On the proposal for a regulation of the European Parliament and of the Council amending Regulations (EU) 2021/694, (EU) 2021/695, (EU) 2021/697, (EU) 2021/1153, (EU) 2023/1525 and 2024/795, as regards incentivising defence-related investments in the EU budget to implement the ReArm Europe Plan

PA_LegEvaluation

BUDGETARY ASSESSMENT

for the Committee on on Industry, Research and Energy on the on the proposal for a regulation of the European Parliament and of the Council amending Regulations (EU) 2021/694, (EU) 2021/695, (EU) 2021/697, (EU) 2021/1153, (EU) 2023/1525 and 2024/795, as regards incentivising defence-related investments in the EU budget to implement the ReArm Europe Plan

(COM(2025)188 – C100070/2025 – 2025/0103 (COD)

The Committee on Budgets has carried out a budgetary assessment of the proposal under Rule 58 of the Rules of Procedure and has reached the following conclusions:

A. whereas a massive increase in European defence spending is needed over a prolonged period to develop the necessary capabilities and military readiness to credibly deter armed aggression and aim at efficinetly protect the EU and its citizens;

B. whereas the proposal does not modify existing budgetary commitments and remains within the limits of the overall allocations for the period 2021-2027 and is therefore budgetary neutral; whereas the proposal is meant to be implemented within the existing human resources allocation;

C. whereas the proposal establishes a fourth strategic sector for defence-related technologies under the Strategic Technologies for Europe Platform (STEP) which extends the scope of the programmes included in STEP;

D. whereas the proposal complements the mid-term review of the Cohesion policy by allowing investment in this sector under STEP in the European Regional and Development Fund (ERDF) and Cohesion Fund (CF); whereas Member States could for this new sector benefit from a 30 % pre-financing of the amounts programmed under cohesion policy funds and a Union financing of up to 100 %; whereas the proposal also introduces the possibility for the Member States to transfer resources to the Connecting Europe Facility (CEF) for projects supporting military mobility to benefit from the same rates; whereas disbursements under the cohesion programmes are subject to the fulfilment of the horizontal and thematic enabling conditions defined in the Common Provisions Regulation (CPR);

E. whereas the proposal will enable support to technologies with potential dual-use applications under the European Innovation Council (EIC) Accelerator, as well as support defence technologies under the STEP window; whereas the unused amount and potential returns from investment made by the EIC Fund during the pilot phase under Horizon 2020 should be made available for the STEP window; whereas they are estimated at EUR 210 million;

F. whereas the proposal extends the scope of Digital Europe Programme to include dual-use projects as well as the deployment and operation of AI Factories and new generation AI Gigafactories;

Conclusions of the budgetary assessment

1. Determines that the proposal is compatible with the multiannual financial framework (MFF), in particular the payments ceiling and the system of own resources; notes that the proposed measures do not involve any top-up of the EU budget;

2. Notes that, according to the Commission, the proposal does not require additional human resources; doubts whether this assessment took sufficiently into consideration a scenario whereby the Member States would make great use of the possibility to transfer cohesion funds to programmes implemented by the Commission;

3. Deplores that the Commission did not perform an impact assessment of the proposal; highlights that it makes it impossible to comment on the possible consequences of redirecting funds towards the new priority; regrets that the legislative financial statement accompanying the proposal does not provide any estimate of the impact of the introduction of a fourth strategic sector under STEP and of the increase of the pre-financing and co-financing rates for investment in military mobility financed from cohesion funds transferred to CEF;

4. Determines that the proposal is compatible with the budgetary principles laid down in the Financial Regulation; welcomes the derogation from Article 212(3) enabling to consider the repayments including reimbursed advances, revenues and unused amounts net of fees and costs of EIC blended finance of the EIC pilot under Horizon 2020 as internal assigned revenues; recalls, in light of the introduction of the option of 100 % Union co-funding, the general principle whereby grants shall involve co-financing and full financing from the EU budget shall remain an exception; points out that introducing such flexibility at this time in the MFF could be perceived as penalising the most advanced Member States in the implementation of the cohesion programmes;

Recommendations as regards the budget implementation

5. Welcomes the objective of the proposal to increase EU support to European defence investment; regrets however that in the absence of fresh resources existing priorities under the amended programmes will face a further budgetary pressure; underlines the importance of including a clear definition of ‘defence technologies’ in the STEP Regulation and a clear definition of dual-use in the Horizon Europe Regulation in order to prevent unnecessary risk of oversubscription to the available funds due to an unclear scope which might also lead to unnecessary overlaps with other existing schemes;

6. Requests the Commission to provide for traceable information in form of timely reports on transfers referred to in Article 26 of Regulation (EU) 2021/1060 to make the impact of the proposal clearly identifiable for the budgetary authority;

7. Calls on the Commission to maintain consistency in applying conditionality across the EU budget, and to pay utmost attention at preventing that the possibility to redirect cohesion funds leads to circumvent the existing decisions taken in accordance with rule-of-law requirements established in the CPR;

8. Concludes that the proposal is compatible with the elements referred to in Rule 58(3) of the Rules of Procedure.

AMENDMENT

As part of its budgetary assessment, the Committee on Budgets also submits the following amendments to the proposal:

Amendment 1

Proposal for a regulation

Recital [18] a (new)

Text proposed by the Commission

Amendment

([18]a) This Regulation has implications for the Union budget. Accordingly, the European Parliament’s Committee on Budgets adopted a budgetary assessment, which forms an integral part of Parliament’s mandate for negotiations.

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