On the draft general budget of the European Union for the financial year 2026

The Committee on Economic and Monetary Affairs calls on the Committee on Budgets, as the committee responsible, to incorporate the following into its motion for a resolution:

1. Stresses that 2026 may be a difficult year for the Union economy due to the current volatile geopolitical, socio-economic, humanitarian, security and climate-related context; points to the challenges posed by the return of protectionism, increasing economic fragmentation, threat of deindustrialisation across the Union, tensions in international trade and threat to the financial stability; is concerned about the potential negative impacts on the Union budget as well as of the increased budgetary needs, in the context of the limited flexibility of the current MFF; calls in this regard to mainstream the areas of competitiveness, defence, SME support, and the green and digital transition; believes those challenges should be duly reflected in next year's budget;

2. Emphasises that the Union budget should prioritise the provision of European public goods in areas where Union-level action enables greater efficiency and economies of scale to deliver tangible results; believes that cross-border investments should be increased in defence and energy interconnections;

3. Recalls the findings of the Draghi report, which identifies a significant investment gap; calls for the Union budget to contribute to closing that gap through increased funding to the Union’s key strategic objectives and measures to steer private capital towards productive and sustainable activities;

4. Notes that in view of the Russian aggression against Ukraine and its social and economic consequences for the Union, in particular the impact on energy prices, the budget should provide robust support to make the Union economy more resilient to external shocks; underlines the need to address the impacts of possible trade tensions, which risk exacerbating the ongoing cost of living crisis and putting additional pressure on European households and businesses; calls on the Commission to explore ideas for a mechanism that helps ensure that the cyclical position of the Union as a whole is appropriate for the macroeconomic outlook at all times;

5. Recalls the disastrous consequences of dependence on fossil fuels from the Russian Federation and the potential crisis related to the lack of independent access to rare earth elements; calls for the Union budget to tackle vulnerabilities in the Union’s value chains by reducing dependencies on critical inputs from non-Union countries, with the aim of achieving strategic autonomy in key sectors, especially in the raw materials and energy sector; stresses the importance of reducing energy costs by encouraging the use of alternative sources in line with the Taxonomy Regulation;

6. Emphasises the key role of financial stability for economic resilience and calls for support in next year's budget for measures to ensure the stability of the Union’s banking system; stresses the need for adequate funding and human resources for the European Supervisory Authorities (ESAs), in order to execute strictly the tasks assigned to them by the European Parliament and the Council; highlights the responsibilities of ESAs to cope with the speedy developments in the fields of sustainable finance, financial technology, anti-money laundering, cyber resilience and other areas;

7. Underlines that the 2026 budget must respond to the economic impact of the ongoing geopolitical instability, particularly for Member States bordering the Russian Federation and the Middle East, which had direct implications for trade, inflation and energy stability; stresses the need to include appropriate financial measures to address those challenges and support regional economic stability; reiterates the need to place among the objectives of the 2026 budget, the reduction of the gap between island areas, inland areas, outermost and Eastern border regions and all those penalised by geographical factors, compared to the more developed areas of the Union; stresses the need for support for cooperation and integration policies in specific areas of the Union, such as the Baltic and the Mediterranean;

8. Stresses that the persistent housing crisis represents a growing risk for the economic and social cohesion of the European Union, exacerbating territorial disparities; proposes that the 2026 Union budget includes targeted measures within the housing policy to address the specific needs of vulnerable groups;

9. In view of the ongoing Russian aggression against Ukraine, uncertainty about the development of the situation and the possibility of a direct military threat to the Union, emphasises the urgent need to stimulate investment in strategic preparedness, resilience, security in a broad sense (including logistical infrastructure, cybersecurity, and strategic autonomy in crucial areas such as energy) and defence by fostering targeted investment, supporting innovation and creating the necessary financial conditions to mobilise private capital into the defence sector, to ensure the safety of Union citizens;

10. Takes note of the Commission's Security Action for Europe (SAFE) initiative; emphasises that there is a need to build elements for a Defence Union, in particular in the joint procurement where justified by the defence needs of the Member States and in the build-up of common defence capabilities under the Union budget; emphasises the need for all common defence funds to be spent responsibly and efficiently, in line with the actual defence needs of individual Member States; deplores the Commission's too frequent application of Article 122 TFEU on matters of common Union debt; calls for greater involvement of Parliament in such decisions and for monitoring the increase in the Union’s common debt;

11. Notes the Commission’s proposal to temporarily activate the national escape clause of the Stability and Growth Pact, which will provide the Member States with additional budgetary space to increase their defence spending, within the Union’s fiscal rules; calls for appropriate targeting of funds in next year’s budget to ensure complementarity and support for national defence expenditure of Member States;

12. Recalls that national medium term fiscal structural plans under Union fiscal rules must be aligned with the Union budget policy priorities to provide the fiscal space needed to stimulate strategic investments; welcomes the fact that the net expenditure indicator excludes all national co-financing in Union-funded programmes, providing increased fiscal space for Member States to invest in the Union’s common priorities, as laid down in Regulation (EU) 2024/1263 of the European Parliament and of the Council, thus helping to strengthen synergies between the Union and national budgets, thereby reducing fragmentation and increasing the overall efficiency of public spending;

13. Stresses that cohesion policy and structural funds are a pillar of the Union, essential for the convergence process of the Union regions, and reducing the economic inequalities among them, promoting economic, social and territorial cohesion; reiterates, in this respect, that while focusing on the priorities in the next year's budget such as competitiveness, the cohesion policies should not be undermined; calls for maintaining the cohesion policy under shared management within the framework of place-based approach and partnership principle; highlights the importance of involving local and regional authorities in the planning and implementation of such investments to ensure effective absorption and better alignment with regional economic needs;

14. Highlights that the consolidation of the single market primarily requires internal barriers to be removed; calls for priority to be given to the identification and the removal of such barriers, alongside both innovation-enhancing and cohesion-enhancing investments in order to rebuild the Union's competitiveness; believes that the Union budget is an essential tool for preserving competitiveness and safeguarding the integrity of the single market;

15. Stresses the need to ensure the competitiveness of the internal market of Member States, including through measures to protect small and medium-sized enterprises; emphasises the need to stimulate economic growth in the Union, modernise the Union economy and improve access to capital markets for SMEs and retail investors;

16. Welcomes the development of a methodology to track gender-based spending and urges improvements based on lessons learned; regrets the lack of systematic gender impact assessments for budget-related legislation; calls for a strengthened framework in the next MFF to ensure the Union budget advances gender equality and sustainability goals;

17. Recalls that public investment should be a driver for economic and social development, and that it should stimulate further private investment; points out that weak capital markets significantly limit investment in the Union and that a significant increase in private investment capital, which is the aim of the Savings and Investments Union initiative, is a necessary condition to effectively stimulate the Union’s economy; stresses that private investments should be steered towards activities that enhance the resilience and sustainability of the Union to be effective in stimulating the economy and achieve long-term prosperity and welfare for all European citizens; underlines the importance of increasing the leverage of the Union budget to enhance the mobilisation of private investment across the Union and that private investment should complement and not substitute public investment; calls on the Commission to make full use of financial guarantees under the Union budget to leverage private investment; welcomes the proposal to increase the size of the InvestEU programme guarantee, which will allow continued investment in key technologies and sectors that drive sustainable growth in the Union; also welcomes the enhanced possibilities for combining available support from the Union budget introduced by Omnibus II; believes that the successor to the InvestEU programme will be essential in closing the innovation gap, supporting the decarbonisation effort, addressing increased security needs, and reducing strategic dependencies;

18. Emphasises the need to support private investment efforts by companies in digital transformation, ecological transition, internationalisation and paths of social inclusion and decent work, including for the most vulnerable groups;

19. Stresses the importance of ensuring that all Union programmes, including increased funding for NGOs, actively support the meaningful engagement of civil society to contribute to the Union’s objectives particularly in the context of the impact of reduced funding for civil society by the Union’s international partners; notes that the European Court of Auditors' report states that Union’s funding granted to NGOs in internal policies was not sufficiently transparent; stresses that organisations receiving Union budget support must act in a transparent way;

20. Notes that 2026 is the last year of operation of the Recovery and Resilience Facility (RRF); calls for an 18-month extension of mature RRF projects through an amendment of the RRF Regulation by co-decision, if needed, and highlights that this is a one-off instrument; calls in this regard on the Member States and the Commission to ensure a swift implementation of the recovery and resilience plans; stresses the need for complementarity between expenditure from the budget and the RRF, as well as avoiding double financing; notes that so far the RRF failed to fund investments in European public goods and to structurally transform national economies; expresses concern over the potential decline in public investment following the expiration of the RRF; urges therefore the Commission to present a strategy to address the huge demand for public investment beyond 2026 without compromising budgetary resources in other critical areas;

21. Notes the costs resulting from servicing the NextGenerationEU loans; points out that the issue of financing the repayment of the NextGenerationEU has not yet been satisfactorily resolved; notes the persistent lack of progress on the new own resources package in the Council; reminds the importance of the introduction of new own resources to the Union budget to ensure an effective and sustainable Union budget; stresses that the introduction of new own resources should be aimed at supporting the Union’s competitiveness;

22. Recalls that the VAT also contributes to the Union's own resources and that its relative share in the Union’s revenue has declined over the years; considers, therefore, that resources deployed to combat VAT fraud would not only strengthen national budgets but also directly benefit the financing of the Union budget;

23. Stresses the need for adequate funding and resources for the FISCALIS programme to ensure the necessary support for the national tax authorities; highlights that the FISCALIS programme is a crucial cooperation programme for Member States and their national tax authorities to pursue common objectives in the fight against tax fraud, tax evasion, and aggressive tax planning.