Priorities and challenges for the EU in 2026

Cyprus has outlined a presidency agenda centred on strengthening the EU’s resilience and strategic capacity during a period of global instability, and the EU has identified the next budget, migration, a defence readiness as some of the key legislative priorities. Meanwhile, there are several challenges the union has to tackle.

The priorities for 2026

The Cyprus EU presidency: Cyprus has the following priorities for their presidency from January to June this year accoring to their official site: a focus on bolstering the “autonomy” of the EU in the face of unprecedented geopolitical uncertainty, as well as making progress on the bloc’s €2 trillion long-term budget. They also wants to focus on ”driving forward red tape-cutting, strengthening the rule of law, advancing the applications of prospective members like Ukraine and Moldova, and building a “constructive, inclusive and mutually beneficial” relationship with President Donald Trump”.

EU Legislative priorities: The European Parliament, the Council, and the Commission have, since 2016, agreed on and signed a Joint Declaration to enhance cooperation on key legislative proposals. It advocates for a prompt agreement on the next Multiannual Financial Framework and highlights the commitment of EU Institutions to ensure the EU’s defence readiness by 2030. Additionally, the text addresses efforts to resolve bottlenecks that are hindering the Union’s competitiveness. The Declaration also emphasises the importance of tackling the cost of living, managing migration comprehensively, and reiterates the EU’s role as a leader in humanitarian assistance. Finally, the three EU Institutions commit to prioritising a set of 10 key legislative initiatives during 2026, as outlined in the working document accompanying the Declaration:

The challenges in 2026

According to analysists, eight major issues are expected to shape the EU’s agenda in 2026, with security, migration, Ukraine, budget negotiations, competitiveness, relations with China, and AI/climate policy emerging as the dominant themes.

1. Security and Defence

Russia’s ongoing war against Ukraine and a more unpredictable global environment make security the EU’s top priority in 2026.
The EU must strengthen air and missile defence, ammunition production, drones, cyber‑capacity, and military mobility.
New tools for joint procurement and faster defence production are planned.

2. Ukraine: War and EU Accession

The war remains the central security issue, with uncertainty about the battlefield situation.
Ukraine continues aligning with EU rules and joins the EU’s roaming‑free zone in 2026.
Progress on EU membership depends on unanimous decisions in the Council; Hungary’s 2026 election may influence veto dynamics.

3. Migration and the New Pact

The EU’s migration and asylum pact begins implementation in June 2026.
Focus shifts from legislation to enforcement, especially on returns of rejected asylum seekers.
The EU expands cooperation with neighbouring countries and allocates €675 million to North African partners for border control and anti‑smuggling efforts.

4. The EU Budget (2028-2034)

Negotiations over the next multi‑annual budget will dominate 2026.
Key tensions: defence spending, Ukraine support, competitiveness investments, and climate transition funding.
Around 40% of the budget may be channelled through national/regional plans, raising concerns about democratic oversight.
Sweden pushes for a smaller budget and strict rule‑of‑law conditionality.

5. Competitiveness and Industrial Policy

The EU aims to cut administrative burdens by 25% (35% for SMEs) and remove more regulations.
Major investments are needed to keep up globally—up to €800 billion annually.
The EU plans measures to unlock private capital and support innovative firms.
External shocks in 2026—US tariffs, rapid AI adoption—may reshape sectors and labour markets.

6. EU-China Relations

The relationship is increasingly defined by competition and systemic rivalry.
China’s support for Russia strains ties; the EU has sanctioned several Chinese/Hong Kong companies for aiding Russia’s military industry.
The EU seeks to reduce strategic dependencies in raw materials, semiconductors, and green tech while maintaining selective openness to trade.

7. AI, Digitalisation

The EU’s AI Act becomes fully applicable in 2026, alongside new initiatives on cloud, cybersecurity, and data.
Digital vulnerabilities and disinformation make AI a security and democracy issue.

8. Climate, and Energy

Climate policy shifts toward implementing the 2040 framework, requiring major investments (1.5% of EU GDP annually).
Energy policy focuses on grids, bottlenecks, and reducing external dependencies.