With a budget of €1.8 trillion, the new Multiannual Financial Framework (MFF) 2028-2034 proposal sets the agenda for the European Union by aligning investment with long-term strategic priorities. According to European Commission (EC) President Ursula von der Leyen, the next EU budget introduces two unprecedented measures for social policy: a 14% spending target to mainstream social investment and a system to track social funding across the entire budget. The proposal also commits to the climate spending target of 35% supporting the EU’s six environmental objectives, combined with a “six times increase of funds” for clean tech, bioeconomy, and decarbonisation.
However, these commitments need to be supported by a robust monitoring framework that considers environmental, social, and economic metrics equally. Without meaningful monitoring metrics, it is difficult to assess impact, allocate resources effectively, or build public trust. Measuring what matters requires shifting our focus beyond inputs and outputs to outcomes, such as wellbeing, sustainability, inclusion — the ultimate values the MFF is designed to promote (as Article 3 of the Treaty of Europe states, “The Union’s aim is to promote peace, its values and the well-being of its peoples.”)
Is the next MFF set up to monitor its performance and, more importantly, its impact?
Earlier this year, MERGE convened a group of researchers and policy practitioners to discuss how the sustainable and inclusive wellbeing (SIW) framework can be used to monitor the impacts of MFF spending. The experts and practitioners discussed challenges and opportunities when integrating a wider set of indicators in the two existing principles of the MFF: conditionality and do-no-significant-harm (DNSH).
Figure: Beyond-GDP measurement metrics in relation to Wellbeing, Inclusion and Sustainability. Source: www.beyond-gdp.world where you can click on the acronyms for more information.
Ensuring current wellbeing, including the determinants of wellbeing such as health, education, air quality, employment, social relationships, income, housing, security, environmental health, and peace.
Ensuring future wellbeing, encompassing biophysical and social conditions for future wellbeing. Examples of relevant determinants include climate, biodiversity, demographics, and innovation capacity.
Limiting wellbeing inequalities for current and future generations, involving gauging the distribution of wellbeing determinants and opportunities across spatial scales and social groups. Potential domains include gender inequality, income/wealth inequality, risk of poverty, child poverty, and discrimination.
Table: SIW Dimensions
In short, to align EU spending with a sustainable, inclusive future, two elements are essential: 1) clear, coherent SIW metrics and 2) political will supported by robust governance structures to enable such measurement.
1. Making indicators meaningful, measurable, and adaptable
Monitoring often emphasises short-term outputs over long-term impact. Worse, performance measurement is frequently an afterthought, developed only after policies are already decided. To reduce the gap between ambition and implementation, it is important to embed indicators from the start, during the policy design phase, and not to leave performance measurement considerations as an afterthought. This can be facilitated by collaboration and coordination between different Directorates-General and policy teams of the European Commission.
Positive examples like Horizon Europe show that using different sets of indicators for each project phase, or employing the monitoring tool Key Impact Pathways (KIPs) with short-term, medium-term, and long-term indicators, can yield insights from planning through to evaluation.
Furthermore, indicator frameworks need to be clear and adaptable. Using simple, visual tools can enable action and flexibility to evolve alongside shifting EU priorities. For example, a core metric like “number of participants in a training programme” remains relevant across years, while thematic indicators measuring green skills vs. digital skills can adapt to reflect emerging political focus.
2. Redesigning monitoring for both usability and depth, without adding bureaucratic burden
One of the biggest dilemmas lies in the design of monitoring frameworks themselves. At present, tools like the DNSH principle rely on binary compliance — a yes-or-no approach focused on six environmental dimensions. Moving toward a more nuanced, SIW-aligned assessment would require richer, indicator-based evaluation, potentially including social dimensions as well.
But this comes at a cost. More indicators may mean greater complexity, longer approval times, and additional pressure on already-stretched administrative systems — a red flag for many member states eager to streamline reporting requirements. The challenge is to develop tailored, flexible approaches that strike a balance between usability and depth (e.g., project-based evaluations or ‘inclusion lists’ — predefined lists of activities that are automatically considered compliant with the DNSH principle, moving away from a system where every project is assessed against the criteria from scratch).
Here lies an opportunity: technological tools, including AI and improved IT systems, could help reconcile this tension. They offer the potential to implement more robust frameworks without overwhelming national and local authorities. If developed for good, AI can help quickly scan complex policy documents to assess alignment with EU priorities or track real-time data, including social and environmental impacts, at the project level.
3. Strengthening political and institutional alignment with long-term goals
A deeper obstacle is the shifting political landscape. Political talks across European countries, on topics ranging from climate targets to competitiveness and defence, extend the priority list and dilute urgent efforts to advance just, green transitions. In this context, new SIW metrics risk being seen as unwelcome red tape, especially if tied to conditionality mechanisms that feel more punitive than empowering.
Yet, conditionality could be reframed. Instead of a compliance tool, it could become a way to reward positive impact, using metrics already embedded in the EU’s existing frameworks, like the social convergence framework in the European Semester. These systemic indicators operate ex-post and could complement broader SIW goals without adding friction upfront.
To support this shift, early-stage political and institutional buy-in is key. This means not only engaging EU institutions, but also working with social partners, civil society, and regional actors to co-define what “wellbeing” actually looks like in practice. Their involvement boosts both legitimacy and feasibility.
Examples of using wellbeing evidence to inform Budget decisions
There are a number of international examples of the use of wellbeing evidence and principles to inform budgetary processes: New Zealand, Canada, Italy, the Netherlands, and Victoria state, Australia, to name a few.
| The Irish Budget, ‘Moving from GDP to Wellbeing,’ is worth exploring as a good example of how the wellbeing budgeting approach is used to present whole-of-government descriptions of expenditure allocations. The Irish government is committed to: – Developing a set of wellbeing indices to create a well-rounded, holistic view of how Irish society is faring. – Ensuring that this wellbeing framework will be utilised in a systematic way across government policymaking at local and national levels in setting budgetary priorities, evaluating programmes and reporting progress; as an important complement to existing economic measurement tools. |
The convergence of wellbeing indicators
For the EU Budget to measure what matters, it needs to employ suitable indicators. But perhaps the most technical yet foundational challenge is that there’s no consensus on which SIW indicators to use, when to apply them, or how to interpret them.
However, the EU already has experience in this area. As a result of the sustainable and inclusive wellbeing initiative of the 2023 Strategic Foresight Report, the JRC Sustainable and Inclusive Wellbeing Dashboard demonstrates that meaningful impact measures, such as poverty and planetary boundary indicators, can be tracked effectively in a single framework without creating new monitoring burden.
Other research, including our MERGE’s work, shows that sustainable and inclusive wellbeing indicators are converging. In a soon-to-be-published study co-authored by our team, results highlight that indicators with about 20 components account for most of the overall similarity across the dataset.
Through the course of the MERGE project, we aim to ultimately propose a dashboard with holistic indicators for an economy of sustainable and inclusive wellbeing, and offer feasible policy frameworks for enabling multidimensional wellbeing within planetary boundaries in the EU and member states, as well as in global organisations and civil society. This knowledge can greatly support the MFF and other EU monitoring frameworks in focusing on what truly matters when measuring progress.
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Every seven years, the EU agrees on a long-term budget plan — the Multiannual Financial Framework — which sets the direction for nearly all EU activities: from climate and cohesion policy to research, agriculture, and crisis recovery. The MFF is a political agreement among all 27 member states that determines not only how much the EU should spend, but also where and to what end.
