The European Court of Auditors has presented its initial opinions on the planned EU funding instruments in the next multiannual financial framework. The focus is on the European Competitiveness Fund (ECF) and the Horizon Europe research framework programme, which together are set to cover a central part of the EU budget for 2028–2034.
New funding instruments with large financial volumes
On 16 July 2025, the European Commission presented two legislative proposals: a regulation establishing the ECF as a budgetary instrument for key technologies and strategic industries, and a new regulation for the 10th Framework Programme for Research and Innovation (Horizon Europe). Both programmes are intended to enable a continuous funding path from basic research to business start-up and scaling. The ECF also includes a separate programme for research and innovation projects in the defence sector. Together, the planned budget amounts to €409 billion, which corresponds to around 20 per cent of the proposed total EU budget for the period 2028–2034.
Lack of definitions and database as core problem
The auditors acknowledge that investment in competitiveness, innovation and research is a political priority at EU level and can generate high European added value. At the same time, they criticise the fact that there is no uniform definition of the term ‘European added value’ in the legislation or in the current proposals. In addition, comprehensive and reliable data on the use of funds is lacking, even though the programmes are strongly focused on cross-cutting EU priorities. The application of the principle of excellence also needs to be further specified. While Horizon Europe refers to the European Semester process, the ECF proposal does not contain any corresponding provisions.
More flexibility – but unanswered questions about implementation
The planned competition fund is intended to enable more flexible reallocation of budgetary resources and allow additional financing from Member States or external sources. The Court of Auditors points out that the implications for state aid still need to be clarified. In addition, the auditors recommend establishing clear guidelines on so-called revolving capacity, i.e. the multiple reuse of funds for guarantees, loans or equity investments. In the auditors’ view, the administrative fees charged by external implementing partners such as the European Investment Bank should also be limited to an appropriate level.
Risks associated with transparency, control and subsidy processing
Both programmes aim to simplify procedures through uniform rules, harmonised payment terms and a common data exchange system. However, according to the Court of Auditors, there are still uncertainties, for example in the awarding of contracts, non-cost-based financing models and simplified cost options. Research in particular is considered a high-risk area of expenditure where errors frequently occur and can have a significant impact. According to the auditors, innovative funding instruments such as pre-market public procurement require particularly careful implementation. Although flat-rate funding could reduce administrative costs, it would need to be clearly regulated.
Audit rights and outlook for further assessments
As the programmes are to be managed both directly by the European Commission and indirectly via partner structures, the Court of Auditors is calling for its unrestricted audit rights to be enshrined in the contract. Another new feature is the planned cross-cutting regulation on performance monitoring and evaluation, which the Court of Auditors intends to examine in a separate opinion.
The new multiannual financial framework for 2028–2034 is expected to have a total volume of nearly two trillion euros. The current statements mark the beginning of a comprehensive series of reviews that will serve as a basis for further budget negotiations between the legislators – the Council of the EU and the European Parliament.
Source: European Court of Auditors ECA
