On 16 July 2025, the European Commission presented its proposal for “an ambitious and dynamic Multiannual Financial Framework (MFF)” amounting to EUR 1.98 trillion, (ca. EUR 1.76 trillion in 2025-adjusted terms). This represents a real terms increase of  approx. 47% compared to the current MFF. Overall, the proposal promotes greater flexibility and simplifcation across the budget based on more harmonised and efficient EU financial programmes merged into 16 streamlined funds.  

Key highlights include: 

• National and Regional Partnership Plans (NRPPs) for investments and reforms combining EU funds for economic, social and territorial cohesion, including agriculture, fisheries, social policies and internal security. Notably there is a significant drop in CAP funding, with a stronger focus on quality employment, skills and social inclusion (total budget: EUR 865 billion).  
• A new European Competitiveness Fund, governed by a single rulebook, designed to accelerate EU funding and catalyse public and private investment in four areas: (1) clean transition and industrial decarbonisation; (2) digital transition; (3) health, biotechnology, agriculture and the bioeconomy; and (4) defence and space, with defence and space receiving EUR 131 billion, a fivefold increase on previous levels. 
• Horizon Europe, with a reinfroced budget of EUR 175 billion (increase of ca. 100% in 2025 prices), will be closely linked to the European Competitiveness Fund, with the two offering “support for the entire investment journey of a project” (for more details see, ACA Newsletter – Education Europe, July 2025). 
• A reinforced Erasmus+ programme, now incorporating the European Solidarity Corps (ESC), and supporting education mobility, solidarity and inclusiveness will be the backbone of the Union of Skills (total budget of EUR 40.8 billion, ca. 25% inflation-adjusted increase based on the combined previous budgets of Erasmus+ and ESC) (for more details see, ACA Newsletter – Education Europe, July 2025).  
• The Creative Europe and CERV programmes are merged into the new AgoraEU programme, which promotes shared values, including democracy, equality and the rule of law while supporting the European cultural diversity and creative sectors (total budget: EUR 8.6 billion, representing ca. 117% increase in real terms). 
• Global Europe, a new instrument consolidating existing programmes (NDICI, IPA, Humanitarian Aid, and Ukraine Facility) to enhance the EU’s global influence. It supports enlargement, neighbourhood policy, international partnerships, humanitarian aid, and Ukraine’s recovery. It is structured around five geographic areas: Europe; Middle East, North Africa and the Gulf; Sub- Saharan Africa; Asia and the Pacific; Americas and the Caribbean, along with a complementary Global Pillar (total budget: EUR 200 billion, a 75% increase, including EUR 100 billion which may be mobilised for Ukraine outside the MFF ceilings depending on needs, and a dedicated reserve capacity of EUR 15 billion to respond to emerging crises and unforeseen needs). 
• A new crisis mechanism, enhancing civil protection and health emergency preparedness and response (total budget: EUR 10.7 billion in common funding, and EUR 400 billion in loans to member states). 
• New own resources of ca. EUR 300 billion to ensure revenues for the priorities generated through (a) EU Emissions Trading System (ETS): (ca. EUR 9.6 billion annually); (b) carbon border adjustment mechanism (CBAM) (ca. EUR 1.4 billion annually); (c) non-collected e-waste duty (ca. EUR 15 billion annually); tobacco excise duty (ca. EUR 11.2 billion annually); and (d) a Corporate Resource for Europe (CORE), amounting to an annual lump-sum contribution from companies, operating and selling in the EU with a net annual turnover of at least EUR 100 million (ca. EUR 6.8 billion annually).  

What happens next?  

Negotiations are now entering a technically and politically intense period. 

• The European Parliament broadly supports the proposals on competitiveness, research, social policies, and crisis resilience but raises concerns over the adequacy of the 1.26% Gross National Income (GNI) cap (especially post-inflation), potential erosion of key programmes (Cohesion, CAP, Fisheries) and budget fragmentation and democratic oversight linked to the introduction of the National and Regional Partnership Plans. The Budget Committee has launched formal hearings (e.g., with Budget Commissioner Serafin), with MEPs calling for greater transparency and early access to documents. 
• Although the positions in the Council vary across the North (more frugal about common debt and GNI caps) and the South (more expansionist about EU-funding), member states are likely to scale back the Commission’s ambitions, particularly on borrowing and overall envelope. Council ministers have begun discussions to define the EU’s formal position, balancing ambition with fiscal restrain. 

What does this mean for the higher education sector? 

• The Commission’s proposal sends an overall positive signal to the higher education and research sectors. While framed in terms of competitiveness, the strong emphasis on innovation, global engagement, and shared values aligns with the missions of many higher education institutions across Europe. Proposed budget increases for Horizon Europe, Erasmus+, and the new AgoraEU programme hopefully suggest sustained and possibly expanded EU support for priorities such as student and staff mobility, research excellence, European University Alliances, international cooperation, and inclusion and diversity. 
• The new financial framework presents significant opportunities for universities with strong research profiles in strategic fields, though likely accompangied by increased political steering. Meanwhile AgoraEU offers potential for arts and humanities, civic engagement, and cultural education, possibly helping to diversify funding beyond STEM and applied innovation. On the international front, the expanded Global Europe instrument is expected to strengthen academic partnerships with priority regions like Africa, the EU Neighbourhood, and Ukraine. 
• Although overall funding levels might seem promising, there is no dedicated increase earmarked for higher education specifically (yet), and mobility funding may fall short of growing needs. Additionally, the shift toward the NRPPs overcrowded with political objectives might sideline the needs of higher education and research players (e.g., in terms of infrastructure, innovation ecosystems) posing risks for less developed regions and smaller institutions. The successful implementation will thus depend on the final outcome of the budget negotiations, the distribution of funding across actions, and the degree of access and equity ensured through both EU and national-level mechanisms.