The European Union is considering a proposal to prolong the Recovery and Resilience Facility (RRF) beyond its 2026 deadline, a move that could become a key bargaining chip in the negotiations for the 2028‑2034 Multiannual Financial Framework (MFF). Extending the RRF would allow member states that have not yet received their allocated funds to draw them, creating an incentive for those states to accept larger cuts in cohesion policy and the Common Agricultural Policy within the core EU budget.

Background to the budget talks

The upcoming MFF will be the first multi‑year EU budget drawn up after the pandemic‑era recovery plan. Negotiators are split into two camps. Net‑payer countries such as Germany, the Netherlands and the Baltic states favour a smaller budget focused on research, digitalisation and competitiveness. Net‑beneficiary countries, mainly from Central and Eastern Europe, seek to protect spending on agriculture and cohesion.

Germany has asked for cuts of about €400 billion, roughly 20 % of the European Commission’s proposal. The outgoing Cypriot Presidency put forward a modest 2 % cut, amounting to €32.8 billion, aimed mainly at the Competitiveness Fund and Global Europe. The group described as the “frugal bloc” rejected the Cypriot proposal as insufficient and poorly targeted.

Political pressure is mounting ahead of the French presidential election and the Polish parliamentary election scheduled for 2027. The Irish presidency, which is chairing the negotiations, aims to reach a deal before the end of 2026, 17 months after the Commission’s formal proposal in July 2025. By comparison, the previous MFF (2021‑2027) took more than two and a half years to conclude, from the Commission’s May 2018 draft to the European Council’s political agreement in December 2020.

State of the Recovery and Resilience Facility

The RRF was launched in 2020 as a joint‑borrowing operation of €577 billion to support post‑pandemic recovery. By July 2026, €405 billion of the RRF had been disbursed, leaving €172 billion still unspent for member states that have not met the required reforms. Bulgaria, Hungary, Poland and Romania are among the countries that have not yet drawn their full RRF allocations.

Hungary has released only €920 million of its €10.4 billion entitlement because it failed to satisfy rule‑of‑law and anti‑corruption conditions. A new Hungarian democratic government led by Péter Magyar intends to re‑classify some cohesion spending under the RRF, though the final amount remains uncertain. Outstanding RRF allocations are approximately €1.9 billion for Bulgaria, €8.44 billion for Romania and €25.5 billion for Poland.

Extending the RRF by one or two years would require unanimous approval from the Council of Ministers. A previous request by Poland in 2024 to extend the RRF was rejected because it was viewed as a country‑specific measure lacking broader relevance.

Strategic implications of an extension

If approved, the undrawn RRF funds could be used as leverage in MFF negotiations, allowing net‑beneficiary states to accept deeper cuts to cohesion‑related programmes in exchange for access to the remaining money. For net‑payer states, particularly Germany, an extension could help keep the overall size of the MFF lower without imposing a large reduction on the Commission’s original proposal. The extension would also keep the RRF repayment schedule, which starts under the 2028‑2034 MFF, under control, as the fund would continue to be financed through joint borrowing.

Some member states warn that extending the RRF might create a moral hazard by rewarding countries that have delayed reforms with additional time to receive funds. There are concerns that such extensions could set a precedent for future budget cycles, making the MFF increasingly dependent on ad‑hoc adjustments.

Hungary’s limited disbursement highlights a broader tension between EU rule‑of‑law enforcement and national sovereignty; extending the RRF without a clear path for Hungary could be seen as weakening EU conditionality. In Romania, a potential government crisis and the possible rise of the radical‑right AUR party add uncertainty; an extension could be used as leverage or portrayed as external interference.

The Irish presidency may propose a formal amendment to the RRF statute that would set conditions for any extension. The Council would need to decide whether to allow immediate drawing of the remaining €172 billion or to implement a phased release linked to concrete reform milestones.

The European Parliament, which traditionally defends a robust EU budget, will examine any compromise that appears to reduce cohesion or agricultural spending; its approval is required for the final MFF. Trade unions across the EU warn that cuts to cohesion spending would disproportionately affect vulnerable communities and call for safeguards to ensure labour standards and monitoring of RRF expenditures.

Outlook

With the deadline for the 2028‑2034 MFF approaching, the EU must choose between pursuing a leaner core budget that risks a prolonged stalemate or using the unused RRF resources as a bargaining tool to achieve a compromise. Extending the RRF is not a complete solution but could help secure a timely agreement and preserve the Union’s capacity to fund projects that support Europe’s social model.