As Europe prepares its next Multiannual Financial Framework (MFF) for the period from 2028 onwards, the debate should move beyond the traditional question of how much the European Union spends. In my view, the far more important question is whether the budget can strengthen Europe’s long-term resilience while mobilising sufficient private capital to address the continent’s growing investment needs.
For long-term institutional investors like pension funds, the next MFF should be seen as a catalyst for investment, not just a spending programme. Public resources alone won’t be enough to finance Europe’s ambitions in energy transition, industrial modernisation, defence and strategic infrastructure. The next budget must therefore be designed to attract private capital wherever possible.
This is particularly relevant for Central and Eastern Europe (CEE). Poland and other CEE economies remain among the fastest-growing regions in the EU, yet they also face some of the largest investment requirements. Decarbonising our energy systems, expanding electricity networks, modernising industrial assets and upgrading transport infrastructure will demand financing on a scale that neither nor the EU budget can deliver on their own. I see these needs up close, and I know they cannot be met without private savings put to work.
For this reason, transition spending should remain a central pillar of the next MFF. European policymakers must recognise that member states are starting from different points on the path to meeting climate objectives. CEE economies still rely heavily on carbon-intensive energy systems and industrial structures, making the transition both larger and more capital-intensive. Supporting this shift goes beyond climate policy – it is essential for competitiveness, energy security and economic convergence across the Union.
At the same time, Europe’s security environment has fundamentally changed. Defence spending can no longer be viewed solely as a national responsibility. Investments in defence capabilities, military mobility, critical infrastructure and supply chain resilience should become a key component of the next MFF. For long-term investors, these areas represent strategic investment opportunities linked to advanced manufacturing, innovation, cybersecurity and technological development. Defence and resilience investments should therefore be recognised as productive investments that directly strengthen Europe’s long-term economy.
We should also stop treating competitiveness and sustainability as opposing objectives. Europe will remain competitive only if it enhances energy security, accelerates innovation, modernises industry and reduces strategic dependencies. Investments that strengthen resilience and productivity are also investments that improve Europe’s long-term growth prospects. Competitiveness must therefore recognise sustainability as a core component of Europe’s economic strength, not a separate policy objective.
In the energy sector, transition spending should focus on delivering affordable, reliable energy, reducing costs for households and strengthening industrial competitiveness. But let me be direct about how success should be measured. The real test of the next MFF is its ability to mobilise private investment. Europe’s investment gap is far larger than public resources alone can address. Pension funds, insurers and other institutional investors manage substantial pools of long-term capital that could support European priorities if appropriate investment frameworks and risk-sharing mechanisms are in place.
This is why the next MFF should align closely with the objectives of the Savings and Investments Union (SIU). Across Europe, roughly €10 trillion of household savings remains held in bank deposits rather than invested in productive assets. This figure dwarfs even the most ambitious proposals for the next MFF, which are expected to amount to around €2 trillion over the seven-year budget period.
The comparison highlights a fundamental reality: Europe’s future competitiveness, security and transition cannot be financed through public budgets alone. Even a relatively small reallocation of household savings into capital markets would unlock investment volumes that exceed the resources available through the EU budget itself.
This logic also applies to innovation financing. If Europe wants to strengthen competitiveness, it must do more than subsidise transition and infrastructure. It must also create frameworks that help innovative companies scale and attract long-term capital. In Poland, initiatives such as Innovate PL reflect this broader approach: using public institutions not to replace private investors, but to help unlock capital for innovation, technology and future growth.
So the MFF should therefore function primarily as a catalyst. Its role should be to reduce risk, improve project bankability and create investment opportunities capable of attracting both institutional and retail capital. National initiatives that encourage greater participation in capital markets can complement this objective. Poland’s new retail investment accounts (OKI), drawing inspiration from successful European models such as Sweden’s Investment Savings Account (ISK), demonstrate how member states can support broader efforts to channel savings towards productive long-term investment.
The next MFF should also build on programmes and instruments with a proven track record of mobilising private capital. InvestEU is a particularly strong example, having demonstrated that guarantee-based instruments can attract private finance far more effectively than traditional grant-based approaches. Such instruments create a multiplier effect that allows public resources to go much further. The next MFF should therefore strengthen the InvestEU framework and prioritise financial instruments wherever they can deliver higher leverage and stronger crowding-in effects.
I welcome the proposed 35% climate and environmental spending target as an important signal. But what matters most is the quality of each investment and its power to attract additional capital. The Do No Significant Harm (DNSH) principle plays an important role in ensuring that EU-funded projects support long-term sustainability objectives and avoid creating future liabilities. At the same time, its implementation must remain practical, proportionate and easy to apply. Excessive complexity, unclear requirements or disproportionate reporting obligations risk discouraging investment and reducing private capital participation, particularly in CEE markets where data availability and market maturity may differ from Western Europe.
Ultimately, the next EU budget should be judged not by how much it spends, but by how much private capital it mobilises. The most successful MFF will not be the largest in nominal terms, but the one that creates the strongest multiplier effect by attracting institutional and household savings into Europe’s real economy. If Europe can combine transition financing, defence investment, deeper capital markets and effective public-private partnerships, the next MFF can become far more than a budgetary framework – it can become a genuine investment strategy for Europe’s long-term competitiveness, resilience and prosperity.
Piotr Dmuchowski is chief executive officer of PFR TFI and a board member of the Sustainable Investment Forum Poland (POLSIF)
