Extending the EU’s recovery and resilience funds (RRF) would add flexibility to the 2028–2034 EU budget negotiations, raise the chances of agreement before year’s end, and preserve EU leverage over reforms in Bulgaria, Hungary, and Romania at a sensitive moment.
Daniel Hegedüs
Europe is facing what may be its most difficult negotiations yet to agree on the next seven-year Multiannual Financial Framework (MFF) for the period 2028–2034.
The negotiations are constrained both by financial realities and by political timing.
To overcome these hurdles, the inclusion of additional financial resources outside the MFF framework may once again prove to be the political sweetener needed to reach a compromise.
In 2020, that sweetener was the €577bn Recovery and Resilience Facility (RRF), the EU’s landmark post-pandemic recovery instrument financed through joint borrowing.
While a new round of joint borrowing is politically unrealistic this time, extending the lifecycle of the RRF beyond the end of 2026 and allowing member states to access allocated but undrawn funds could provide a comparable political incentive.
Such a solution might help persuade net beneficiary countries to accept deeper cuts to cohesion policy and the Common Agricultural Policy (CAP) within the next MFF.
Net payer and net beneficiary countries remain fundamentally at odds over both the budget’s size and the logic of EU spending.
The former favour investment in competitiveness, research, and policies enabling Europe to remain a global player rather than an object of geopolitical competition. The latter seek to preserve the largest headings — agriculture and cohesion — to maximise EU transfers and keep European integration politically saleable, particularly among rural voters.
Cypriot suggestion a no-no
In figures, the outgoing Cypriot Presidency proposed cuts of around two percent, or €32.8bn, from the EU Commission’s nearly €2 trillion MFF proposal.
These would primarily affect the Competitiveness Fund and Global Europe, while largely sparing the national and regional partnership plans covering agriculture and cohesion.
Germany, by contrast, called for cuts of around €400bn — almost 20 percent of the commission proposal — while the Netherlands and other frugal member states dismissed the Cypriot proposal as a “no-go”, objecting both to the limited scale of cuts and their concentration on the Competitiveness Fund.
Although Germany’s demand should not be taken at face value, it illustrates how far apart frugal and net beneficiary member states remain.
The European Parliament’s consent is ultimately required — and it traditionally favours an ambitious budget — but member states must first reach a compromise among themselves, and quickly.
Negotiations on the current 2021–2027 MFF lasted more than two-and-a-half years, from the commission proposal in May 2018 to the European Council’s political agreement in December 2020.
French and Polish elections on horizon
This time, the French presidential election and Polish parliamentary election in 2027 could seriously complicate negotiations, creating a strong incentive for member states and the Irish presidency to reach political agreement before the end of 2026, only 17 months after the commission proposal in July 2025.
Given the gap between positions and the time pressure, agreement by year’s end appears not merely ambitious but potentially unrealistic. Dissatisfied member states may resort to delaying tactics to pressure negotiating partners.
Under these circumstances, additional resources outside the MFF offer the most straightforward way to facilitate a rapid compromise. Another round of joint borrowing on the scale of the €577bn RRF, however, is politically unrealistic.
However, a substantial share of the original RRF allocation nevertheless remained undisbursed in July 2026. According to the EU Recovery and Resilience Scoreboard, around €405bn had been paid out.
Although this figure will increase before the August/September deadline as member states seek to maximise available funding, a significant share is likely to remain unused, particularly in Bulgaria, Hungary, Poland, and Romania, due to delayed reforms under their national recovery plans.
The problem is especially acute in Hungary.
Because the Orbán government failed to fulfil the required rule of law and anti-corruption milestones, only €920m of the country’s €10.4bn allocation was disbursed as pre-financing.
Despite the reform drive of the new democratic government led by Péter Magyar, and the possible reclassification of certain cohesion expenditures under the RRF, the fate of the remaining allocation remains uncertain.
Similar reform backlogs exist elsewhere.
In Bulgaria and Romania, repeated political instability has delayed implementation, while in Poland the necessary reforms have been consistently vetoed by the president since the Tusk government took office in late 2023.
Outstanding allocations amount to approximately €1.9bn for Bulgaria, €8.44bn for Romania, and €25.5bn for Poland.
These funds can either expire at the end of 2026 if reforms are not completed by end-August, or become MFF bargaining chips if an RRF extension is exchanged for greater willingness among net beneficiary countries to accept reductions in their National and Regional Partnership Plans.
An extension would require unanimous approval in the Council. Similar requests — most notably from Poland — have repeatedly been rejected, while net payer countries have a clear interest in limiting RRF disbursements, not least because repayment begins under the 2028–2034 MFF.
The political context, however, has changed fundamentally since Poland’s unsuccessful request in 2024. Then, the issue was country-specific and lacked broader systemic relevance. Today, its strategic importance is evident.
Extending the RRF would add flexibility to the MFF negotiations, raise the chances of agreement before year’s end, and preserve EU leverage over reforms in Bulgaria, Hungary, and Romania at a sensitive moment — not least given Romania’s government crisis and the prospect of a radical-right AUR breakthrough in possible snap elections.
Net-payer countries, Germany in particular, should reassess their strategic options.
Simultaneously achieving three objectives — a substantial reduction of the commission’s MFF proposal, a timely conclusion of negotiations, and the complete RRF phase-out by the end of 2026 — is unrealistic.
Extending the RRF by one or two years may be the most pragmatic way to secure the first two objectives, both essential to the future cohesion and effectiveness of the European Union.
