The Council has adopted its partial negotiating position on the regulation establishing the new European Competitiveness Fund (ECF) – a central pillar of the next EU multi-annual budget (MFF).
The fund is designed to help address the EU’s innovation gap with its main global competitors, reduce dependencies, and increase the overall competitiveness of the European economy.
Under a single rulebook and a single application gateway, it will channel EU investment to the strategic technologies and industries necessary for Europe to strengthen its global position. The ECF will also draw on private investment alongside public funding to maximise the impact of every euro.
The Council position is 'partial' because it excludes financial and horizontal issues, which are currently being discussed as part of the overall negotiations on the next multiannual financial framework (MFF) covering the period 2028 to 2034.
Our work has been guided by a clear priority: ensuring that Europe remains competitive, innovative, and resilient in an increasingly challenging global environment. The European Competitiveness Fund is a unique chance to scale up investment, fund high quality and high impact projects across the Union, and unlock Europe’s full competitiveness potential.
Michael Damianos, Minister for Energy, Commerce and Industry of the Republic of Cyprus
The Council’s position clarifies synergies with other EU funds such as Horizon Europe, with specific measures included for SMEs. It also introduces improvements to the original Commission proposal to strengthen the role of member states in the governance of the fund.
Funding competitiveness
The fund aims to consolidate 14 existing instruments into a single framework, simplifying EU funding and attracting private investment to boost the EU’s competitiveness. It focuses on four key policy areas:
clean transition and industrial decarbonisation
health, biotech, agriculture and bioeconomy
digital leadership
resilience and security, defence industry and space
Coordination with other EU funds and instruments
The partial general approach clarifies the synergies between the ECF and other EU funds and programmes, paying particular attention to Horizon Europe, ensuring joint priority setting.
The Council position also aligns key features of the ECF InvestEU instrument with the existing InvestEU programme, while maintaining the ECF’s focus on financing higher-risk projects.
Focus on SMEs and support for business
The Council position provides for a specific focus on SMEs through work programmes and dedicated calls, together with incentives to attract private capital. The ECF project advisory initiative and other business support services will be expanded, improving links between the InvestEU advisory hub and the EU for business network.
Governance and strategy
The Council position strengthens the role of the member states in the implementation of the fund. All comitology procedures will now be subject to an examination procedure, requiring formal opinions from member states on proposed implementing acts.
Additionally, the Council’s position reinforces member state involvement within the ECF General Committee – the advisory body governing the programme – granting them a role in providing strategic input on the overall direction of the fund and defining the priorities.
Defence industry policy
The changes introduced by the Council align the ECF rules with the current European defence fund, ensuring stronger ownership and control for member states in award decisions. The changes also ensure consistency with the existing defence industrial acquis.
Space policy
On space policy, member states have introduced major changes concerning the new Earth Observation Governmental Service (EOGS), which will harness space data in support of autonomous European decision-making in the area of security and defence. The Council introduces a stepwise approach involving resource pooling and gap analysis. Participation in EOGS and the roles of the European Union Satellite Centre and the European Space Agency have been clarified.
Next steps
The partial negotiating position is the Council's mandate to start negotiations with the European Parliament on the ECF. The decision on the programme’s budget for 2028-2034 will depend on the final agreement on the next MFF.
Background
The 2024 reports by Enrico Letta (Much more than a market) and Mario Draghi (The future of European competitiveness) highlighted a severe investment deficit in Europe. The Draghi report in particular called for unprecedented levels of annual investment to fund the green and digital transitions and bolster defence, while Enrico Letta emphasised that the EU single market remains too fragmented, preventing innovative startups from scaling up.
The ECF proposal aims to address these twin challenges and is a key element of the next MFF, the EU's seven-year spending plan. Following the European Commission's initial proposals for the 2028–2034 period, presented in July and September 2025, an EU agreement on the overall MFF by the end of 2026 would allow for the adoption of legislative acts in 2027 and ensure that EU funding reaches beneficiaries without interruption from January 2028.
