Questions and answers on the agreement on the 2026 EU annual budget

Full overview of the annual budget 2026:

In the 2026 annual budget, the following amounts will be allocated to the various EU priorities (in commitments):

• €53.3 billion for the Common Agricultural Policy and €0.8 billion for the European Maritime, Fisheries and Aquaculture Fund, for Europe's farmers and fishers, but also to strengthen the resilience of the agri-food and fisheries sectors and to provide the necessary scope for crisis management.
• €42.1 billion for regional development and cohesion to support economic, social and territorial cohesion, as well as infrastructure supporting the green transition and Union priority projects.
• €14.5 billion to support investments in our people and social cohesion through the European Social Fund Plus (ESF+).
• €15.6 billion to support our partners and interests in the world, of which, among others, €10.2 billion under the Neighbourhood, Development and International Cooperation Instrument — Global Europe (NDICI — Global Europe), €2.2 billion for the Instrument for Pre-Accession Assistance (IPA III) and €0.5 billion for the Growth Facility for the Western Balkans, as well as €2.0 billion for Humanitarian Aid (HUMA).
• A further €3.9 billion will be available in grants under the Ukraine Facility, complemented by €7.2 billion in loans.
• €14.1 billion for research and innovation, of which mainly €13.0 billion for Horizon Europe, the Union's flagship research programme. The Draft Budget also includes the financing of the European Chips Act under Horizon Europe and through redeployment from other programmes.
• €4.6 billion for European strategic investments, of which, for instance, €3.0 billion for the Connecting Europe Facility to improve cross-border infrastructure, €1.0 billion for the Digital Europe Programme to shape the Union's digital future, and €298.6 million for InvestEU.
• €2.4 billion for spending dedicated to space, mainly for the European Space Programme, which will bring together the Union's action in this strategic field.
• €15.1 billion for resilience and values, of which, €4.3 billion Erasmus+ to create education and mobility opportunities for people, €397.0 million to support artists and creators around Europe, and €333.6 million to promote justice, rights, and values.
• €2.2 billion for environment and climate action, of which €813.6 million for the LIFE programme to support climate change mitigation and adaptation, and €1.3 billion for the Just Transition Fund to make sure that the green transition works for all.
• €2.7 billion for protecting our borders, of which €1.3 billion for the Integrated Border Management Fund (IBMF), and €1.1 billion (total EU contribution) for the European Border and Coast Guard Agency (Frontex).
• €2.3 billion for migration-related spending, of which €2.1 billion to support migrants and asylum-seekers in line with our values and priorities.
• €2.0 billion to address defence challenges, of which mainly €1.0 billion to support capability development and research under the European Defence Fund (EDF), €621.3 million for the newly created European Defence Industry Programme (EDIP, including for the Ukraine Support Instrument (USI))  and €261.3 million to support Military Mobility.
• €1.0 billion to ensure the functioning of the Single Market, including €624.0 million for the Single Market Programme, and €207.2 million for work on anti-fraud, taxation, and customs.

How is defence financed in the annual budget for 2026?

The Union is facing unprecedented security challenges, which need to be addressed urgently in the 2026 budget, including funding as from 1 January through the European Defence Industry Programme (EDIP).  

As agreed by Parliament and Council on 16 October 2025, the EDIP aims at strengthening the competitiveness and responsiveness of the European Defence Technological and Industrial Base, while ensuring the availability and supply of defence products, including through the funding for the Ukraine Support Instrument. The defence priorities are also served by the additional funding available under the European Defence Fund (EDF), for projects related to the Strategic Technologies for Europe Platform (STEP).

Progress is also being made on the Commission proposal incentivising defence-related investments in the EU budget to implement the ReArm Europe Plan/Readiness 2030. To boost the defence capabilities in the Member States, the Security Action for Europe (SAFE) instrument as adopted on 27 May 2025 enables the Commission to provide the Member States with €150 billion in loans backed by the EU budget, available until 31 December 2030.

What are commitments and payments?

Commitments are the total volume of contractual obligations for future payments that can be made in a given year. Commitments must then be honoured with payments, either in the same year or, particularly in the case of multi-annual projects, over the following years.

Payments are the actual money paid in a given year from the EU budget to cover commitments of the current, and previous years.

For instance, when the EU decides to co-fund the building of a bridge in a Member State, the total amount which the EU agrees to cover is a commitment. The bills for the work done are the payments that are paid over the coming years in line with the implementation life cycle of the project. The commitment is made in year N. The payments from the EU budget may follow in the same year N, but also in following years, depending on the financial rules on when the invoices are reimbursed (N+x).

How are the increased borrowing costs for NextGenerationEU covered?

Considering the increase of interest rates since 2022, a new ‘cascade mechanism' has been put in place as from 2025 to cover the additional needs for the NextGenerationEU interest payments. It includes several steps to finance the additional costs, by making use of availabilities to redirect existing funding within the budget, mobilising special instruments within the long-term budget, and the mobilisation of a new and exceptional instrument over and above the MFF ceilings if financing for the interest payments cannot be found within the existing EU budget.

In the annual budget for 2026, and in line with the approach agreed with Parliament and Council for the 2025 budget, the additional needs for the borrowing costs are financed through a combination of the unallocated margin in heading 2b (resilience and values), the Flexibility Instrument, and the EURI instrument for the remaining amount, which is fully covered by past decommitments. Therefore, there is no need to recourse to the so-called ‘financial backstop' (a contingency measure to ensure that there is sufficient funding available to address unforeseen circumstances or to stabilize financial systems when necessary.)

How does the annual budget for 2026 relate to the next long-term budget?

The budget for 2026 is agreed by the European Parliament and the Council in line with the current long-term budget, which runs until the end of 2027. The Commission proposal for the next long-term budget as of 2028 was published in July this year, building on the lessons learnt from the current long-term budget, in particular as regards the need for more flexibility to respond to new and unforeseen developments.

The Commission stands ready to assist the European Parliament and the Council in reaching a swift agreement on the MFF proposals.