF 2028-34, aimed at supporting strategic technologies, industrial transformation, and the green and digital transitions.
- Although its budget is unlikely to close Europe’s investment gap on its own, the ECF could have a substantial impact if resources are focused on strategic priorities and effectively leverage private investment.
- The governance of the ECF has been a major point of contention: while the Commission proposed a highly centralised model, the Council strengthened the role of Member States.
- Coordination with existing EU instruments has been improved by the Council but remains insufficiently defined, creating risks of overlap, fragmentation and inefficiencies.
- The ECF marks a significant shift in the EU budget towards a competitiveness-driven approach, raising questions about its balance with the traditional objective of territorial cohesion and its contribution to the process of transformation of the European industry.
Analysis
1. Introduction
The publication of the Draghi Report in 2024 placed competitiveness at the heart of the European policy agenda (Draghi, 2024). The shift was reflected in the European Commission’s Political Guidelines for the 2024-29 term and became a key reference point for the design of the next Multiannual Financial Framework (MFF).
Based on the perception that the existing EU funding architecture is too fragmented and insufficiently aligned with the Union’s emerging competitiveness agenda, the European Competitiveness Fund (ECF) became one of the Commission’s most significant proposals for the MFF 2028-34.
According to the Commission, around 90% of the resources available under the MFF 2021-27 and NextGenerationEU are pre-allocated to multiple programmes, traditional policy objectives or national envelopes, leaving limited flexibility to respond to new economic, technological and geopolitical challenges.
To address these shortcomings, the ECF is intended to consolidate a range of existing instruments within a common framework, strengthen the link between research, innovation and industrial deployment, and focus EU spending more directly on competitiveness, strategic technologies and economic security. Together with Horizon Europe, the ECF would account for around 30% of the proposed EU budget.
The ECF has the following overarching objectives. First, it aims to establish an investment capacity capable of supporting European competitiveness in strategic technologies, activities and sectors that support the entire innovation and business cycle. Secondly, it would further integrate defence-related investments into the mainstream architecture of the EU budget. Thirdly, the ECF aims to leverage EU budgetary instruments to mobilise private, institutional and national investment in strategic technologies and industrial ecosystems.
As the Draghi Report highlighted, EU competitiveness is the crucial issue for the next years. The lack of competitiveness in specific sectors in relation to major players such as the US or China needs to be addressed urgently. This involves investing –at large scale– in the technologies and sectors that are leading technological change, responding to increasing geopolitical, hybrid and cyber risk and safeguarding critical value chains. A transformation is needed in the industrial base in Europe, which is becoming increasingly clean and digital. Europe’s competitiveness is inseparable from its renewed industrial capacity and the ECF may provide the framework to make this change possible.
The ECF’s governance structure is particularly significant in this regard, as it determines who defines spending priorities and how resources are allocated across sectors, technologies, and territories. According to the EC proposal, the ECF is primarily based on centrally managed instruments and strategic priorities defined at the EU level.
The creation of the ECF must also be understood in the context of the broader debate on the MFF 2028-34, namely the growing tension between territorial cohesion and investment driven by competitiveness. While Cohesion Policy has traditionally aimed to reduce regional disparities through allocations to less developed regions, the ECF reflects a different intervention logic centred on a competitive approach aimed at strategic sectors, technological leadership, scale and economic impact. The design of the ECF therefore raises questions about the future balance between social, economic and territorial cohesion and competitiveness within the EU budget. It also raises questions about how the EU funds should be dedicated to the transformation of the EU industries in order to keep up with the global competition and the green and digital European agendas.
These developments are particularly relevant to Spain. Within the next MFF, Spain may have the opportunity to benefit from increased support for strategic sectors such as renewable energy, industrial decarbonisation, digital technologies and defence-related industries. However, the ECF will follow the logic of competitive allocation to projects under selected EU programmes with no pre-allocated funds to Member States or specific sectors. This emphasis on innovation capacity, technological excellence and industrial competitiveness may favour regions and Member States that already have stronger research and industrial ecosystems.
This ARI comes at a decisive moment: with the Council’s negotiating mandate agreed in June 2026 and the European Parliament due to adopt its position in a plenary this autumn, trilogues on the ECF are about to begin. This leaves a narrow window to shape the Fund’s design before the aim of adopting all MFF legislation in 2027, in time for programmes to start in January 2028.
Against this background, this ARI asks: to what extent does the proposed ECF represent a shift in the governance, priorities and allocation logic of EU industrial and innovation policy? What are its limitations for EU competitiveness?
Building on previous ARIs of the Commission proposal (Kölling, 2025) and of the negotiations surrounding Cohesion Policy in the next MFF (Kölling, 2026), this ARI examines first the ongoing ECF negotiations. It analyses the principal changes introduced since the publication of the Commission proposal, assesses the Fund’s policy priorities and governance arrangements and examines the position adopted by the European Parliament. It comments on the new approach to EU funding for competitiveness. The conclusions discuss the potential implications of the emerging framework for Spain.
2. The negotiation stand
The European Commission presented the European Competitiveness Fund (ECF) in July 2025 as one of the flagship instruments of its proposal for the 2028-34 Multiannual Financial Framework (MFF). Following the logic of the existing Horizon Europe programme, the proposal introduced a governance model that granted the Commission a prominent role in defining priorities and allocating resources. This immediately triggered debate among Member States, many of which welcomed the objectives of the Fund but questioned the degree of centralisation envisaged in the proposal.
The proposal was examined by Council working groups and the Industry Ministers –in the Competitiveness/Industry Council– as part of the broader MFF negotiations. A key issue was the balance of power between the Commission and the Member States, as several Member States wanted a stronger role for the Council in setting strategic priorities and monitoring their implementation. In June 2026 the General Affairs Council agreed on a partial general approach to the ECF Regulation. This constitutes the Council’s formal negotiating mandate with the European Parliament (Council, 2026). Compared with the Commission proposal, the Council introduced a number of modifications, including a stronger involvement of Member States in governance and priority-setting (see below).
The European Parliament will play a significant role in shaping the final design of the ECF. The Parliament’s consent is required for the adoption of the MFF 2028-34 and the Parliament is also co-legislator in the negotiations on the ECF Regulation under the ordinary legislative procedure. The ITRE Committee of the EP launched its draft report, which formally initiated the parliamentary debate, on 20 April 2026 (EP 2026). Subsequently, more than 3,000 amendments were tabled, highlighting the sensitivity of the proposal. A committee vote is expected later in 2026, to be followed by a plenary vote to establish the Parliament’s negotiating position. Once the Parliament adopts its position, interinstitutional negotiations (trilogues) between the Parliament, the Council and the Commission will begin.
The following conflict lines have emerged from the negotiations so far. First, the Commission’s preference for a highly centralised and flexible instrument enters in conflict with the demands of Member States for greater involvement in strategic steering of the Fund and linking project decisions to EU Industrial Strategies (the issue of governance of the ECF). There are also tensions regarding flexibility in execution, with the European Parliament and Member States seeking stronger accountability and oversight mechanisms. Secondly, the ECF reflects the undergoing tension between competitiveness and cohesion in the new EU multiannual budget, with resources being directed towards strategic sectors rather than territorial development. Thirdly, The ECF also lacks the necessary focus on industrial sectors that are undergoing the double energy and digital transition, and have received, so far, financing through the Next Generation funds. Concerns have also been raised about the relationship between the ECF and Horizon Europe, particularly the question of research policy being subordinated to industrial and competitiveness objectives.
3. An Analysis of the ECF’s content and governance
3.1. Content
The European Competitiveness Fund has been presented as the new EU instrument to foster competitiveness and innovation, as well as economic security and strategic autonomy. Reflecting the EU ambition, the Commission has proposed a budget of €234.3 billion for the 2028-34 period, as part of the new MFF budgetary heading on Competitiveness. The objective is to give ‘a powerful competitiveness boost, for Europe to secure supply chains, scale-up innovation and lead the global race for clean and smart technology’.
Such an ambitious approach has resulted in a new, complex and multi-sectoral instrument, with multiple lines of action and a specific governance.
First, a new structure. The ECF, according to the Commission’s proposal, is structured into four thematic windows, complemented by a new financing mechanism and a link to the new Horizon Europe Programme. The ECF windows proposed are the following four: (a) clean transition and industrial decarbonisation (with a proposed budget of €26.2 billion); (b) health, biotechnology and bioeconomy (€20.4 billion); (c) digital leadership (€51.5 billion); and (d) security, defence and space (€125.2 billion), the largest allocation, which amounts to 45% of the whole Fund (56% excluding InvestEU). These windows are complemented by the horizontal Invest-EU FEC mechanism, with a budget of €11 billion. The R&D&I Framework Programme (horizon Europe), with €175 billion, is added to the FEC, bringing Heading 2 of the MFF (Competitiveness) to €409 billion.
Secondly, complexity is one of the key features of the new ECF. The Fund will integrate 14 existing programmes (eg, defence instruments such as the EDIP or EDF, LIFE, STEP, the Innovation Fund, COSME-SMEs, Connecting Europe, the European Digital Programme and the European Space Programme). It will address strategic areas such as security, space and defence, clean transition and decarbonisation, including the environment, digitalisation, health and biotechnology. Conceptually, it will be linked to the R&D&I funding of the Horizon Programme, to cover the entire ‘investment journey’ for the European businesses. Additionally, it will finance specific actions in Space and Defence, including common purchases and European projects.
The ECF will also include a horizontal financial capacity through the integration of InvestEU, the EIB mechanism that provides guarantees and blended financing with private resources and other sources. The Fund may also be implemented through Public-Private Partnerships (PPPs) or Joint Undertakings, with a flexible use of a broad range of financing instruments.
3.2. Governance
The governance framework of the ECF set out in the Commission proposal was designed with a logic similar to that of other directly managed EU programmes, such as Horizon Europe (Debande, 2026). This would have granted the Commission flexibility to adjust priorities and reallocate resources in response to emerging geopolitical and economic challenges (Lausberg, 2026). However, negotiations in the Council revealed concerns among Member States regarding the concentration of decision-making at the supranational level. Several governments argued that, given the scale and political importance of the Fund, Member States should play a stronger role in its strategic direction. The Council text adopted in June 2026 (ST 10625/26) reflects these concerns. The most significant governance amendment is the addition of Article 13b, which establishes an advisory role for the ECF General Committee. This committee should now advise the Commission on the ECF’s strategic direction and priorities, as well as on competitiveness trends, market failures, support for SMEs, cross-border cooperation and the alignment between research, innovation and industrial policy.
Another important amendment is the requirement to hold strategic meetings before the first work programmes are adopted and again after three years. These meetings enable Member States to contribute input at an early stage, while the Commission is required to prepare a multiannual strategic document for discussion. While the Commission remains autonomous and recommendations ‘shall be taken into account, without committing the Commission’, this mechanism creates a new layer of coordination that was absent from the original proposal.
Another change is the formal link established between ECF and Horizon Europe governance structures. The Council text also requires joint meetings, strategic sessions and discussions of shared priorities relating to R&I activities. This addresses concerns that the ECF could overshadow, or fragment Horizon Europe, creating an institutional bridge between industrial and research policies.
The Council text also establishes a Stakeholders Board. The Board will include representatives from industry, investors, academia and SMEs. The Board will advise on long-term competitiveness trends, investment gaps and strategic priorities.
Additionally, the Council introduces governance provisions relating to monitoring, including reporting obligations to the European Parliament and the Council, as well as mechanisms to assess the territorial distribution of funding. Where excessive concentration is identified, these may be discussed within the ECF General Committee.
Furthermore, the Council text allows Member States to designate national contact points, creating a more networked governance arrangement between the Commission and national administrative structures (ST 10625/26).
At the same time, the ECF formally remains a directly managed EU programme. The Commission retains responsibility for preparing work programmes, managing the budget, selecting projects and the reallocation of resources.
In summary, following the Council amendments, the ECF evolves from a centralised executive governance model to a more structured form of coordination, all the while remaining under the direct management of the EU. From a governance perspective, the change is not so much about transferring decision-making powers from the Commission to Member States, but rather about strengthening their capacity to influence and veto strategic priorities before implementation decisions are made.
4. The interrelationship between the ECF and other EU programmes and territorial implications
The interrelationship between the ECF and other EU programmes is one of the central features of its design. As previously mentioned, the ECF will unify the 14 EU programmes currently operating under the MFF into a single strategic framework. However, rather than assimilating these programmes, the ECF is intended to serve as a coordinating mechanism that aligns research, innovation, industrial and investment policies around a common competitiveness agenda. Consolidating programmes under a common rulebook and standardising financial instruments, while encompassing a broad range of technologies, sectors and policy objectives, could improve policy coherence and facilitate the transition from research to market deployment. However, critics argue that, in the absence of clear prioritisation and an explicit definition of EU added value, resources may become too dispersed, weakening strategic focus and market signals. As Lausberg (2026) points out, the proposed framework offers little clarification on how it will coordinate with programmes such as the Innovation Fund and the Connecting Europe Facility. This increases the risk of overlap, duplication and administrative inefficiencies.
The effectiveness of the ECF therefore depends not only on its internal governance arrangements, but also on its ability to establish clear complementarities with existing instruments (Council, 2026). The Council has introduced governance mechanisms to address these concerns and strengthen coordination and priority-setting across programmes. Nevertheless, important questions remain regarding the relationship between the ECF and existing EU funding instruments.
The relationship with Horizon Europe is particularly significant. While the Council proposal introduces mechanisms to improve coherence between the two programmes, including joint meetings and strategic discussions, several authors have expressed concerns that the growing integration between Horizon Europe (2028-34) and the ECF could have an impact on the autonomy of EU research policy. More specifically, the increasing orientation of research funding towards competitiveness and industrial objectives may alter the balance between excellence-driven research and mission-oriented innovation policies.
Furthermore, the relationship between the ECF and the National and Regional Partnership Plans (NRPPs), beyond its interaction with EU-level programmes, raises important questions, particularly for territorially sensitive policies. According to Kölling (2025), expenditure on cohesion policy is expected to decline by around 12%, whereas resources allocated to the ECF are expected to increase by approximately 139%. This reallocation reflects a broader shift from place-based development policies to sectoral and strategic competitiveness objectives. Moreover, the ECF’s agenda is not territorially neutral. Innovation capacity, industrial competitiveness and the infrastructure required to absorb the investments tend to be concentrated in capital regions, metropolitan and specialised industrial regions. Consequently, a fund organised primarily around sectoral priorities is likely to allocate resources to areas where these sectors already exist and where the strongest innovation ecosystems are present (Rodríguez-Pose & Bartalucci, 2026). For example, Rodríguez-Pose & Bartalucci (2026) argue that a relatively small number of regions, including Midi-Pyrénées (Toulouse/Airbus), Bremen and Hamburg (aerospace and naval industries) and Friuli-Venezia Giulia and Liguria (Italian shipbuilding), could capture most investments of the planned defence-industrial expansion. In contrast, the median EU region has less than 0.2% of its workforce employed in defence-related manufacturing. This implies that the economic effects of the defence dimension of the competitiveness agenda will remain largely invisible across much of the Union. This pattern is evident not only between Member States, but also within them. Member States enter the new funding framework with highly uneven levels of research and development expenditure, innovation performance, industrial capabilities and administrative capacity. Northern and Western European countries generally host a larger share of Europe’s leading research institutions, innovative firms and strategic industrial clusters, while many Southern and Eastern European Member States continue to face structural challenges in innovation ecosystems, technology absorption and access to private investment. In this regard, unless the ECF is accompanied by effective territorial balancing mechanisms, it may foster existing regional disparities by concentrating resources in prosperous, innovation-intensive territories, while offering limited opportunities in less developed regions.
5. The European Parliament approach
In its resolution of 7 May 2025 on the long-term budget for the Union in a changing world, the EP identified competitiveness, decarbonisation and innovation as central priorities for the next MFF. Similarly, in its 8 May 2025 resolution on competition policy, the EP welcomed the Commission’s agenda to strengthen competitiveness (European Parliament, 2025). However, disagreements concerning the balance between competitiveness objectives, research autonomy and territorial cohesion have become apparent, and important differences exist among the main political groups.
In its position on the next MFF, Parliament called for an increased EU budget, rejecting the idea that emerging priorities, including defence and competitiveness, should be funded by reducing spending in traditional areas. New priorities should be adequately funded, and policies such as agriculture, fisheries and regional development should continue to receive sufficient support. The ITRE Report on the ECF, issued in April 2026, includes more than 354 amendments to the Commission’s proposal, aiming for an instrument more closely aligned with the research and innovation chain and offering greater predictability and focus.[1]
A central element of the Parliament’s position concerns the autonomy of Horizon. The EP endorsed the Warsaw Declaration, signed by the Member States in March 2025 that reaffirmed that the Framework Programme for Research and Innovation (Horizon Europe) should remain a standalone instrument with its own separate work programmes (Council, 2025). It proposes a close connection between both instruments by introducing ‘Pathway Actions’ in the ECF that will bridge funds and promote commercialisation and scale-up of the innovation actions funded by Horizon Europe.
Regarding the four proposed windows, the Parliament rapporteurs propose a greater focus on energy and industry infrastructure, as well as critical resources. The policy windows are renamed: (a) energy infrastructure, industrial decarbonisation and clean technologies (replacing the Commission’s proposal of ‘energy transition and industrial decarbonisation’); (b) digital infrastructure and agile digital leadership (replacing ‘digital leadership’); (c) health, biotechnology and sustainable prosperity (replacing ‘health, biotechnology, agriculture and bioeconomy’); and (d) critical resources, security, defence industry and space (replacing ‘defence industry and space’).
The EP report also proposes assigned lines within each window. Specifically, the area of critical raw materials is highlighted and separated from the activities of security, defence and space within the current fourth window. The Parliament’s report also increases the allocation for the clean transition and industrial decarbonisation window from €26,200 million to €30,730 million. It introduces a specific budget line for industrial decarbonisation and clean tech of €10.000 billion, which provides a greater visibility, allowing the ring-fencing of the funds, while concentrating the majority (€14.730 billion) on the second line, for energy transmission networks.
At the same time, the EP has sought to strengthen the democratic accountability of the ECF. Under the Commission proposal, its role in the governance of the ECF would remain relatively limited. The Council’s partial general approach addressed these concerns by introducing additional reporting and monitoring obligations towards both the EP and the Council. Parliament has continued to argue that stronger strategic coordination across EU funding instruments should be accompanied by parliamentary scrutiny, clear reporting requirements and effective monitoring arrangements. It has therefore sought to ensure that the ECF does not evolve into an executive instrument of the Commission with limited democratic oversight.
The rapporteurs also propose increasing the ECF budget from €234.3 billion, as suggested by the Commission, to €257.7 billion. However, this amount still falls short of the €264.4 billion proposed by the Parliament’s Budget Committee in its draft report on the overall EU budget on 15 April.
6. Industrial policy and the European Competitiveness Fund
As stated in the Draghi report and the European Council, Europe must address several key transformations in order to gain competitiveness and play a leading role in the global economy. To produce real changes in the industrial structure, a basis for the EU’s ability to compete, several objectives should be achieved and the ECF must be ready to respond accordingly.
The first objective is to accelerate innovation. Currently, EU companies face growing competition from US and Chinese enterprises, especially in advanced digital technologies and AI.The ECF should facilitate innovative industries by helping to finance the whole life-business cycle, starting from basic R+D to applied innovation and final production. The coordination with Horizon Europe is one of the basic challenges that has not been fully addressed.
The second objective, according to Draghi, is to guarantee accessible energy, reduce high energy prices that are essential for industry and AI development. Since 2022 the energy markets have experienced growing prices, following the Russian invasion of Ukraine and the conflict in the Middle East, driving up costs for European companies, thus requiring investment in new energy infrastructure and renewables. In parallel, the EU is the world leader in the process to decarbonise industries and transition to a circular economy, which should be fostered through EU incentives and dedicated aid from the ECF, especially in the automotive/ECVs and energy intensive industries.
The third objective is security of supply and general strategic security. The EU is highly vulnerable to some critical value chains and has strategic dependencies from Asia and China, particularly in critical raw materials and semiconductors. It also needs the ECF to strengthen its civil security, cybersecurity and defence capabilities, in the current global context. As Draghi says, ‘with defence spending significantly lower than that of the US and an outdated defence industry, Europe must boost its investments in this sector’. In this complex scenario, the ECF must become a real game changer and an effective instrument to attain these transformations.
On the one hand, there are several positive aspects of the proposal, including its main objectives. Regarding its objectives, Article 3.1 of the Competitiveness Fund sets forth the general objective of increasing the EU’s competitiveness by funding disruptive innovation, critical, strategic and dual-use technologies, including their manufacturing and industrial development, as well as the development of critical infrastructure in energy, transport, digital sectors, civil industrial security, defence and space, addressing specifically critical value chains. Another positive point is the fact that projects covered by the regulations on critical raw materials and the net-zero industry will automatically benefit, being directly eligible for ECF funding.
A valuable feature, too, is the introduction of concrete measures to support the competitiveness of SMEs, as well as the possibility to cofinance Important Projects of Common European Interest (IPCEIs), thus facilitating access to these mega-European projects to more Member States.
As regards the way it will function in practice, the ECF will operate using a competitive allocation mechanism, based on the ‘excellence principle’ of Horizon Europe, through calls for proposals and in accordance with work programmes defined by the European Commission. These will set forth the eligibility criteria for each specific call. Provision is also made for direct invitations and the accelerated allocation for European programmes with a transnational impact. The use of this competitive approach is positive in order to select the most excellent project, but it means that there will be no previous regionalisation of its resources nor prior programming by sector or country (national envelopes) –unlike the approach taken with the Structural Funds– and this will put the pressure on the Member States’ internal organisation and public-private collaboration.
On the other hand, the Fund, as proposed by the Commission, lacks a sufficient focus on the need to finance the ongoing transformation of the industrial sector in Europe, which had been initiated with the Next Generation Funds after the COVID crisis, responding to the double challenge of the Green and Digital transition. This has been highlighted by Spain in the Council meetings (Gobierno de España, 2026) and is a crucial point that may need to be addressed through negotiations with the Parliament.
The reference to industrial sectors linked to the objective of supporting the green transition and decarbonisation is too general. The specific window includes actions in the field of energy –to facilitate the electrification of electricity-intensive industries, carbon capture and energy storage, as well as energy efficiency initiatives, energy networks, the production of sustainable fuels– as well as clean solutions –clean transport (vehicles, ships), the manufacturing of clean technologies (net-zero), the circular economy, water management and environmental improvement–. Therefore, this ‘Clean Transition and Industrial Decarbonisation’ window is very broad, lacking a focus on the manufacturing sector and making no mention of specific industrial sectors (eg, steel, aluminium, chemicals, automotive, pharma or shipbuilding) to which the EU is responding internally through specific Strategies and Plans. In fact, the ECF approach is not to finance specific ‘sectors’ but to give access to funds in order to build strategic value chains. This is more ambitious but also more complex.
In order to make an effective contribution to European Competitiveness, several changes could be made during the trilogue process.
First, the ECF should help to continue the process of modernisation, digitalisation and decarbonisation of European industry and make it a priority, not just one of the possible actions. Focus and direction should be introduced in order to succeed. The result should be specific working programmes that address this objective, with no or little national co-financing. There should be room for national proposals and priorities, with the necessary European coordination.
Secondly, this priority would need to be reflected in the corresponding governance structure, in the role of the General Committee and its corresponding formations, as well as in the ECF Strategic Stakeholders Board and the ECF’s Invest EU. At present there is a lack of reference to the European Plans for the steel, chemical and automotive industries presented by the Commission in 2025 and 2026 and no allocated funding to these sectoral plans. This necessary interaction between industrial plans and the corresponding instrument, the ECF, can be addressed by the new advisory role of the General Committee and should be taken into account in the specific work plans presented by the Commission through the corresponding committees.
Third, the EP can help to maximise the volume of resources devoted to the ECF. Although this is an issue linked to the MFF negotiations, there should be a link between both negotiations during the trilogues, reflecting the ambition of this new instrument. Spain’s position for the global MFF budgetary negotiations is to increase the EU budget up to 2% of the EU’s GDP, to match the level of the EU’s ambitions and necessities. The ECF should be –together with cohesion, environment and the common agriculture policy– a fundamental part of this equation.
Conclusions
This ARI has asked to what extent the proposed ECF represents a shift in the governance, priorities and allocation logic of EU industrial and innovation policy, and what its limitations are for EU competitiveness.
As negotiations on the ECF are linked to the MFF package, discussions on governance, policy priorities and financial allocations are to evolve in parallel. Member States will seek compromises that balance national interests, sectoral priorities and broader EU objectives. The Council’s partial general approach makes all comitology procedures subject to the examination procedure and reinforces the role of the ECF General Committee. This gives Member States an ex ante say over implementation. The shift is therefore better described as stronger intergovernmental control within direct management than as a consolidation of the Commission’s executive power. Also, the EP focuses less on the rationale for the ECF itself and more on its governance arrangements, budgetary size, and relationship with Horizon and its implications for economic, social and territorial cohesion. Consequently, the final design of the Fund will depend not only on sector-specific negotiations but also on the outcome of the overall budgetary package.
As regards priorities, the ECF marks a significant shift in the EU’s spending priorities. Rather than supporting individual policy sectors through separate instruments, it will establish an integrated framework centred on strategic technologies, industrial capacity and economic security. The weight of the security, defence and space window, more than half of the Fund, shows that ‘competitiveness’ in the next MFF is defined in very broad terms. The ECF should focus on industrial capacities in Europe, which means sufficient funding and priority regarding other windows, including industrial decarbonisation and industrial modernisation programmes.
As regards allocation, the ECF replaces national envelopes and place-based programming with competitive, excellence-based calls, so funds follow the quality of projects rather than territorial need. The monitoring of geographical distribution introduced by the Council acknowledges the risk of concentration but does not correct it, since excellence remains the only award criterion. The ECF thus sharpens the tension between competitiveness and territorial cohesion that runs through the whole MFF 2028-34 proposal.
While its budget is unlikely to close the EU investment gap, the ECF could have an important impact if resources are focused on strategic priorities and private investment is effectively leveraged.
For Spain, the ECF presents both opportunities and risks: it could support sectors such as renewable energy, industrial decarbonisation, digital technologies and the defence industries. However, it may also pose a challenge to the internal organisation and sub-national coordination if funding becomes concentrated in projects which may favour the most competitive territories. The ECF should also meet Europe’s ambition to gain competitiveness and focus on how to continue the process of transformation of European and Spanish industry after the Next Generation funds.
References
Council of the European Union (2026), ‘MFF 2028-2034: Council agrees its position on new and innovative fund to boost EU’s competitiveness’, press release, 16/VI/2026.
Debande, J. (2026), ‘Consolidating Commission executive power through the European Competitiveness Fund?’, European Papers, vol. 11, nr 2, p. 1051-1088.
Draghi, M. (2024), ‘The future of European competitiveness: a competitiveness strategy for Europe’, European Commission.
European Parliament (2025), ‘European Competitiveness Fund’, Procedure (2025/0555(COD)), Legislative Observatory.
European Parliament, Committee on Industry, Research and Energy (2026, April 20), ‘Draft report on the proposal for a regulation of the European Parliament and of the Council establishing the European Competitiveness Fund (ECF)’, (2025/0555(COD)), 20/IV/2026.
Gobierno de España (2026), ‘Spanish non-paper on European competitiveness’.
Kölling, M. (2025), ‘La propuesta del nuevo Marco Financiero Plurianual 2028-2034: ¿cambio radical en la lógica del presupuesto de la UE?’, Real Instituto Elcano, 25/IX/2025.
Kölling, M. (2026), ‘La propuesta del nuevo Marco Financiero Plurianual 2028-2034: ¿nuevos conflictos, viejas alianzas?’, Real Instituto Elcano, 20/V/2026.
Lausberg, P. (2026), ‘Can the European Competitiveness Fund deliver? Strengths, shortcomings and recommendations for an effective EU industrial policy’, Briefing PE 783.711, European Parliament, Directorate-General for Budgetary Policies, January.
Ministerio de Industria y Turismo (2025), ‘Spain proposes to ensure an industrial pillar in the new European Competitiveness Fund’, press release.
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Rodríguez-Pose, A., & F. Bartalucci (2026), ‘A Union under siege, or a Union besieging itself? The EU’s new budget and the future of European integration’, Global Challenges & Regional Science, nr 7.
[1] On 20 April 2026 the co-rapporteurs, MEP Christian Ehler (DE/European People’s Party, EPP) and MEP Dan Nica (RO/Socialists, S&D), presented the Draft Report at the Industry, Innovation and Energy (ITRE) Commission. The final EP Report will be voted in October 2026 at the Plenary meeting.
