The most striking clash during the European Parliament's Budgets Committee workshop on 28 January 2026 revolved around the governance and strategic coherence of the proposed European Competitiveness Fund (ECF). Christian Ehler (EPP) argued the ECF’s current design is overly flexible and logically hollow, centralizing power but lacking effective delivery mechanisms. He criticized stakeholder capture by entrenched industrial actors who limit innovation and push funds toward incumbents. Judith Arnal (Elcano Royal Institute), by contrast, emphasized implementation gaps and poor performance tracking rather than centralization per se, focusing on the fragmented relationship between ECF windows and national Partnership Plans. Johannes Jarlebring (Bruegel) added concern over weak accountability caused by removal of expert-based selection, advocating stronger rules to ensure transparency and expertise involvement.
This intensive debate unfolded during the European Parliament Committee on Budgets’ workshop on "Financing Industrial Policy and Competitiveness in the post-2027 Multiannual Financial Framework (MFF)", reflecting rising EU institutional focus as preparations for the next MFF cycle sharpen. The discussion also connected with wider macroeconomic and defence policy considerations following recent reports by Draghi and Letta.
Concrete vs. Vague Proposals: Notably, Judith Arnal presented concrete proposals such as advocating for tighter governance, harmonized tax rules to support cross-border scale-ups (“Regime 28”), coupled with calls for increased risk appetite by implementing partners. Sylvie Matelly (IRIS) pushed for earmarked EU-level defence investments under the ECF, proposing joint procurement programs including dual-use technologies and a European military cloud — concrete institutional and budgetary orientations emphasizing strategic autonomy. In contrast, Christian Ehler largely issued critical assessments without detailing structured reform plans, urging a rethink of top-down governance and stakeholder dynamics. Similarly, Daniel Gros (Bocconi University) and Philipp Lausberg (EPC) contributed analytical critiques on leverage and governance deficiencies but stopped short of outlining detailed implementation frameworks.
The debate crystallized important cleavages. First, on increasing vs. restructuring EU governance powers: Ehler advocated for decentralizing decision-making and increasing project-level expertise, while some experts favored centralized strategic guidance combined with bottom-up execution for balance. Second, on regulation and private capital involvement: Angéline Furet called for rolling back complex regulation that deters investment, whereas Arnal stressed governance coherence over deregulation alone. Third, on sectoral priorities: Matelly’s strong defence investment push underlined tensions between military spending and social investment priorities highlighted by others such as Nils Usakovs and Joao Oliveira.
The European Competitiveness Fund’s design impacts a range of actors. EU producers, especially in innovative scale-ups, would benefit substantially from harmonized cross-border rules and increased risk capital, potentially accelerating growth and competitiveness. Conversely, incumbent industrial actors might lose influence and funding dominance, altering the competitive landscape. National authorities face challenges coordinating fragmented implementation vs. centralized governance. EU taxpayers' interests hinge on the fund’s efficiency and democratic oversight amid fiscal constraints. For EU civil society and NGOs, issues around transparency and democratic legitimacy of strategic investments remain crucial, especially given concerns about Commission overreach.
The 2027 budget’s limited fiscal space compounds pressures to sharpen priorities and improve governance efficiency. Continued dialogue is expected between Parliament, Commission, and Member States to clarify the ECF’s governance model, accountability mechanisms, and sectoral focus — particularly balancing innovation, industrial competitiveness, and newly emphasized defence capabilities. The workshop signals an ongoing struggle to reconcile competing demands for centralization, performance, democratic legitimacy, and strategic autonomy within EU budget frameworks.