Background

On 16 July 2025, the European Commission adopted the first package of proposals for the next seven-year EU budget, the multiannual financial framework (MFF) for 2028-2034. The European Competitiveness Fund (ECF) proposal is part of this package and envisages bringing together 14 individual funding instruments¹ from the current MFF in one framework.² It should provide investment capacity to reinforce the EU's competitiveness in technologies and strategic sectors critical to competitiveness. Simplification, financing, and better coordination are the primary focus of the ECF. The impact assessment (IA) also accompanies the proposal for a self-standing EU framework programme for research and innovation 2028-2034 (Horizon Europe) and the proposal to implement Horizon Europe and the research and innovation parts of the ECF.³

The Commission has highlighted the need to enhance the competitiveness of the EU in several policy documents.⁴ In her political guidelines, European Commission President Ursula von der Leyen announced a new European Competitiveness Fund as part of the proposal for a new MFF. The proposal was included in the 2025 Commission work programme.

The IA refers to the Better Regulation Toolbox, specifically Tool #9, which states that 'the special case of preparing a new multiannual financial framework is a unique process requiring a specific approach as regards scope and depth of analysis'.

Problem definition

The IA starts by outlining the political and legal context of the initiatives. It states that 'the EU is currently falling behind in multiple areas, including technological development, research and innovation performance, market dynamism and industrial capacity' (IA, p. 10). The existing productivity gap makes the EU less competitive than other major economies. At the same time, the existing EU funding architecture is complex and is the major factor hindering the impact of the EU budget (IA, p. 9). The IA provides a definition of European competitiveness by referring to the Commission's Competitiveness Compass communication (IA, p. 7).

The IA defines five problems, caused by eight problem drivers resulting from market or regulatory failures (IA, pp. 10-26). The five problems (P1-P5) are:

P1: suboptimal support along the investment journey, from fundamental research, to applied research through scale-up, to industrial deployment, to manufacturing;

P2: a complex and uncoordinated funding landscape (different existing frameworks, lack of cohesion between funding programmes);

P3: an innovation gap (underinvestment in research and innovation in the EU, especially of the private sector; fragmented investment in strategic technologies and sectors);

P4: a challenging geopolitical situation, strategic dependencies (e.g. critical materials, technologies, industrial components), and security and resilience issues in the EU;

P5: high investment needs for delivering on EU priorities, including for decarbonisation, digital transition, resilience and security.

The IA identifies the following underlying problem drivers:

Driver 1: fragmented support through the investment journey (P1);

Driver 2: insufficient leverage of private investment (P1);

Driver 3: complexity to access, mobilise and implement EU funding for beneficiaries (P2);

Driver 4: inefficient structure and coordination mechanisms creating overlaps and reducing complementarities (P2);

Driver 5: insufficient flexibility of funding instruments (P2);

Driver 6: capacity gaps (labour and skills shortage, infrastructure, R&I divide) (P3);

Driver 7: weak translation of research results into marketable outputs (P3, P4);

Driver 8: low and fragmented investment in strategic technologies and sectors (e.g. clean tech, cross-border infrastructure, defence, digital, biotech) (P3, P4, P5).

The IA provides a comprehensive description of the existing situation and assesses the likelihood of the problems persisting without EU action. The problem definition appears to rely on evidence from various data sources, including desk research,⁵ stakeholder input and targeted examples of relevant interim and ex-post evaluations of EU programmes. In general, they are well referenced. However, the relevant elements of the evaluation's conclusions could have been stated more consistently throughout the description of the problem definition.

With the help of a problem tree, the IA illustrates the drivers behind the problems and the general and specific objectives to solve them (IA, p. 30). The description of the problems and their drivers could have been more structured and clearer (e.g. P1 and problem driver 1 seem to be identical). The problem's consequences can be deduced from the text. However, they could have been discussed in more detail and added to the problem tree.

The problem definition does not analyse consistently how the problems, drivers and consequences affect the stakeholder groups, as advised by the BRG. In addition, the IA does not discuss whether all problems and drivers are equally relevant. However, references to stakeholder input and feedback from the Commission's consultation activities and examples in the description of the problem drivers compensate for these weaknesses to a certain extent.

Subsidiarity/proportionality

The IA includes a section on subsidiarity (IA, pp. 27-29), where it describes the legal basis and explains the necessity and added value of EU action. The IA does not discuss proportionality.

The proposals rely on a number of separate legal bases. The IA's main text mentions Article 173 (Industry) of the Treaty on the Functioning of the European Union (TFEU). Article 173(1) TFEU determines that 'the Union and the Member States shall ensure that the conditions necessary for the competitiveness of the Union's industry exist'. The IA mentions Article 182(1) TFEU, which requires a multiannual framework programme to implement the activities set out in Article 180 TFEU (e.g. in the areas of research, technological development and demonstration programmes). Details of the legal bases of the sectoral policies within the scope of the proposals are provided in a separate annex (IA, Annex 8).

According to the IA, EU action is necessary to regain competitiveness by pooling resources at EU level to 'maximise the impact and added value of investment on the ground' and to 'support the type and scale of projects that would otherwise not be possible if Member States acted alone' (IA, p. 27). The IA sees added value in EU action to fund enhanced collaboration across stakeholders and borders. EU funding would address market failures and suboptimal investment conditions by mitigating investment risks. EU action would contribute to limiting duplication and inefficiencies caused by financing overlapping projects conducted in several countries (IA, p. 28).

The IA does not include a subsidiarity grid, as recommended by the Task Force on subsidiarity, proportionality and 'doing less more efficiently' (Better Regulation Toolbox, Tool #5). The deadline for the submission of reasoned opinions by national parliaments on the grounds of subsidiarity is 13 November 2025. No reasoned opinions had been submitted by the time of writing.

Objectives of the initiative

According to the IA, the two general objectives (IA, p. 29) of the initiative are

According to the BRG, general objectives should be Treaty-based, and general and specific objectives should be clearly distinct. In this case, however, the general objectives seem to be partially overlapping with the following three specific objectives, defined in relation to the five identified problems:

The IA does not specifically set out operational objectives which define deliverables of specific policy actions after identifying the preferred option as envisaged by the BRG. The IA refers to the performance framework for the post-2027 budget without presenting specific indicators relevant to the objectives in the IA's section on monitoring and evaluation (see section on 'Monitoring and evaluation' below). This lack of specificity may weaken the measurability of the objectives. This weakness notwithstanding, the other BRG's S.M.A.R.T criteria, according to which objectives should be specific, measurable, achievable, relevant and time-bound, seem to be fulfilled (IA, p. 29).

According to the BRG, an IA shall include an assessment of the impacts on the relevant United Nations Sustainable Development Goals (SDGs). However, the present IA does not illustrate how the objectives contribute to the relevant SDGs.

Range of options considered

In addition to the baseline (i.e. continuation of the current MFF with the same funding programmes within the scope of this IA), the IA presents three policy options, as shown in Table 1. The IA describes an option discarded at an early stage (partial consolidation of existing programmes into a small number of sectoral programmes) and it is transparent about the reasons for discarding it. Such an option 'would not sufficiently improve flexibility to respond to emerging needs across the EU budget and would miss a number of the benefits put forward by the European Competitiveness Fund' (IA, p. 32).

The presented options are only partially linked to the problems, problem drivers and objectives (see section above), against the requirement by the BRG. For example, option A does not address problem drivers 1, 2 and 3. Therefore, problem 1 is not addressed. Option B does not fully address problem driver 3. Overall, it is questionable whether all options present fully realistic alternatives to the baseline as requested by the BRG and Toolbox (Tool #16). This is especially the case for option A. The IA presents the core elements of each option (predominantly funding architecture) only briefly in the main text (IA, pp. 30-32) and does not clearly describe how they will contribute to achieving the initiatives' objectives.

Assessment of impacts

In accordance with the requirements of the BRG, the IA assesses the economic, social and environmental impacts of the options (IA, pp. 32-42). However, the IA states that 'given that the architecture of the new MFF will be significantly different from the current structure, assumptions on the budget of each programme would be unreliable at this stage. Therefore, the impact assessment does not include sectoral funding scenarios.' (IA, p. 10). The IA also refers to Tool #9 of the Better Regulation Toolbox, highlighting the special case of preparing a new multiannual financial framework, which requires a specific approach as regards scope and depth of analysis. Quantification is limited and a more detailed assessment of costs and benefits can only be found in the supporting study for the IA. The IA uses modelling to analyse the policy intervention's impacts (see section on 'Supporting data and analytical methods used' below).

In the qualitative and partially quantitative assessment of economic impacts, the IA provides a brief description of the impacts associated with each option (IA, pp. 32-42). The section within the IA that focuses on economic impacts could have been clearer and more structured, particularly regarding estimates of administrative costs and expected benefits for businesses and public administrations.

According to the IA, option A will have similar economic impacts compared to the baseline scenario. Option B would have a higher return on investment over a 15-year period (15-year gross domestic product (GDP) multiplier).⁶ The total benefit of the investment per euro spent would be 1.51 % higher than for option A. For option C, this would amount to 15.74 % higher than option A. Option B envisages improved coordination between the programmes and a common rulebook. According to the IA, this would bring benefits to applicants and beneficiaries in terms of reduced costs of preparing the proposal and the time-to-inform (i.e. the duration between closure of a call and formal communication of the outcome to applicants) and time-to-grant (i.e. the duration between call outcome and the signing of the grant agreement). The proposal's preparation costs would decrease by 5 % compared to the baseline (10 % for option C compared to the baseline) depending on the complexity of a programme. The 'time-to-inform' and the overall 'time-to-grant' is expected to be reduced by 5-10 days (or up to 10-15 days for option C). However, the IA states that 'due to the low extent of quantitative evidence available, the estimates are of a high level of uncertainty' (IA, p. 37).⁷ For option B, the IA expects (not quantified) adjustment costs to be moderate (short-term adjustment costs for the introduction of a single rulebook; modifying operational procedures; requiring applicants to adjust to new rules). For option C, higher adjustment costs (i.e. transition to a single, integrated fund) for applicants and beneficiaries would materialise than for option B. However, the IA states that 'while initial adaptation to the new fund would be needed, beneficiaries would only need to undertake this learning process once' (IA, p. 40). The IA expects an increase in EU exports because of a larger volume of investments (option B: 30.48 % higher compared to option A; option C: 57.53 % higher compared to option A).

The IA qualitatively assesses the social impacts of the following aspects for each option: employment; skills, education and training; health; resilience, technological sovereignty, economic security, security of supply. Option A is expected to have minimal impacts compared to the baseline scenario. Option B and option C would increase the volume of investment, which would have positive effects on employment. Option B would strengthen coherence in skills development in strategic sectors, such as artificial intelligence (AI), cybersecurity and green technologies. Option C would contribute to promoting targeted investments in re-skilling and up-skilling and improving synergies among education, research and business. Options B and C would foster a streamlined and flexible funding mechanism to respond better and faster to unforeseen health crises. Both options would enhance coordination in decision-making with a positive impact on fostering resilience, technological sovereignty and economic security.

The IA qualitatively analyses the environmental impacts of the options, focusing in particular on potential positive impacts through prioritisation of research and development for decarbonisation (e.g. clean technology) and on climate, as envisaged in option C. According to the IA, the expected environmental impacts of options A and B are similar to those of the baseline.

Regarding territorial impacts, the IA expects the positive effects of option C to 'unlock significant economic growth in regions with strategic advantages, driving innovation, development, and overall productivity' (IA, p. 42). However, it is not clear what impacts the IA expects there to be on territorial cohesion and how synergies with other parts of the post-2027 MFF focused on national and regional funding will be achieved.

When comparing the options, which is mainly done in a qualitative way, the IA considers their effectiveness, efficiency and coherence. To facilitate the assessment of the options against these criteria, the IA presents all options in summary tables showing how they score. However, the scoring system is not explained in the IA, but only in the supporting study. The score ranges from '+' to '+++', indicating the extent of an improvement compared to the baseline.

In terms of effectiveness, Option A would bring limited improvements (with remaining fragmented financial instruments and a lack of integrated tools). Option B is expected to bring moderate improvements (alignment of objectives and governance under a common rulebook). Option C scores highest and is expected to significantly enhance investment support (integrated framework, unified governance, simplified funding). When assessing efficiency, quantification of costs and benefits is limited. Option A would bring limited efficiency gains (and administrative burdens would still exist). Option B is expected to bring moderate gains (standardisation, reduced costs, easing applications). Option C scores highest and would bring significant gains (a single and integrated fund with streamlined processes). In the assessment of coherence, option A would bring limited improvements (unaddressed fragmentation). Option B would offer moderate improvements (standardised rules, fragmented governance would remain). Option C scores highest and would bring significant enhancement (consolidated funding, reduced duplication).

After comparing the options, the IA concludes that option C is the preferred option.

Monitoring and evaluation

To monitor the implementation of the initiatives, the IA refers to the performance framework for the post-2027 budget, which is examined in a separate IA and includes an implementation report during the implementation phase of the programmes and an ex-post evaluation (IA, p. 49). According to the IA, the evaluation will be conducted in accordance with the BRG and will include indicators relevant to the initiatives' general and specific objectives. However, the IA remains unclear on how progress in achieving the objectives will be measured. It should have been clearer on how the specific indicators will be identified and used, and how, and which, data will be collected.

Stakeholder consultation

In accordance with the BRG, a summary (synopsis report) of the stakeholder consultations and an outline of the targeted stakeholder groups (including citizens, academia/research institutions, businesses, SMEs, public authorities, recipients of EU funding, civil society organisations) are provided in a separate annex (IA, Annex 2). As recommended by the BRG, the Commission conducted an open public consultation on the next MFF (2 034 responses and 462 position papers) over a 12-week period, which ran from 12 February 2025 to 7 May 2025. Furthermore, it conducted consultation activities with industry and research and innovation stakeholders (e.g. a plenary meeting of the Industrial Forum) to gather feedback on the present proposals.

Overall, the stakeholders' views are clearly presented and systematically referred to throughout the IA. However, the IA should have assessed stakeholders' support for the preferred option in more detail.

Supporting data and analytical methods used

The IA primarily relies on desk research complemented by economic modelling by the Joint Research Centre (JRC), stakeholder input and an external supporting study (carried out by a consortium led by the Centre for Strategy & Evaluation Services (CSES)). The supporting study focused on the cost-benefit analysis, the comparison of options and the public consultation synopsis report. The data sources are well referenced and publicly available. The IA provides a comprehensive table including the main sources of evidence for all 14 programmes within the scope of the IA. The list includes previous IAs, mid-term and ex-post evaluations, studies and reports (IA, Annex 1, pp. 52-56).

The IA describes the analytical methods used in a dedicated annex (IA, Annex 4). It outlines the methodological approach used, which includes a cost-benefit analysis (see paragraph above) and modelling. Regarding modelling, the IA explains the use of the RHOMOLO model, which is well referenced. A description of the use of the model is publicly available in the Commission's Modelling Inventory and Knowledge Management System (MIDAS). For the qualitative analysis of responses and position papers to the open public consultation, the Commission relied on AI by using Large Language Model-driven topic modelling combined with expert human validation.

Overall, the IA openly mentions the limitations constraining the completeness and consistency of the evidence base, such as: i) limited comparability of findings and uneven availability of evaluation documents across programmes; ii) reliance on various uncertain estimates and assumptions (for the cost-benefit analysis, e.g. administrative costs, benefits for businesses and public administrations); iii) missing information on procedures and management structures envisaged in the options. In addition, the IA states that 'results from the public consultation cannot be generalised as they refer to a limited sample' (IA, p. 80).

Follow-up to Commission Regulatory Scrutiny Board opinion

The Regulatory Scrutiny Board (RSB) issued an opinion on the draft IA on 13 June 2025, following the submission of a draft version of the IA on 19 May 2025. The opinion states that 'given that at this stage the impact assessment lacks several key elements, the Board decided, exceptionally, to issue an Opinion without qualification' (RSB opinion, p. 1).⁸ While the RSB acknowledged the applicability of Tool #9 of the Better Regulation Toolbox (preparation of a new MFF), the RSB concludes that the draft IA report contains significant shortcomings spread across almost all sections (e.g. lack of consistency in the problem definition; proposed objectives are not S.M.A.R.T.; the full range of options is not adequately identified; lack of adequate assessment of the costs and benefits of the options; no specification of coherence with other parts of the post-2027 MFF; and unclear monitoring and evaluation arrangements). The IA explains in a short table (IA, Annex 1, p. 50-52) how the RSB's recommendations were addressed. However, it appears that they were only partially taken into account in the final IA.

Coherence between the Commission's legislative proposal and IA

The proposals appear to be coherent with the preferred policy option (option C) identified in the IA.

This briefing, prepared for the Industry, Research and Energy (ITRE) Committee, analyses whether the principal criteria laid down in the Commission's own Better Regulation Guidelines, as well as additional factors identified by the Parliament in its Impact Assessment Handbook, appear to be met by the IA. It does not attempt to deal with the substance of the proposal.