A First Look at the EU’s Budget Proposal and the Push for “Digital Leadership”
On 16 July, the European Commission presented its proposal for the EU’s next long-term budget: the Multiannual Financial Framework (MFF) for 2028–2034. Valued at nearly €2 trillion, the MFF aims to align the Union’s financial architecture with its political priorities of building an “independent, prosperous, secure and thriving” Europe over the next decade.
One area where this is particularly evident is digital policy. Across EU institutions and in Member States, there is growing recognition that regulation alone cannot resolve Europe’s deep structural dependencies in the digital domain. After years of relying on markets to drive innovation and scale, the EU is now embracing a more active public role in shaping its digital future through long-term industrial strategy.
A key part of this transformation is the creation of a European Competitiveness Fund (ECF), introduced in the MFF package. This new instrument will consolidate several existing programs into a single, more strategic investment framework. Commission communications underscore this shift, presenting the ECF as a tool to strengthen the EU’s “capacity to act” and to respond more effectively to emerging challenges.
This analysis provides an initial examination of how the Commission’s MFF proposal, alongside the draft regulation for the European Competitiveness Fund, translates the political priority of digital sovereignty into financial commitments.
Strategic Signals: Digital as Core Infrastructure
The ECF draft regulation offers an insight into the Commission’s plans. The fund proposes four thematic investment windows, including Digital Leadership; Clean Transition and Industrial Decarbonisation; Health, Biotech, Agriculture and Bioeconomy; and Resilience and Security, Defence industry and Space.
The establishment of the ECF and the inclusion of EU’s “digital leadership” among its priorities signal the direction. Budgets are, fundamentally, expressions of power and priority. In the EU political context, where bold ambitions are often delayed or diluted, the MFF process stands out as an instrument capable of translating political goals into long-term commitments.
The Commission’s plan for the next MFF, alongside the ECF regulation—which frames investment in digital in terms of ‘leadership’ rather than just ‘transition’—signals a growing recognition of the EU’s strategic dependence on digital infrastructure amid a shifting geopolitical landscape.
By identifying ‘digital leadership’ as one of four core thematic areas with a budget of €51.5 billion — five times the combined budgets of the Digital Europe Programme and the Connecting Europe Facility under the current MFF — the draft recognizes the essential role of digital systems in ensuring Europe’s economic and political resilience. This suggests that digital capacity is now recognized as a strategic asset requiring sustained public investment, rather than mainly a driver of innovation.
Public Digital Infrastructure – Where Tech and Rights (Should) Converge
The ECF draft regulation explicitly calls for developing pan-European digital public infrastructure. Recital 31 urges investment in “interoperable, secure, and sovereign” digital networks, solutions, and services to address fragmentation and transform the European public sector into an “interconnected, frictionless, and agile digital ecosystem.”
However, this framing risks reducing public infrastructure to a technical fix focused on government efficiency and cross-border data exchange. It overlooks the broader role that digital infrastructure plays as a socio-technical foundation, one that can either enable or constrain fundamental rights and democratic accountability.
Interestingly, the version of the ECF draft regulation that was leaked earlier this month, stated that it will have “no consequences on the protection of fundamental rights”. While such statements are common in early drafts, it is surprising and symptomatic in this context. It seems to suggest the Commission was still in the process of making up their mind about how digital infrastructure funding intersects with rights, governance, and democratic values. The official draft states that the proposal aligns with and respects the Union values enshrined in Article 2 of the Treaty on the European Union and the Charter of Fundamental Rights. It highlights how the initiative promotes fundamental rights such as the right to life and private life through decarbonization efforts, and equality by fostering diversity and equal opportunities across investments. This framing stops short of addressing the broader ways digital infrastructure funding can impact fundamental rights.
A more ambitious approach sees public digital infrastructure as the backbone of sovereignty and self-determination.
The European Parliament’s recent own-initiative (INI) report on technological sovereignty and digital infrastructure supports this more comprehensive view. It underscores that Europe cannot rely on technologies controlled by foreign powers because this introduces vulnerabilities in terms of data control, rule-setting, implementation, and security. The report calls for foundational digital infrastructure built within Europe, from chips and connectivity to cloud services, software, and AI platforms. Encouragingly, the ECF draft includes references to technological sovereignty and resilient digital ecosystems (Article 39), signaling a step toward this comprehensive approach. The European Digital Infrastructure Consortia or Joint Undertaking are identified as potential vehicles to advance Europe’s digital leadership.
Closing the Gap: From Research to Infrastructure
A key ambition of the EU has been closing the gap between research and deployment. This goal is now taking a concrete, systemic shape through the coordinated design of Framework Programme 10 (the Horizon Europe successor) and the European Competitiveness Fund, which together aim to support innovation from early research to large-scale deployment.
Horizon Europe’s successor, Framework Programme 10, will continue funding early-stage research and innovation, while the ECF focuses on scaling technologies through infrastructure investment and ecosystem development.
According to the ECF draft, the Framework Programme for Research and Innovation will be closely linked to the ECF. This alignment is intended to ensure European industries can effectively leverage research results to innovate and produce within Europe.
If successfully implemented, this coordinated approach could overcome a major bottleneck in EU digital funding, where research outputs often fail to translate into infrastructure or market-scale deployment. Complementing this is a broader shift in the MFF proposal toward greater budgetary flexibility. New instruments aim to reduce rigidities, enabling a more agile response to emerging priorities and unforeseen events.
What’s Next: Making Digital Sovereignty Real
The Multiannual Financial Framework is the EU’s main lever for turning political priorities into real investment. Member States must now reach an agreement in the Council, with the European Parliament’s consent. What happens next will shape Europe’s digital future for the next decade.
By integrating and streamlining funding for digital infrastructure, the Commission has laid down a promising structure. However, this structure must genuinely reflect political priorities if those ambitions are to be realized. Digital sovereignty isn’t about slogans. It’s about supporting systems Europe can trust and rely on, no matter what a tech-bro or a foreign government decides to do.
For this reason, moving forward, the next MFF should include a dedicated envelope for public digital infrastructure, as requested by the INI report. This funding must not go solely to large industrial players; it should also support public-interest actors such as the digital commons, including the open source ecosystem. These communities contribute to building and maintaining digital infrastructure that can reduce vendor lock-in risks and support greater transparency and long-term oversight.
One of the features of the Commission’s MFF proposal is the concept of “moonshots” under the new Horizon framework programme (see here). These will be large-scale flagship projects aiming for breakthroughs in next-generation AI, quantum computing, data sovereignty, and the space economy.
These projects sound exciting, but as currently framed, they lean too heavily on industrial ambition and technological hype.
If the EU is serious about digital sovereignty, its moonshots must do more than chase the next big thing. Specifically, the design of the “sovereignty” moonshot, currently limited to “data”, should be rethought and expanded into a broader Digital Sovereignty Moonshot that covers all foundational layers of public digital infrastructure. Moonshots have the power to shape Europe’s digital future, but if they aren’t aligned with the fundamental values Europe wants to uphold, they risk missing the target entirely.
