European Commission Plans €2 Trillion Budget for Innovation and Defense

2025-07-17 green

Brussels, Thursday, 17 July 2025.
The European Commission aims to reallocate a €2 trillion budget for 2028, shifting funds from agriculture to bolster defense and innovation, with a third dedicated to climate protection.

Overview of the Proposed Budget Shift

The European Commission’s new financial proposal marks a significant restructuring of the EU’s priorities with a notable shift away from traditional agricultural supports. The multi-year budget aims to allocate €410 billion to a special Competitiveness Fund focusing on investments in technology, defense, and food security sectors to enhance the EU’s global standing. Furthermore, an unprecedented €2 trillion is proposed for the upcoming 2028-2034 period, reflecting a rise from 1.1% to 1.26% of the EU’s gross national product[2][3].

Major Allocations and Funding Redirections

Within this strategic financial realignment, agricultural subsidies are poised to experience a 25% reduction, bringing them to approximately €300 billion[3]. In contrast, there will be a fivefold increase in defense and space expenditure proposed at around €131 billion[2]. These changes are designed to support the EU’s broader ambitions for industrial rejuvenation and enhanced defense capabilities, initiatives that are crucial given the current geopolitical climate[1][2][3].

Innovation and Climate-Focused Initiatives

A considerable portion of the new budget framework aims to bolster innovation-oriented projects, particularly those aligning with climate action goals. Approximately a third of the budget is earmarked for sustainable climate initiatives, translating into substantial funding for renewable energy projects and green tech advancements[4][5]. This funding shift underscores the EU’s commitment to addressing climate change proactively through technological innovation and partnerships with key industry stakeholders[5][6].

Economic Implications and Industry Reactions

The economic implications of this budget proposal are substantial, with new revenue channels including environmental contributions, increased tobacco excise, and levies from large corporations poised to generate €60 billion annually[2][3]. While the expanded budget garners overall approval for its ambition in innovation and climate sectors, it faces resistance from member states like the Netherlands and Germany, who express concerns over national contributions and the feasibility of proposed revenue sources[3][6].

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innovation funding European budget