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Constitutionalisation of the EU budget governance: Rule of Law Conditionality and the New Multiannual Financial Framework of the EU


In July 2025, the European Commission presented its proposal on the Multiannual Financial Framework (MFF) for 2028–2034. The new budget aims to strengthen the EU’s resilience to face new challenges and enhance its competitiveness in key sectors and technologies, while also creating new own resources to fund its priorities. From the legal perspective, it is also remarkable that the next MFF strengthens the rule of law conditionality as a means to protect the EU budget, thus reinforcing the role of the Conditionality Regulation. This piece reflects on this particular aspect of the next MFF by assessing how the rule of law has gained increasing importance in EU budgeting, contributing to the constitutionalisation of the Union’s financial governance.

 

The Multiannual Financial Framework for 2028–2034: General Observations


The next MFF for the period between 2028 and 2034 is significantly shaped by geopolitical and security crises, particularly Russia’s ongoing military aggression in Ukraine. Since February 2022, the EU has provided support to Ukraine through various means, including the adoption of 20 package of sanctions against Russia, assistance measures for the Ukrainian armed forces under the European Peace Facility, loans, including economic support and military assistance, and humanitarian aid.[i] Such extraordinary financial demands prompted a revision of the current MFF for 2021–2027, established in Regulation 2020/2093.[ii] Namely, since its adoption in December 2020, the Regulation was revised twice: first in December 2022, the MFF was amended to enable the provision of loans to Ukraine in 2023 and 2024,[iii] and second, in February 2024 to enable further responses.[iv]

Such considerations were taken into account in the new MFF for 2028-2034, proposed by the European Commission in July 2025. The new MFF provides more flexibility across the budget to provide the EU with the capacity to act and react fast when circumstances change. To this aim, the Commission proposed a simpler architecture for the MFF with fewer programmes and a higher share of unprogrammed amounts, as well as mechanisms and in-built reserves. The proposal includes one thematic special instrument dedicated to the financial support to Ukraine (‘Ukraine Reserve’) and two non-thematic special instruments (the ‘Single Margin Instrument’ and the ‘Flexibility Instrument’).[v]

The ‘Ukraine Reserve’ is dedicated to “keep supporting Ukraine as long as it takes, and to firmly help Ukraine on its path to accession to the Union”. While the Ukraine’s EU accession certainly represents the most complex challenge for EU enlargement, the accession of other candidate states, particularly Western Balkan countries is arguably not a central concern for the EU. Enlargement is planned to be addressed in the ‘Global Europe’ instrument, covering a wide range of external policies, including enlargement, neighbourhood, international partnerships in and outside Europe.[vi] The EU’s focus on newer candidates such as Ukraine and Moldova may risk a dilution of attention from the accession of Western Balkan states that have been waiting for EU membership for nearly two decades.[vii] In addition, the Commission’s proposal for the next MFF does not refer to the EU accession of any candidate state besides Ukraine.[viii] Notably, the thematic special instruments in the MFF for 2021–2027 included the ‘Solidarity and Emergency Aid Reserve’, the ‘European Globalisation Adjustment Fund’, and the ‘Brexit Adjustment Reserve’.[ix] The ‘Ukraine Reserve’ is the only thematic special instrument in the new MFF.

The two non-thematic special instruments (the ‘Single Margin Instrument’ and the ‘Flexibility Instrument’) can also be found in the MFF for 2021–2027. Their aim is to provide the possibility to address more generally unforeseen circumstances or new priorities during the target period.[x]

To fund its priorities while repaying obligations under NextGenerationEU, the Commission proposes five new own resources: the EU Emissions Trading System (ETS), the Carbon Border Adjustment Mechanism (CBAM), an own resource based on non-collected e-waste, a tobacco excise duty own resource, and a Corporate Resource for Europe (CORE).[xi] While the proposed new resources would provide a mechanism to finance the repayment of the common debt, their introduction can also strengthen the EU’s fiscal autonomy.[xii]


Rule of Law Conditionality in the MFF for 2028–2034


In addition to the abovementioned structural changes, a remarkable aspect of the new MFF is the strengthening of the rule of law conditionality, with the aim of protecting the EU budget from breaches of the rule of law. Rule of law conditionality was introduced to the MFFs with Regulation 2020/2092, which connects the adoption of certain measures (primarily the suspension of payments or financial corrections) with the respect for the rule of law in a given Member State. Notably, the Commission’s proposal for the Conditionality Regulation was adopted on the same day as its proposal for the MFF, on 3 May 2018, similar to the adoption of the Regulation and the MFF. In fact, the establishment of the Conditionality Mechanism was a prerequisite for the European Parliament’s consent to the MFF for 2021–2027.[xiii]

The proposal for the new MFF also refers to the Conditionality Regulation and the necessity of adjustments in case measures are adopted under the Mechanism, thus reaffirming its continued application to the whole EU budget. Furthermore, while breaches of the rule of law are at the centre of attention of the Conditionality Mechanism, the Commission in the new proposal equally refers to the Charter of Fundamental Rights. In a factsheet dedicated to the rule of law in the context of the new MFF, it can be read that the Commission proposes that parts of payments can be suspended at any time, while Member States need to continue payments to the final beneficiaries. The amounts lost due to the unresolved breaches may therefore be reallocated to other programmes.[xiv]

While the next MFF needs to be discussed by the Council and subsequently in the European Parliament, meaning that further negotiations and adjustments are likely, it is nevertheless possible to identify certain trends in the Commission’s proposal concerning the rule of law conditionality. The continued emphasis on respect for the rule of law in the implementation of the Union budget is consistent with the broader trend of strengthening supranational oversight mechanisms within the Union. In recent years, the EU has increasingly developed instruments to monitor compliance with rule of law standards across Member States, including the annual Rule of Law report, the Rule of Law Framework as a pre-Article 7 instrument, or the Conditionality Mechanism. Such measures may also contribute to the constitutionalisation of the EU budget, as the budget is arguably no longer a purely financial instrument but it increasingly serves as a mechanism for enforcing compliance with constitutional principles. However, while constitutional principles are primarily interpreted by constitutional courts at the national level, EU institutions, particularly the European Commission, who has the discretionary power to activate the Conditionality Mechanism against a Member State, play a key role in interpreting and assessing the rule of law at the EU level.[xv]

Furthermore, the growing emphasis on fundamental rights protection can also be discerned in the new MFF. Article 3 of the Conditionality Regulation, which provides some examples of breaches of the principles of the rule of law,[xvi] does not explicitly mention violation of fundamental rights as a ground that may result in the application of the Mechanism. Therefore, it remains to be seen whether the Conditionality Mechanism will be accompanied by stronger monitoring of compliance with fundamental rights, or whether new mechanisms will be introduced for this purpose.

Based on the above, it can be concluded that the rule of law continues to play a significant role in the new MFF. This development supports the constitutionalisation of the EU budget, as it contributes to the process of raising constitutional issues to the level of EU governance. Additionally, the details of the monitoring process, along with the future of the Conditionality Mechanism, remain central questions to be clarified in the upcoming months.


[i] Timeline - EU response to Russia's war of aggression against Ukraine. Available at: https://www.consilium.europa.eu/en/policies/eu-solidarity-ukraine/timeline-russia-military-aggression-against-ukraine/ (accessed: 28 May 2026).

[ii] Regulation 2020/2093 of 17 December 2020 laying down the multiannual financial framework for the years 2021 to 2027. Available at: https://eur-lex.europa.eu/eli/reg/2020/2093/oj/eng (accessed: 28 May 2026).

[iii] Regulation 2022/2496 of 15 December 2022 amending Regulation (EU, Euratom) 2020/2093 laying down the multiannual financial framework for the years 2021 to 2027. Available at: https://eur-lex.europa.eu/eli/reg/2022/2496/oj/eng (accessed: 28 May 2026).

[iv] Regulation 2024/765 of 29 February 2024 amending Regulation (EU, Euratom) 2020/2093 laying down the multiannual financial framework for the years 2021 to 2027. Available at: https://eur-lex.europa.eu/eli/reg/2024/765/oj/eng (accessed: 28 May 2026).

[v] Proposal for a Council Regulation laying down the multiannual financial framework for the years 2028 to 2034, Explanatory Memorandum, COM(2025) 571 final, 16 July 2025. Available at: https://eur-lex.europa.eu/legal-content/EN/TXT/?uri=CELEX%3A52025PC0571&qid=1753801194712#footnote7 (accessed: 29 May 2026).

[vi] Proposal for a Regulation of the European Parliament and of the Council establishing Global Europe, COM(2025) 551 final, 16 July 2025. Available at: https://eur-lex.europa.eu/legal-content/EN/TXT/?uri=CELEX%3A52025PC0551 (accessed: 29 May 2026).

[vii] Federico Baccini, Financing enlargement via the 2028-2034 MFF, Foundation for European Progressive Studies, Policy Brief, December 2025. Available at: https://feps-europe.eu/wp-content/uploads/2026/01/FINANCING-ENLARGEMENT-VIA-THE-2028-2034-MFF.pdf (accessed: 29 May 2026).

[viii] Enlargement is mentioned as one of the reasons for the revision of the MFF, however, in a general sense. See Recital 15 of the Preamble: “Enlargement of the Union is a strategic investment in peace, security, stability and prosperity in Europe and allows the Union to be better positioned to address global challenges. It is necessary to provide for a revision of the MFF in the event of accession of new Member Sates to the Union.” Proposal for a Council Regulation laying down the multiannual financial framework for the years 2028 to 2034, supra iv.

[ix] Regulation 2020/2093, supra ii, Articles 8–10.

[x] Regulation 2020/2093, supra ii, Articles 11–12 and Proposal for a Council Regulation laying down the multiannual financial framework for the years 2028 to 2034, supra iv, Articles 7–8.

[xi] The 2028-2034 EU budget for a stronger Europe. Available at: https://commission.europa.eu/strategy-and-policy/eu-budget/long-term-eu-budget/eu-budget-2028-2034_en (accessed: 29 May 2026).

[xiii] Multiannual Financial Framework, European Parliament. Available at: https://www.europarl.europa.eu/factsheets/en/sheet/29/multiannual-financial-framework (accessed: 30 May 2026).

[xiv] Europe’s budget. Strengthening the Rule of Law, July 2025. Available at: https://commission.europa.eu/document/download/da01c579-6aab-4bca-9541-47ed8b18ed4e_en (accessed: 31 May 2026).

[xv] Regulation 2020/2092 of the European Parliament and of the Council of 16 December 2020 on a general regime of conditionality for the protection of the Union budget, Article 6. Available at: https://eur-lex.europa.eu/eli/reg/2020/2092/oj/eng (accessed: 31 May 2026).

[xvi] These are the following: (a) endangering the independence of the judiciary; (b) failing to prevent, correct or sanction arbitrary or unlawful decisions by public authorities, including by law-enforcement authorities, withholding financial and human resources affecting their proper functioning or failing to ensure the absence of conflicts of interest; (c) limiting the availability and effectiveness of legal remedies, including through restrictive procedural rules and lack of implementation of judgments, or limiting the effective investigation, prosecution or sanctioning of breaches of law.

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