EUROPE: As the EU restructures its transport budget for 2028–2034, rail and public‑transport stakeholders warn that ‘unfettered flexibility may leave local and urban rail underfunded while favouring large‑scale projects with strong lobbying power’. A study commissioned by the European Parliament stresses that parliamentary scrutiny is ‘pivotal’ to ensure investments remain climate-aligned.
The European Union is restructuring its transport investment strategy for 2028 to 2034. The EU’s next Multiannual Financial Framework (MFF), proposed by the European Commission on July 16, 2025 is currently undergoing a rigorous approval process involving both the Council of the EU and the European Parliament. The goal is to reach an agreement before the end of 2026 to ensure the new budget takes effect on January 1, 2028.
To inform its position, the Parliament’s Committee on Transport and Tourism (TRAN) requested a study looking at several aspects of the transport investments. Independent experts authored the report ‘Investing in Transport in the new MFF‘, published late April 2026, to assess the proposed 2028-2034 transport budget, looking at cost-benefits and policy positions from sector stakeholders.
Flexibility at a cost?
In the EU budget plans, the Connecting Europe Facility (CEF) will remain the central tool for transport investments; €51.5 billion is proposed by the European Commission, making it the largest directly managed transport fund in EU history. It is nearly double the current budget of CEF Transport. The majority of this funding generally goes to railways; in several previous calls, rail has represented more than 70% of commitments.
While the CEF expansion is a win for rail, other budget reforms are raising concerns. Regional funding under the EU’s Cohesion Policy would undergo a major architectural change, with the European Commission planning to consolidate various regional funding streams into single National and Regional Partnership Plans (NRPPs). These plans group an estimated €453 billion. With the redesign, national governments gain unprecedented flexibility over local transport. A minimum of 25% of these resources will remain unearmarked initially. This allows states to steer money towards emerging priorities.
However, this new flexibility comes at a cost. The International Association of Public Transport (UITP) warns that local urban mobility projects may lose predictable financial support. The association argues that the next MFF ‘needs to contain easily accessible funding and financing mechanism dedicated to the local and regional sustainable mobility ecosystem, ensuring stability and investment predictability for local authorities and operators’ in their policy position on the next MFF.
The organisation highlighted a stark historical imbalance, where only about 1% of EU transport funding went to local networks between 2014 and 2020, despite the clear socio-economic benefits of such projects. UITP highlights the broader impact of local transport investment, noting that “each euro invested in local public transport can generate up to four euros in wider economic, social and environmental benefits”.
Funding gap
The funding gap for local authorities could be significant. The POLIS network of cities and regions highlighted the scale of the challenge. They stress that around €500 billion is required for the sustainable urban mobility transition, cited by the European Parliament study. They also warned that 431 sustainable urban mobility plans risk non-implementation without dedicated instruments.
Railway operators underline that urban and regional authorities must have direct, simplified access to EU instruments such as CEF and Cohesion Policy for public transport and multimodal hubs. Otherwise ‘NRPPs risk recentralising decisions and sidelining local sustainable mobility priorities’, the European Parliament report says, citing a 2024 joint position paper by European rail sector organisations.
To make long-distance corridors function properly, urban nodes are essential. Citing the Scandria Alliance/Urban Nodes Alliance, the report points out that the draft CEF III regulation does not include dedicated support for urban node investments, creating a funding gap.
The funding uncertainty for local networks is not just a local issue; it could threaten the broader TEN-T goals. ‘The projects that are essential for TEN-T functionality at the point where corridors meet cities risk falling between CEF and NRPP’s’, says the study. The European Committee of the Regions echoes this sentiment. They note that European priorities require robust local supporting measures.
In summary, the study states that ‘cities, ports and public‑transport stakeholders in particular warn that unfettered flexibility may leave secondary and local networks underfunded while favouring large‑scale projects with strong lobbying power’.
Geopolitics shapes infrastructure spending
While urban rail is lower on the priority list, defence needs take centre stage in the next proposed EU budget. Approximately 17.5 billion euros is clearly earmarked for military mobility in the next MFF. This represents a massive tenfold increase from the previous budget period. This money will upgrade bridges, tunnels and terminals to military standards. Planners expect these upgrades to support heavy military transport alongside standard freight.
Major rail stakeholders actively support this increased focus on defence, arguing that dedicated funding for military mobility is essential. However, they also stress that these security investments must not crowd out climate-orientated projects. They insist on strong civilian benefits, saying that dual-use criteria must safeguard sustainable investments.
Overall, rail stakeholders have explicitly welcomed the strengthened CEF proposal and Parliament’s call for much greater, directly managed funding for transport infrastructure. They emphasise that completing the TEN-T and a future EU high-speed rail master plan would require much larger, long-term EU funding commitments, with calls for at least €100bn under the next CEF and better blending with the European Investment Bank (EIB) and InvestEU to mobilise private capital for commercially viable projects.
Recommendations
The study for the European Parliament offers several recommendations on the topic of financing flexibility and safeguarding urban rail investments:
- ‘Parliament’s longstanding call for a larger CEF‑T envelope is supported by evidence on value for money, but it could be matched by safeguards on project selection, dual‑use criteria, minimum shares for urban nodes and public transport, and transparent monitoring of outcomes rather than outputs.’
- ‘When defending strong cohesion budgets, Parliament could press for explicit transport‑related objectives and indicators in NRPPs, including commitments on safety, maintenance, regional accessibility and sustainable urban mobility.’
- ‘Within CEF‑T, legislators may consider ring‑fencing a meaningful share for urban nodes and last‑mile connections, reflecting evidence that such projects unlock the full benefits of long‑distance corridors and tend to yield high benefit‑cost ratios’.