Today, the European Court of Auditors (ECA) has issued two opinions on the European Commission’s legislative proposals to boost competitiveness, research and innovation in the EU through the European Competitiveness Fund and the Horizon Europe programme. These are the first in a series of opinions the ECA will be issuing on the proposals for the EU’s 2028-2034 budget. The auditors provide independent and expert advice on the budget’s design, governance, performance framework, and financial control arrangements. Their advice is intended to ensure not only that the initiatives promote transparency and accountability, but also that EU money is used efficiently and effectively.
On 16 July 2025, the Commission proposed new regulations to create the European Competitiveness Fund (ECF), a budgetary instrument to support key European technologies and strategic sectors, and the 10th framework programme for research and innovation, known as Horizon Europe. Together, they are designed to ensure a seamless flow from fundamental research to applied research, start-ups and scale-ups. A specific programme for defence research and innovation activities will also be included in the ECF proposal. Their joint budget will be €409 billion, i.e. one fifth of the total proposed budget for 2028-2034.
Investing in the EU’s competitiveness, innovation and research is an EU-wide policy priority, and potentially also has high EU added value. However, there is no common definition of this concept in EU legislation or in the ECF and Horizon Europe proposals.
The auditors note that both proposals contain numerous references to the EU’s cross-cutting priorities, but neither the Commission nor the member states have comprehensive, reliable data on the use of EU funds for the related objectives, and the proposals do not address the issue. There is also a need to clarify further how the principle of ‘excellence’ would be applied. Moreover, while the Horizon Europe proposal refers to the European Semester process, this is not the case for the draft ECF regulation.
The ECF proposal will allow funds to be reallocated quickly across policy areas, and even for additional contributions to be made by member states or other stakeholders. This enhanced budget flexibility could have state-aid implications which need to be clarified, the auditors note. They also advise specifying minimum requirements for revolving capacity (re-using funding multiple times for guarantees, loans or equity stakes in the course of programme implementation), and setting management fees at reasonably low levels for partners (such as the European Investment Bank or other financial institutions) that implement the programme.
Both proposals make efforts at simplification through a single rulebook, harmonised payment conditions, and unified data exchange. However, some key elements need to be clarified, e.g. regarding procurement, the use of financing not linked to costs, and simplified cost options.
The auditors additionally flag some risks in terms of compliance, transparency, accountability, and the traceability of the funds spent. Research, in particular, is a high-risk spending area where errors are frequent and material. Certain innovative approaches – such as pre-commercial procurement – would require particular attention. Simplification measures such as lump-sums reduce the administrative burden, but the rules for using them should be clear.
As funding will be managed by the Commission either directly or indirectly (e.g. through partnerships, joint undertakings, and the EIB), the ECA will have full audit rights. However, the auditors ask that their audit rights should be safeguarded in any agreements with entrusted entities, beneficiaries and third parties.
Lastly, another novelty of the 2028-2034 proposals is that a horizontal regulation – to be examined in another ECA opinion – sets out how programme performance will be monitored, assessed and evaluated.
Background information
The EU’s long-term budget – known as the multiannual financial framework (MFF) – provides for the financing of programmes in all EU policy areas. The new MFF will total almost €2 trillion over 2028-2034.
Today’s opinions are the first in a series: over the next few weeks, the auditors will also take stock of the financial soundness of several other Commission proposals for the new MFF. The Council of the EU and the European Parliament, which will ultimately agree on the budget, have asked for the auditors’ views before they themselves examine the proposals.