Big bets for bigger impact: towards a more strategic and risk-taking MFF

November 2025

Europe’s next Multiannual Financial Framework (MFF) will be developed amid growing pressure. The continent is facing a polycrisis involving technological competition, climate urgency, fiscal stress and social polarisation. Yet, despite this turbulence, the EU budget is likely to undergo only incremental change. While the familiar logic of allocating limited resources across various programmes and regions has ensured stability and solidarity, it has not necessarily had a transformative impact.

As the green and digital transitions accelerate, this approach is looking increasingly inadequate. Other global players — most notably the United States and China — combine industrial policy, innovation and strategic investment on an unprecedented scale. Europe’s traditional instruments risk being outpaced not due to a lack of vision, but due to a lack of scale and risk appetite.

Against this backdrop, a new debate is emerging: should the EU continue to prioritise the breadth and equity of distribution, or shift towards the depth and directionality of impact? The challenge lies in designing a budget that redistributes resources and reshapes Europe’s future.

Inspired by this debate, we have developed a series of scenarios exploring alternative approaches to the future MFF. These scenarios are based on the concept of a more impactful and risk-taking MFF that dares to invest in scale, coordination and experimentation (see also our previous blog posts on 'The wellbeing economy as a platform for impactful societal change (Opens in a new window)' and 'Turning budgets into impact: Europe’s next cohesion challenge (Opens in a new window)’).

MMF Scenario 3: Larger Strategic Pots for Transformative Action

In this scenario, the structure of the MFF evolves further than in the European Commission's July 2025 proposal, moving towards fewer, larger funding envelopes organised around cross-cutting missions. While earlier scenarios examined the cohesion dimension of the National and Regional Partnership Plans and their funds, this scenario focuses on the European Competitiveness Fund (ECF). This includes a strengthened Horizon agenda designed to enable large-scale, mission-oriented investment.

The idea already put forward in the MFF proposal is simple yet powerful. An increased RDI (Research, Development and Innovation) budget — potentially rising from EUR 95.5 billion for the period 2021–2027 to EUR 175 billion for the period 2028–2034 — would enable Europe to transition from pilot projects to systemic change.

This scenario goes one step further: Rather than making dozens of fragmented calls, the EU could use this money strategically to finance a handful of big bets combining research, infrastructure, and social innovation in pursuit of shared goals.

In this way, the funding could act as an integrator, linking technological innovation with territorial deployment and social experimentation. A 'systemic clean-tech mission', for instance, could combine R&D funding with regional demonstration projects and community-level social innovation. Similarly, a 'wellbeing and demography mission' could combine health research, digital care infrastructure and local capacity building.

The emphasis would shift from 'how many projects can we fund?' to 'how much change can we trigger?'. Thus, the MFF would become a transformative portfolio rather than a mere collection of spending lines.

From spending lines to a stronger impact focus

If realised, this scenario could represent a fundamental change in the way Europe implements policies.

• Scaling up ambition and impact. Concentrating resources in a few strategic areas would create a critical mass, enabling Europe to compete globally in terms of breakthrough technologies and social innovation. Scale is not an end in itself; it is a precondition for impact.

• Stimulating risk-taking and experimentation. With larger budgets and built-in tolerance for failure, the EU could finance bold experiments that national and regional programmes rarely dare to support. The objective would be to learn through doing, not merely to comply.

• Breaking silos across policy domains. Integrated missions that link R&D, infrastructure, and skills could bridge the divide between industrial, regional, and social policy, which is one of the EU's long-standing weaknesses.

• Mobilising co-investment. Clear long-term missions could attract private capital, national co-funding and philanthropic investment. By signalling Europe’s strategic priorities, the MFF could attract resources and foster lasting partnerships.

• Strengthening Europe’s narrative. A visible portfolio of transformative missions, such as clean technology, well-being and digital sovereignty, could help to shift the EU’s image from that of a regulatory power to that of a transformative force, thereby aligning European identity with ambition.

A sceptical read: the shadows of scale

However, a more impactful MFF also carries serious risks. Increasing budgets and ambition does not automatically lead to better outcomes. Without careful design and governance, large funds can easily become ineffective.

• Centralisation and loss of ownership are two such risks. Large, Brussels-managed funds risk marginalising regional and local actors, who are crucial for implementation. The territorial partnership principle — a cornerstone of cohesion policy — could erode under the pressure of strategic urgency.

• Inequality of opportunity. Regions with strong innovation ecosystems will be better positioned to access large-scale funds, which could widen the gap between leading and lagging regions. 'Excellence' criteria, if not balanced with place-sensitive mechanisms, may exacerbate spatial disparities.

• Bureaucratic inertia and risk aversion may also be issues. Paradoxically, large funds often attract more rigid control mechanisms. The fear of failure could lead to over-engineering and slow implementation, thus undermining the purpose of taking risks.

• Over-politicisation and rent-seeking. Large pots of money invite political bargaining. Without transparent criteria and independent assessment, strategic funds could become arenas for lobbying rather than transformation.

• Crisis bias. While the growing pressure to earmark RDI resources for crisis management and resilience is legitimate, it could reduce the space for long-term transformative investment. The temptation to spend reactively could crowd out systemic experimentation.

In short, size and impact are not synonymous. Without adaptive governance and territorial anchoring, a 'big MFF' could reproduce old inefficiencies on a larger scale.

Making it work: ingredients for a more impactful MFF

For this scenario to be credible, the EU would need to adopt a different mindset, one that is oriented towards learning, flexibility and co-creation. Five principles stand out:

• Strategic clarity and mission orientation. The EU must define a limited set of missions with clear objectives and measurable outcomes. Rather than slogans, these should be actionable impact frameworks, such as 'cut industrial emissions by 60% while doubling clean-tech employment by 2035'. Missions should be chosen for their capacity to mobilise public, private and regional actors around shared European challenges.

• Adaptive and flexible instruments. Large funds require agile management. Essential elements include simplified procedures, multi-annual work programmes, and the ability to reallocate resources as learning evolves. The EU’s experience with the Recovery and Resilience Facility (RRF) shows that flexibility and conditionality can coexist if managed well.

• Risk governance and learning loops are also essential. A culture of experimentation must be institutionalised. This means explicitly budgeting for failure, ensuring transparent reporting, and creating 'learning reviews' rather than punitive audits. Impact should be assessed in terms of direction of change rather than absorption rates.

• Territorial pipelines and co-governance. Rather than merely implementing national missions, regions should co-design them. Territorial pipelines — structured processes that link regional ecosystems to European missions — can ensure that innovation is rooted in place and benefits local economies.

• Performance and transformation metrics should be used. Monitoring should go beyond financial compliance. The EU needs a coherent set of systemic change indicators—such as carbon reduction, wellbeing gains, resilience capacity and knowledge diffusion—that are tailored to territorial diversity.

If these principles guide the implementation of the next MFF, it could genuinely transform the relationship between European ambition and territorial practice.

Territorial reflections: scale with place

From a territorial perspective, this scenario poses both opportunities and risks.

On the positive side, large strategic funds could establish new forms of regional specialisation. Regions with emerging innovation niches could connect with EU-level initiatives and increase their visibility beyond their borders. Cross-border regions, for example, could become testbeds for green corridors or shared industrial ecosystems. Aligning with European missions could give territorial strategies new leverage and legitimacy.

However, the risk of spatial polarisation remains high. Concentrating funding in leading ecosystems — be they in Paris, Munich, Stockholm or Eindhoven — could reinforce an already uneven geography of innovation. Less developed regions may struggle to meet the co-funding, administrative or knowledge thresholds required for participation.

To mitigate this, territorial cohesion should be reframed as mission participation rather than redistribution. EU policy could evolve into the enabling layer of a mission-oriented MFF, supporting readiness, capability building and diffusion. Rather than compensating for inequality after the event, cohesion funds could prepare regions to participate in transformative missions from the outset.

This would necessitate closer collaboration between the Competitiveness Fund, the Horizon programmes and the proposed National and Regional Partnership (NRP) Plans. Cohesion and competitiveness would thus become two sides of the same coin, with one enabling inclusion and the other driving transformation.

Furthermore, the territorial logic of missions must be explicit. Some missions, such as energy resilience and food systems, are inherently place-based and require differentiated territorial approaches. Others, such as digital sovereignty and health innovation, have networked geographies that transcend administrative boundaries. Recognising these variations is key to designing governance architectures that respect both scale and place.

Examples of what it could look like

For example, consider the following possible missions under a more impactful MFF:

• Systemic Clean Tech Mission. This would involve combining R&D grants, infrastructure investments and regional transition funds to scale up hydrogen, circular materials and energy storage solutions. Territorial pilots in industrial regions could demonstrate systemic change rather than isolated innovation.

• Demography and Wellbeing Mission. Integrating research on ageing with digital health infrastructure and local service innovation. This could link universities, hospitals and rural municipalities in cross-border health ecosystems, thereby fostering efficiency and improving care quality.

• The Digital Sovereignty and AI for Public Value Mission. Pooling resources to build European digital commons, including data infrastructures, ethical AI and cybersecurity, anchored in regional clusters and public administrations.

• The Resilient Food and Bio-regions Mission. Connecting agricultural R&D, circular bio-economy pilots and sustainable logistics to diversify rural economies and contribute to strategic autonomy.

Each of these missions would combine technological, social and territorial innovation. Their effectiveness would depend not only on the size of the budget, but also on the alignment of actors, incentives, and governance across scales.

The bottom line

Europe is at a crossroads. The forthcoming Multiannual Financial Framework (MFF) could either entrench the status quo of fragmented programmes, modest ambitions and incremental results, or it could mark a turning point towards strategic scale and transformative impact.

A more impactful and risk-taking MFF would not replace cohesion or national policy; it would redefine their interaction. It would incorporate mission-based thinking into the EU’s financial strategy, integrating competitiveness, resilience, and territorial cohesion within a unified framework of shared objectives.

However, impact cannot be decreed from Brussels. It must be co-produced across levels of governance and be rooted in local realities. Big bets must therefore be backed by broad ownership.

If Europe can strike the right balance between ambition and inclusion, scale and place, it could transform its budget from a redistributive mechanism into a true investment engine for the future. An intelligently designed, territorially anchored MFF that takes risks would demonstrate that Europe’s diversity is not a constraint to be managed, but rather the canvas on which its strategic capacity is painted.

by Kai Böhme and Kaisa Lähteenmäki-Smith

(Opens in a new window)