EU’s Multiannual Financial Framework: Favorable Outlook for Finland – Competitive Funding must be Ensured

EU's Multiannual Financial Framework: Favorable Outlook for Finland - Competitive Funding must be Ensured

The Commission's proposal for the next EU's Multiannual Financial Framework (MFF) meets Finland's needs well, according to Finnish Industries EK. Particular emphasis is placed by the Commission on increased investments on competitiveness, defence and security, connectivity, and support for Ukraine. EK's initiative for a new, significant EU investment fund is progressing, provided that the Competitiveness Fund is implemented appropriately. It is vital that the funding is based on genuine open competition.

In the coming weeks, negotiations will begin in Brussels among Member States, culminating later on in decisions on the EU's revenues and expenditures for the next seven years (Multiannual Financial Framework 2028-2034, MFF).

According to Jyri Häkämies, Director General of the Confederation of Finnish Industries EK, the starting point is more favourable for Finland than in previous negotiation rounds:

"The priorities proposed by the Commission in July correspond well to Finland's priorities, but the final outcome is what counts. Increased investments to boost competitiveness and accelerate investment, strengthen defence and security, and sustain support for Ukraine are among others positive from Finland's point of view."

Häkämies is also encouraged that, in the new security environment, Finland's unique position as an EU's eastern external border state has been recognised in the Commission's proposal.

However, the MFF negotiations are just beginning:

"All of Finland's available means of influence must be utilised to ensure that future EU funding can be used boldly to drive an economic turnaround in Europe."

EK's Proposal for an EU Investment Fund is Progressing

The funding for competitiveness initiatives would more than double, notes Lotta Nymann-Lindegren, EK's Director of EU Affairs:

"EK's proposal for an EU investment fund is advancing as the Commission presented the establishment of a new Competitiveness Fund. The fund would stimulate investment especially in clean industry, the energy transition, technology and defence."

However, the impact of the Competitiveness Fund will ultimately depend on the principles by which funding is allocated.

"EK emphasises the principle of excellence and genuine market-based competition: funding should be awarded to the best projects with the highest ambition. This issue remains, however, unresolved and we consider it essential to clarify it further in the MFF negotiations."

Another concern is the continued flexibilities of the state aid rules into the next MFF period. As a small country, Finland cannot compete with larger Member States through national subsidies. All the more reason for Finland to ensure it can harness EU-level investment funding to the maximum extent. This will become increasingly important in the future, as the increase of the MFF overall level will also be reflected in Finland's financial contributions to the EU budget.

5 + 5 - Key Opportunities and Concerns for Finland in MFF Funding

Positive opportunities:

1. Robust investments in competitiveness - Europe is now genuinely seeking an economic turnaround. Preparations for the Competitiveness Fund are proceeding.
2. Finland's priorities have been taken into account in funding priorities. Increasing investments in defence; also digitalisation, clean industry, and innovation are receiving mor focus. Finland's unique position as an EU's eastern external border is recognised.
3. Strong, continued support for Ukraine.
4. Stronger conditionality for funding: access to funding will be more tightly linked to performance and results, as well as the rule of law.
5. Simplification of the entire MFF funding architecture. A "one-stop shop" for funding and reduced bureaucracy.

Key concerns for further negotiations:

1. Tough negotiations ahead - will the Commission's priorities be maintained? Will competitive funding face cuts?
2. Will the high level of defence funding be preserved?
3. Will the Competitiveness Fund become the instrument for strategic investments as the EK has proposed?
4. Will the funding criteria be strongly focused on excellence?
5. Will support for Ukraine remain robust, and will there be sufficient instruments to leverage investments for reconstruction?