MFF negotiations update

At this stage of the MFF negotiations, MEPs are about to start voting their draft Parliamentary reports. The plan is for Parliament to finalise their negotiating positions by end November. The Irish EU Presidency has also signalled that it will revise the Cyprus negotiation box on critical issues such as agricultural spending. The notional calendar seeks that the co-legislators and European Council to reach an outline of a deal before the cycle of key national elections (France, Poland, Italy, Spain, Finland) start.

Since July there has been some interesting developments.  The REGI draft report on the ERDF Regulation goes noticeably further than the Commission proposal in recognising demographic decline, articulating the “right to stay” in detail for the first time in EU legislation (as opposed to merely enunciating it), integrated territorial development, rural development (a 10% for rural not only at NRPP level but also inside the ERDF, plus 13% for urban development, up from the present 8% ERDF earmark) and the specific needs of territories facing structural disadvantages. This suggests that territorial cohesion stakeholders have been successful in shaping the narrative and that there is growing political support for moving beyond a purely competitiveness-driven approach.

At the same time, important gaps remain. The emerging compromise still falls short of recognising territorial disadvantages with dedicated monitoring and support mechanisms, and there has been little progress on our proposals for stronger NUTS3-level territorialisation of programming, reporting and expenditure tracking. These remain areas where targeted advocacy could add value but the coming amendments phase will be important to secure stronger operational commitments and ensure that territorial diversity is reflected not only in political objectives but also in implementation mechanisms.

For the first time, the Negotiating Box comes with figures—and with it, a clearer sense of where the real battle will unfold. Somewhat counterintuitively, the Council does not (yet) appear as the main constraint on the spending side. The Commission’s original proposal was already carefully calibrated to keep finance ministries broadly at ease—leaving the familiar “frugals vs cohesion friends” choreography to play out without fundamentally derailing the architecture.

But this equilibrium rests on a fragile premise: without new Own Resources, (i.e. Member States agreeing to give in to “EU Taxes”) the entire construct risks becoming internally inconsistent.

What is emerging from the Council side, under usually pro-Cohesion Cyprus Presidency,  is a recognisable continuity logic. Cohesion and agriculture remain largely protected, even as new priorities—competitiveness, defence, research—absorb most of the adjustment. The first compromise, already trimmed by around 2% and focused on trimming the European Competitiveness Fund (the new “bazooka” that successive Commission presidents asked to directly manage), has nevertheless triggered a sharp reaction from the “frugals”, suggesting that the coming months will be less about grand redesigns and more about a politically charged struggle over marginal percentages of EU GNI.

Within this landscape, the Cohesion dimension reveals both stability and ambiguity.  The 10% rural earmark echoed by Council is a direct carry-over from the famous Von der Leyen letter, with little clarity on whether it represents a genuine policy shift or simply the preservation of EAFRD under a different name. Partnership and multilevel governance are referenced in a somewhat procedural way (despite the more explicit Von der Leyen letter about “direct dialogue” and “subsidiarity check” advocated by CoR and others) echoed, and territorial chapters may end up resembling current Operational Programmes—though their legal and political weight remains to be tested. At the same time, the return of co-financing and GDP-based regional eligibility signals a clear departure from the exceptional logic of the RRF, even as elements such as prefinancing and annual payments hint at a partial hybridisation of implementation models. This is further echoed in the  partial general approach on the NRPP Regulation.

Other elements are deliberately unresolved. The absence—for now—of explicit earmarking for instruments such as LEADER, CLLD or ITI is not surprising at this stage of negotiation and leaves room for later political trade-offs. The introduction of a softer “comply or explain” safety net for less and transition regions (the formerly called Objective 1 regions have been protected  from the start)significant cuts, the unexplained €10 billion allocation for “cities” and other priorities, and the shift to a NUTS3 basis for allocations all point to a system that is being quietly recalibrated, with potential implications for sub-national actors that are not yet fully articulated.

Set against this, the European Parliament is moving in a markedly different direction—particularly on governance. Its draft position on NRPP fundamentally redefines partnership, elevating it to a horizontal condition akin to rule-of-law conditionality. This is not a technical adjustment but a structural shift: failure to ensure effective partnership could trigger payment suspensions and financial corrections, with no possibility of reallocating funds elsewhere.

More importantly, Parliament reframes partnership from a procedural requirement into a governance principle. It strengthens the notion of multilevel governance by requiring not just “balanced” but “competence-based” representation, explicitly embedding regional, local, urban and rural authorities—alongside socio-economic partners—across the full policy cycle. The emphasis is on direct involvement in design, implementation, monitoring and evaluation, backed by a “comply or explain” logic (borrowed from the Rule of Law safeguards mechanism) and reinforced through capacity-building obligations.

In the EP vision, partnership is no longer about consultation; it is about co-governance. This is further anchored in programme design requirements—mandatory pre-submission dialogue, structured consultation processes, and full lifecycle participation—and backed by auditability. Member States would need to demonstrate not only who was consulted, but how, why, and with what impact. Even territorial governance becomes more concrete, with regional chapters and their milestones expected to be co-developed with the relevant authorities.

This sets up a clear tension in the negotiations ahead.
While the Council debate is still primarily structured around volumes and allocations—how much goes where—, with little focus on governance, the Parliament is shifting the focus towards how decisions are made and who is structurally embedded in them.

If there is one takeaway at this stage, it is that the outcome will hinge not only on financial balances but on whether governance principles are made operational.

A credible landing zone would require going beyond declaratory commitments and anchoring partnership in the system itself:

In short, the real question is whether the next MFF will remain a budget that organises spending, or evolve into a framework that also structures governance across levels.

The negotiating box has done its job: it has exposed the fault lines. What remains to be seen is whether the final compromise will simply rebalance envelopes—or redefine how Europe actually governs not only its funds but the way it governs itself in the future: top-down technocratic or multilevel, bottom up and competence-based.

.