Background

The Interinstitutional Agreement accompanying the 2021-2027 multiannual financial framework (MFF) committed to integrating horizontal priorities in the EU budget by setting targets for climate and biodiversity, developing a methodology for tracking expenditure on gender equality, and reporting on the implementation of the Sustainable Development Goals (SDGs). As the IA report acknowledges, despite the benefits delivered by the current MFF performance framework, scope remains to enhance simplification, consistency, and the intelligibility of results with a new proposed tracking and performance framework. This aligns with the 2024 recast Financial Regulation, which introduced new requirements on the 'do no significant harm' (DNSH) principle, gender equality, performance indicators, and transparency rules for beneficiaries of EU budget programmes.

As the IA states, the scope of this assessment is limited to the mainstreaming of gender equality and the DNSH principle, which are legal obligations under the Financial Regulation without covering other policy objectives – such as competitiveness, security, digitalisation, and preparedness.¹ The mainstreaming of the SDGs has not been considered because, according to the IA, they are cross-cutting by definition and high-level in nature (p.4).

Problem definition

In line with the three pillars of the performance framework for EU budget programming, monitoring and reporting, the IA identified three problems:

Problem 1 (Programming) – Insufficient flexibility and excessive complexity of mainstreaming provisions. The IA finds that, in the 2021-2027 MFF, the EU budget has limited flexibility to adapt to evolving priorities and emerging needs. Overlapping programmes related to cross-cutting priorities with similar scope and different delivery models and requirements create inefficiencies and complexity for Member States and beneficiaries, undermining the achievement of mainstreaming objectives. The IA identifies as drivers (D) of this problem the multiple mainstreaming provisions/tools and conditionality requirements at MFF/programme level (D1.1), the horizontal spending targets at MFF/programme level that could constrain the EU budget's responsiveness to new needs and priorities (D1.2), and the inconsistencies in mainstreaming provisions across programmes, generating a burden for Member States and beneficiaries (D1.3). The application of the DNSH and gender equality principles remains heterogeneous and uneven across the EU budget, generating an administrative burden and leading to low progress.²

Problem 2 (Monitoring) – Inconsistency and complexity of monitoring requirements. The IA shows that the tracking system measuring the EU budget's contribution to policy priorities generates administrative costs for beneficiaries, Member States, partner countries and EU institutions and limits the capacity to measure budget performance. This stems from divergent tracking methodologies across programmes and policy priorities, which hinder the ability to assess and compare performance (D2.1) and from the excessive number of non-aggregable indicators – used for measuring performance and for monitoring/evaluation of programmes and Member State plans (D2.2).³

Problem 3 (Reporting) – Fragmentation and duplication in reporting performance information and funding opportunities across the EU budget. The IA finds that the current system generates overload and inconsistency, increasing the administrative burden and reducing transparency – an issue of particular concern to the European Parliament as the budgetary and discharge authority. This results from reporting requirements that are not aligned in timing/content (D3.1), performance information that is spread across more than 20 dashboards (D3.2), and funding opportunities scattered over 12 portals (D3.3).

Overall, in line with the Better Regulation Guidelines (BRG), the IA clearly outlines the nature of the problems, presents their drivers and identifies who is affected and involved. Sources are, in general, duly referenced and the relevant information is presented in the annexes. Stakeholders broadly supported the problem definition and provided specific input on DNSH, gender equality, indicators, reporting and portals. However, while respondent categories and counts are given, detailed findings by group or by type of business – for example, small and medium-sized enterprises (SMEs) v large firms – are not reported.

Subsidiarity/proportionality

The proposed legal basis for the performance framework is Article 322(1) of the Treaty on the Functioning of the European Union (TFEU), regarding the rules and procedures for establishing and implementing the budget. As stated in the proposal, the adoption of EU general financial rules falls within the Union's exclusive competence (p.5). Accordingly, no subsidiarity assessment is required. The IA nonetheless explains the necessity of EU action to meet Treaty objectives and international climate and biodiversity obligations and argues that a more efficient EU-level performance framework would better support EU priorities (pp. 14‑15). Compliance with the proportionality principle, which is a key criterion to consider in the comparison of policy options (BRT, Tool #5), is addressed only in passing, citing the calibrated DNSH (P2) approach and reduced administrative burden from the single portal and consolidated reporting (R2) (p. 41).

Objectives of the initiative

The general objective of the initiative is to propose a simplified, coherent and flexible performance framework for the 2028-2034 MFF, to maximise EU budget capacity to deliver on policy priorities and assess the performance of EU budget programmes effectively, while ensuring alignment with the recast financial regulation (IA p. 15).

The IA defines four specific policy objectives:

Overall, the specific objectives partly meet the SMART (specific, measurable, achievable, relevant and time-bound) criteria (BRT, Tool #15). Only SO2 contains a quantified target (25 %), while SO1, SO3 and SO4 remain at a general level. The IA acknowledges that objectives provide strategic direction, without including quantitative targets (Annex 1, p. 47).

The IA also presents nine operational objectives (two under SO1, one under SO2, three under SO3, and three under SO4) to further clarify what is to be achieved (p. 33). For example, SO1 – to increase capacity to address current and future policy priorities and specific Member State and sector needs – is linked to two operational objectives: (i) increasing capacity to mainstream gender equality, and (ii) increasing capacity to implement the DNSH principle. However, these objectives remain high-level, are not specific to the preferred option – as required by the BRG (BRT, Tool #11) – and are not clearly linked to monitoring indicators.

The IA expects this initiative to contribute to all SDGs and particularly to SDG 5 (gender equality), SDG 13 (climate action) and SDG 15 (life on land) (IA, p. 62).

Range of options considered

The IA identifies three policy options for each pillar – programming, monitoring and reporting – with a dynamic baseline scenario that capture the adaptations envisaged for the 2028-2034 EU budget. Table 1 provides an overview of these options.

Under the baseline, options P1, M1 and R1 maintain a programme-based approach with programme-specific requirements and tools; option P1 retains programme-specific DNSH and gender-equality provisions (heterogeneous guidance per programme); option M1 maintains programme-specific expenditure-tracking methodologies and performance indicators; and option R1 maintains multiple performance reports, multiple dashboards and multiple portals for funding opportunities, with heterogeneous reporting requirements across programmes.

Under programming, both options P2 and P3 propose an activity-based approach that replaces the programme-based model of the baseline scenario. They differ primarily in their degree of harmonisation. While option P3 envisages the full harmonisation of DNSH technical criteria across all intervention fields, management modes (direct, indirect and shared management) and types of support (grants, guarantees, loans), option P2 applies the DNSH principle in a proportionate and differentiated manner, considering the management modes, types of support, and sectors (such as defence and security). Both options envisage the establishment of gender equality requirements at EU level supported by 'a single guidance'. Option P2 proposes differentiated operationalisation according to the management mode, whereas P3 applies a uniform approach across the budget.

Under monitoring, both options M2 and M3 suggest a single expenditure monitoring system for all programmes built on a harmonised list of intervention fields covering all activities financed under the MFF. The two options diverge in their approach to indicators. Option M3 envisages a single, fully harmonised set of output and result indicators – linked to the intervention fields – and applicable across programmes to enable aggregation at EU level. Option M2, by contrast, proposes a short, mandatory, common set of indicators for all programmes, complemented by a standardised but indicative list for the MFF, with flexibility for additional programme-specific indicators where needed.

Both options R2 and R3 provide for a single report and a single portal. Reporting would be based on a single annual management and performance report (AMPR), consolidating all EU budget performance information and published through a single portal featuring a dashboard presenting the EU budget's results and achievements. The single portal would merge the Commission's portals and centralise information on funding opportunities. Under option R2, the portal is differentiated by management mode, policy area and sector, showing disaggregated performance data – including programme-specific achievements. The same granularity applies to funding opportunities; Member State portals are linked via redirects. Under option R3, the portal is fully harmonised and more aggregated, omitting programme- or sector-specific sections and providing a uniform overview of performance and funding opportunities across management modes; Member State portals are integrated and replaced.

While the description of policy options is clear on the envisaged changes, the level of detail remains limited in the main text, with some specifics deferred to the annexes. However, some issues flagged in the problem definition (IA, pp. 10‑11) appear to have been only partially addressed – for example: gaps in data availability for performance monitoring; inadequate indicators to assess progress and success of programmes; a suboptimal balance between output, result and impact indicators, even though all three are needed for a comprehensive assessment (IA, p. 128); and the time-lag effect, whereby benefits materialise beyond the MFF period.

Regarding the monitoring options (M2, M3), the IA explains that a Joint Research Centre-supported methodology was used to build the list of intervention fields and to link them with output and result indicators. The list is set out in Annex 1 of the proposal. While Annex 7 (IA, pp. 147‑149) outlines the methodology, several design choices are presented without elaboration – for example: the trade-off between cross-programme aggregation/comparability and the granularity required for robust impact measurement; how the list of intervention fields was compiled; how the coefficients assigned to the four objectives (CCM, CCA, ENV and SOC)⁴ were derived and validated; the criteria used for selecting or excluding indicators; the extent to which suggested indicators are relevant, accepted, credible, easy to monitor and robust (RACER), as stipulated in Article 33(3) of the 2024 recast Financial Regulation; and whether stakeholders were consulted on these choices. Moreover, a noticeable number of intervention fields display output but no result indicators, without explaining how these gaps will be addressed.

Finally, the information on arrangements for transitioning to the new architecture remains superficial. While the DNSH principle would be implemented through 'a single'/simplified guidance, the regulation would empower the Commission to revise the list of intervention fields and indicators (Annex 1 of the proposal), and while a single gateway portal is proposed, the governance/supervision mechanism and its operational details are not elaborated. Likewise, on portals, the IA sketches option R3 (integration and replacement of Member State portals), but does not detail the pathway to replace/integrate national and thematic portals – which would enable assessment of the option's feasibility.

Assessment of impacts

As required in the Better Regulation Guidelines, the IA assesses the economic, social and environmental impacts of policy options (pp. 36‑32).

Economic impacts are mostly qualitative: The only quantification concerns administrative-cost effects on Member State authorities and the Commission, set out in Annex 9 (pp. 194‑203) for programming (DNSH), monitoring (indicators) and reporting (single portal). The estimates use cost-reduction factors and entry-cost factors assumed by Commission services; beneficiary-level savings could not be quantified due to data gaps.

In programming, option P2 would generate efficiency gains by replacing multiple DNSH guidance documents with a single version, despite one-off development costs for the Commission. Option P3 would deliver greater – but unquantified – benefit at the price of a higher administrative burden. Over the MFF period, administrative costs for Member States are estimated at €171 million for P1, €94 million for P2 and €151 million for P3.

In monitoring, both options (M2, M3) would reduce burden compared to the baseline, but M3 would yield larger efficiency gains due to greater standardisation. Administrative costs for Member States are estimated at €1 401 million for M1 (baseline), €1 345 million for M2 and €911 million for M3.

In reporting, consolidating information in the AMPR and establishing a single online portal combining a performance dashboard with funding opportunity information would reduce costs and improve transparency under both options R2 and R3. Option R2 shows sector-specific views and includes redirects to Member State portals, while R3 does not show sector-specific views and integrates/replaces Member State portals. The Commission's administrative costs for the seven-year period are estimated at €70 million for R1, €16.9 million for R2 and €32.8 million for R3.

Social and environmental impacts are also qualitative: On social impacts, P2 is assessed as enabling more effective gender-equality mainstreaming than P3; M3 supports stronger aggregation and policy steering towards gender equality than M2, and R2's sector-specific displays can better integrate social considerations, including gender, into programme management than R3. On environmental impacts, both P2 and P3 (programming) would reduce environmental risks via the DNSH requirements. The calibrated approach in P2 would enable more effective implementation than P3. Option M3 (monitoring) would support stronger aggregation of environmental indicators than M2. In reporting, while both options would improve transparency and access to environmental information and funding opportunities, R2's sector-specific displays would better support integration of environmental considerations into programme management.

The IA compares options against effectiveness, efficiency and coherence, highlighting synergies across the options. For programming, P2 performs best on effectiveness and efficiency (via lower administrative burden for Member States) and is most coherent with EU policy objectives. For monitoring, M3 is preferred due to the fully harmonised list of indicators that would enable robust aggregation across programmes and scores highest on effectiveness and efficiency. However, it carries a risk that some programme-specific indicators are discontinued, a risk that is not further elaborated. For reporting, R2 achieves higher effectiveness and efficiency, mainly thanks to significantly lower entry/development costs for the single portal. Subsequently, the IA identifies P2+M3+R2 as the preferred combination with the highest scores on all the criteria and lowest administrative costs (€967 million) among the shortlisted combinations (IA, p. 41). Overall, the lack of data and the uncertainty in assumptions adopted constrains the robustness of option comparison across the three pillars. This does not appear to reflect a genuine trade-off, as the options rated most effective are also assessed as the most efficient and the most coherent.

Monitoring and evaluation

This initiative establishes an expenditure-tracking and performance framework. The IA does not present a monitoring plan linked to the initiative's operational objectives (p. 33). Instead, it proposes to track two cross-cutting aspects – (i) relevance/fitness of the intervention field and indicator list, and (ii) the administrative costs of implementing performance provisions – both via an update of a study over time. However, these 'core monitoring indicators' are only sketched out and not clearly linked to objectives, making their compliance with the RACER criteria (BRT, Tool #43) uncertain. Notably, neither the IA nor the proposal lays out a stand-alone evaluation of the performance framework itself, beyond general programme evaluation rules.

Stakeholder consultation

The IA includes a synopsis of stakeholder consultations (Annex 2, pp. 52‑56) covering activities between March and June 2025. No call for evidence has been identified. A 12‑week OPC on the post‑2027 MFF ran from 12 February to 6 May 2025 and received 555 responses. The questionnaire gathered feedback on the problem definition; mainstreaming policy priorities, including the DNSH principle and gender equality; and on the monitoring system and reporting tools. According to the synopsis report, stakeholders broadly confirmed the problem and called for standardisation and simplification. At the time of writing, the factual summary report of the OPC does not seem to be publicly available.

Beyond the OPC, the synopsis lists a Citizens' Panel on a new European Budget (March to May 2025), the annual budget conference (May 2025), the Tour d'Europe (first half of 2025), and a hearing with social partners (June 2025). However, the synopsis report does not provide activity-specific findings, nor does it explain how the collected input fed specific option design choices.

Overall, consultation seems heavily centred on the OPC; SMEs and other beneficiaries were not specifically targeted. The feedback reported lacks sufficient granularity, and some key elements are missing, such as stakeholder views on suggested policy options. Contrary to the BRG (BRT, Tool #54), the report lacks a consultation strategy outline, a differentiated analysis by stakeholder group, including SMEs, and clear explanations of how feedback shaped the policy options.

Supporting data and analytical methods used

The analysis is primarily qualitative and draws on a range of sources such as studies (including a European Parliament study),⁵ stakeholder feedback, programme evaluations and other relevant documents. No supporting study underpinned this IA and no modelling was used. The impact on third countries was not assessed, due to non-available data. However, the sources are generally well-referenced, with most hyperlinked.

Annex 9 of the IA (pp. 190‑202) presents a quantitative analysis of impacts on the administrative burden for Member States and the Commission. The IA acknowledges that significant burden reductions – not quantified because of gaps in the data – are expected for other beneficiaries, including businesses (IA, p. 41). However, the quantification relies heavily on a set of assumptions and estimates of reduction factors suggested by Commission services without additional supporting evidence. As the IA notes, any variation in these assumptions is likely to have a significant impact on overall cost estimates, which should therefore be treated as indicative (IA, p. 41).

Overall, the IA lacks comprehensive quantification of costs and benefits, substantiation of the assumptions used, sensitivity analysis of the results, and foresight considerations. Nonetheless, it is transparent on data limitations and acknowledges the uncertainty introduced into the findings.

Follow-up to Commission Regulatory Scrutiny Board opinion

On 16 June 2025, the Regulatory Scrutiny Board issued a critical opinion on the draft IA report. Remarkably and exceptionally, the Board refrained from giving a qualification⁶ to the opinion. This absence of quality scoring concerns the other MFF-related IAs that the Commission released between July and September 2025.

While the Board acknowledged the applicability of the BRG (BRT, Tool #9, preparation of a new MFF), it nonetheless found that the draft IA was lacking several key elements, pointing to the narrow scope of mainstreaming (limited to the DNSH and gender equality principles), the unaddressed issue of data availability, the non-SMART objectives for the performance framework, the insufficiently developed policy options, the limited transparency of the cost saving calculations, the lack of clarity on governance/implementation, the absence of mid- to long-term indicators, and the absence of monitoring and evaluation arrangements specific to this initiative.

The IA provides a general explanation on how the RSB's comments were addressed (IA, pp. 45‑51), but several issues remain unresolved. For example, uncertainties persist over the design and content of policy options, the assumptions underpinning the cost savings calculations, the governance and implementation mechanisms, and the monitoring and evaluation arrangements of the performance framework.

Coherence between IA and Commission legislative proposal

The proposal appears to follow the preferred combination of policy options (P2+M3+R2). It also operationalises options M3 and R2 by requiring Member States to establish a monitoring and reporting system (Article 14) to track performance and automatically transmit information to the Commission through the electronic data exchange system. In addition, it introduces new binding horizontal provisions; a 35 % climate and environment spending target for the EU budget with programme-specific contributions for some programmes and instruments (Annex III), and a dedicated article on social policies. These binding elements are not discussed in the IA report.

This briefing, prepared for the Committees on Budgets (BUDG) and Budgetary Control (CONT), analyses whether the IA appears to meet 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. It does not attempt to deal with the substance of the proposal.