The Commission’s proposal for a European Competitiveness Fund (ECF) marks a significant shift in the EU budget towards industrial policy. Together with the closely aligned Horizon Europe programme, the new competitiveness heading would account for around 30% of the proposed 2028–2034 Multiannual Financial Framework (MFF), representing a substantial reprioritisation compared to the current framework. While this scale remains insufficient to close Europe’s large investment gaps, it could have a meaningful impact if deployed in a sufficiently focused, coordinated and leveraged manner. 

The proposal addresses several long-standing weaknesses of EU industrial policy, notably fragmentation and complexity. The consolidation of instruments under a single rulebook, the standardisation of financial tools, the strengthening of InvestEU as a horizontal instrument, and the closer alignment with Horizon Europe’s innovation pillars provide a credible basis for improving coherence and accelerating the transition from research to market deployment.

However, important shortcomings remain. The ECF’s windows cover an exceptionally broad range of technologies and sectors without a clear prioritisation framework or definition of EU added value, risking dilution of resources and weaker market signals. Leverage potential is further constrained by a low minimum allocation to InvestEU guarantees and limited incentives for blending. Coordination with other key instruments – such as the Innovation Fund, the Connecting Europe Facility (CEF) and national and regional partnership plans (NRPPs) – remains insufficiently specified, increasing the risk of overlaps and inefficiencies. Finally, the proposed governance framework grants the Commission considerable flexibility but lacks robust safeguards, strategic prioritisation mechanisms and accountability, potentially undermining effectiveness.

This Briefing was originally published by the European Parliament. Read the full publication here.