European regional and local leaders have warned that the EU’s next long-term budget risks transferring control over investment programmes to national governments, potentially increasing economic disparities and reducing the ability of poorer regions to shape their own development.

The warning was delivered in Brussels on 12 October by Kata Tüttő, President of the European Committee of the Regions, during the opening of the European Week of Regions and Cities.

Her intervention comes as EU leaders prepare to negotiate the 2028–2034 budget, with disagreements over agricultural funding, regional development, defence, industrial competitiveness and the distribution of financial responsibilities among member states.

The Committee of the Regions warned that greater centralisation could concentrate economic opportunities in already prosperous areas while limiting other territories’ capacity to attract investment and develop essential infrastructure.

The concern goes beyond money allocated to regional development. It addresses who controls spending decisions and whether local authorities retain a meaningful role in determining how European funds are used.

Regional governments resist centralisation

EU cohesion policy has traditionally sought to reduce disparities between richer and poorer regions through investment in transport, infrastructure, education, business development and public services. While national governments administer considerable funds, regional and local authorities are frequently involved in identifying priorities and delivering projects.

The Committee argues that restructuring which concentrates decision-making at national level could weaken this arrangement. National governments may favour country-wide industrial or infrastructure programmes, while regional authorities identify specific problems arising from local conditions.

A national infrastructure strategy could prioritise major transport routes and industrial centres. Regional administrations might instead emphasise connecting smaller communities, maintaining local services or developing specialised economic activities.

The dispute concerns whether the next EU budget will maintain flexibility for regional priorities. In Belgium, Germany, Spain and Italy, regional institutions possess important responsibilities across economic development, education and infrastructure. Changes to EU spending governance could alter established relations between European, national and regional institutions.

The budget negotiations intensify the dispute

Ireland’s rotating Council presidency has proposed reducing the Commission’s original seven-year budget plans by approximately €141 billion while largely protecting agriculture and cohesion compared with other expenditure categories.

The proposed financial framework would nevertheless remain substantially larger than the current budget. The distribution of resources remains contentious, and an overall cut does not necessarily translate into the same reduction for every region.

Effects will depend on allocation formulas, national spending plans and programme governance. Meanwhile, European institutions face demands for stronger investment in defence production, digital infrastructure, competitiveness and support for Ukraine while maintaining agricultural and regional commitments.

Economic disparities remain a European problem

The Committee presented its seventh annual assessment of Europe’s regions and cities during the European Week of Regions and Cities, held in Brussels from 12 to 14 October.

The assessment examines competitiveness, resilience, public services, democratic governance and financial conditions. Regional disparities remain a significant feature of the EU economy despite decades of common investment programmes.

Large metropolitan areas often benefit from concentrations of universities, research institutions, advanced industries and capital. Less densely populated territories may struggle with demographic decline, shortages of skilled workers and the cost of maintaining infrastructure.

These differences can reinforce themselves over time. Businesses invest where suitable workers, transport networks and customers are already concentrated. Younger workers moving towards metropolitan economies may further reduce the economic prospects of communities they leave behind.

Defence spending creates new pressures

The increase in European defence expenditure introduces another dimension. Regions containing defence manufacturers, engineering firms, research institutions and military installations could benefit substantially from new spending, while others may receive little direct economic advantage.

If industrial investment concentrates in already advanced manufacturing centres, geographical disparities could widen. Conversely, procurement programmes and infrastructure investment could bring opportunities to weaker regional economies with suitable facilities and labour.

A question of political authority

The Committee of the Regions has limited formal authority over the EU’s long-term budget. National governments will negotiate the framework, and the European Parliament must consent to the final agreement.

Regional leaders are seeking to influence those negotiations before political compromises are established. Their central argument is that aggregate European economic growth alone does not capture the distribution of investment, employment and public services across the Union.

The approaching European Council negotiations will indicate whether governments intend to preserve regional influence over EU spending or concentrate greater authority over investment decisions at national level.

Brussels (enr) – Local and regional leaders raised concerns that the next multiannual EU budget risks undermining investment in affordable homes needed to alleviate Europe’s deepening housing crisis.

“Europe’s housing challenge is not simply about building more housing units,” said Kata Tüttő, President of the European Committee of the Regions (CoR), an EU advisory body home to democratically elected regional and local representatives from all 27 Member States.  

At a gathering in Brussels on Thursday, they demanded the EU “move from political ambition to concrete investment and delivery,” arguing that failing to invest now will only put affordable housing further out of reach for millions of Europeans.

As negotiations over the EU’s next long-term financial framework gather pace, cities and regions fear that affordable housing could become a casualty of competing spending priorities as several EU member states seek to cut the European Commission’s proposed €2 trillion budget for ‌2028-2034.

Tüttő called on the European Investment Bank (EIB), the EU’s lending arm, to “mobilise the scale of investment” that cities and regions need to “make communities liveable” by providing essential infrastructure. She cited public transport, as well as energy and water infrastructure, as key examples.

Italian MEP Irene Tinagli, Chair of the European Parliament’s Special Committee on the Housing Crisis (HOUS), said addressing the housing crisis “requires investment, better coordination across all levels of government and a shared commitment from European institutions, Member States, regions and cities”.

The CoR and EIB on Thursday agreed on closer cooperation in key areas including social infrastructure, housing, and energy. The European Investment Bank’s president, Nadia Calviño, said “investing into resilient cities and regions, into cohesion and housing” was a strategic priority.

According to EIB figures, the world’s largest multilateral development bank provided a record €5 billion in financing for housing projects across Europe in 2025. The EIB is targeting an increase to €6 billion this year, Calviño confirmed.

The investments are a contribution to the European Commission’s Affordable Housing Plan, which was launched in December and aims to boost housing supply, mobilise public and private investment, and support Member States and regions in expanding social and affordable housing.

According to the Commission’s estimates, however, the EU needs to build 2 million homes each year to meet current demand, which amounts to an investment of approximately €153 billion per year.

This story was produced by the European Newsroom (enr) in cooperation with the European Committee of the Regions (CoR). The editorial responsibility lies with the enr.