The EU spends within a seven-year plan, the multiannual financial framework, adopted unanimously by member states with the European Parliament's consent. For 2021-2027 it amounts to €1,210.9 billion in current prices, plus €806.9 billion for the NextGenerationEU recovery instrument.
The EU budget works on two levels. The multiannual financial framework (MFF) sets, for at least five years (in practice seven), the maximum amounts the EU can commit each year and for each main area of spending. Within those limits, an annual budget is adopted each year by the European Parliament and the Council of the EU.
The MFF is the more political decision. It is adopted as a Council regulation by unanimity, which means every national government has a veto, after the European Parliament has given its consent. For 2021-2027, the MFF totals €1,210.9 billion in current prices, according to the European Commission. Current prices include an annual 2% adjustment for inflation; in 2018 prices, the basis used during the negotiations, the amount is lower.
The money comes mostly from own resources, revenue that belongs to the EU under a decision adopted unanimously by the Council and ratified by every member state. They include customs duties, a share of VAT and, above all, a contribution based on each country’s gross national income (GNI), which makes up around 60 to 70% of own resources. The budget must be balanced: the EU cannot run a deficit to finance its ordinary spending, and the resources it can call each year are capped at 1.4% of EU GNI.
Example
To respond to the economic crisis caused by the COVID-19 pandemic, member states created NextGenerationEU, a temporary recovery instrument outside the normal MFF ceilings, worth €806.9 billion in current prices (€750 billion in 2018 prices). It is exceptional because it is financed by borrowing: the Commission raises money on capital markets on behalf of the EU and passes it on to member states as grants and loans. New net borrowing is due to stop at the end of 2026. Repayment will weigh on future EU budgets.
Debates and limits
The budget is regularly contested. Some governments, often those that pay in more than they receive, call for a smaller budget or tighter control of spending. Others, and the European Parliament, argue that the EU needs more resources for its priorities, such as research, defence or climate. How to repay the NextGenerationEU debt, through new own resources or national contributions, is part of this debate. Negotiations for the next framework began when the Commission presented its proposal for the 2028-2034 MFF in July 2025; that proposal has to be agreed unanimously by member states.