The Local Alliance – a coalition of eight leading networks of local and regional governments – is raising the alarm over the European Commission’s proposal for the next EU budget, warning it could sideline cities and regions and undermine the delivery of key EU priorities.

The Commission’s proposal for the 2028-2034 Multiannual Financial Framework,  presented on 16 July, introduces new ‘National and Regional Partnership Plans', intended to simplify EU funding and reduce disparities. However, the Local Alliance argues that this approach risks centralising the EU budget, weakening Cohesion Policy, and marginalising local and regional governments in the policy design and implementation.

Without a clear earmarking of Cohesion Funds for all territories, including cities, and robust multilevel governance, local and regional authorities are unlikely to access the tools they need to implement EU priorities on the ground. Building on the Court of Auditors’ warnings of the limited impact and quality of projects funded through Recovery Funds, the Local Alliance fears that this new structure of National- Regional Plans might not be able to respond to the real transition and cohesion needs of communities.

The proposal also fails to clarify how cities and regions would be affected if national governments fall short on reform commitments or breach horizontal conditions such as the Rule of Law. This could jeopardise progress on critical local goals, from clean transport and affordable housing to inclusive communities, creation of jobs and quality public services, while weakening democratic governance and the principle of multilevel democracy.

Jakub Mazur, Deputy Mayor of Wrocław, Poland and Member of ICLEI Europe’s Regional Executive Committee, said: “While local governments are leading the way on climate action – from clean energy to sustainable mobility and housing – the new EU budget proposal overlooks our crucial role. We need an earmarked Cohesion Policy for all of our territories and a stronger partnership principle to ensure that local governments can act as strategic partners in shaping and delivering EU priorities.”

The Alliance welcomes the proposed European Competitiveness Fund and the FP10 Framework Programme for Research and Innovation, recognising their potential to address productivity and innovation gaps across regions. However, both instruments must ensure meaningful involvement of cities and regions in priority setting and delivery, as competitiveness and cohesion are two sides of the same coin, as highlighted in the Letta Report.

As the budget negotiations move forward, the Local Alliance calls on the European Parliament and the European Council to seize this crucial opportunity to strengthen the role of cities and regions, safeguard cohesion policy, and ensure the EU budget delivers tangible results for people across Europe.

Susanne Schilderman, Deputy Mayor of Utrecht, Netherlands, responsible for Climate Adaptation, Circular Economy, Public Space, Finance and Economic Affairs and Member of ICLEI Europe’s Regional Executive Committee, said : “We welcome the Commission's efforts to put competitiveness and innovation at the centre of the next EU budget proposal. Yet, competitiveness and cohesion are two sides of the same coin, as cities and regions are key enablers of clean industrial transitions and strategic autonomy at the local level. Yet, competitiveness and cohesion are two sides of the same coin, as cities and regions are key enablers of clean industrial transitions and strategic autonomy at the local level.

We drive the development of lead markets, support the rollout of AI-enabled infrastructure, promote collaboration among businesses, and serve as real-world laboratories for innovation and circular economy. Successful competitiveness policies and funding require embedding cities into the core of the EU Competitiveness Fund and Horizon Programme, with guaranteed funding access and a meaningful role in decision-making.”

Ahead of the EU budget negotiations, local leaders call for:

• Reforms and investments to be defined through a multilevel governance approach. Safeguards must be included in the National and Regional Partnerships Plans to ensure mandatory cooperation with local governments in the design and implementation of the plan.
• The territorial chapter of these plans must be clearly stated as an obligation and not as an option left to the discretion of central governments.
• Clear and enforceable safeguarding mechanisms to ensure that local and regional authorities can directly access EU funds, especially in cases where national governments delay or restrict disbursements.
• Concrete institutionalised cooperation with cities and regions in the European Competitiveness Fund (ECF) and FP10, and we urge the EU institutions to involve local and regional governments as partners in setting priorities and strengthening place-based innovation.

About the Local Alliance:

The Local Alliance represents the eight leading networks of European local and regional governments, ACR+, CEMR, Climate Alliance, Energy Cities, Eurocities, FEDARENE, ICLEI Europe and POLIS working together to ensure the next EU budget 2028- 2034 delivers for people by empowering local and regional governments in delivering the transition on the ground.