Can CADA initiatives be funded after 2027 under the next MFF?

Summary As proposed, the Cloud and AI Development Act (CADA) does not establish a new, standalone EU fund with its own dedicated budget line. Instead, the Cloud and AI Leadership Initiatives would be implemented through existing and future Union programmes. Recital 28 explicitly states that these initiatives "could continue receiving support under successive Union programmes" under the 2028–2034 multiannual financial framework (MFF), but this is strictly "subject to their adoption and in accordance with their respective legal bases." Consequently, funding for CADA-aligned projects after 2027 would likely flow through instruments like the proposed European Competitiveness Fund (ECF) or future research frameworks, rather than a dedicated CADA budget.

Detail

The Cloud and AI Development Act (CADA), proposed by the European Commission on 3 June 2026, establishes a comprehensive regulatory framework to strengthen Europe's cloud and AI ecosystem. A central pillar of this framework is the establishment of the Cloud Leadership Initiative and the AI Leadership Initiative (collectively, the "Cloud and AI Leadership Initiatives"). These initiatives are designed to foster the development of cutting-edge cloud and AI technologies, increase cloud and data centre capacity, and promote the uptake of these technologies across the public and private sectors.

However, CADA itself is a regulatory framework, not a financial instrument. It does not allocate specific budgetary appropriations. Instead, it relies on existing and future EU funding mechanisms to finance the projects and activities it supports. The relationship between CADA and EU funding, particularly regarding the post-2027 period, is outlined in the proposal's explanatory memorandum, recitals, and Title II.

Funding Under the Current and Next MFF

Article 6(3) of the CADA proposal states that the Cloud and AI Leadership Initiatives "may be supported by funding from Union programmes, including Horizon Europe and the Digital Europe Programme." These programmes operate under the current Multiannual Financial Framework (MFF) which covers the period up to 2027.

For the period beyond 2027, the proposal looks to the next MFF (2028–2034). Recital 28 provides the critical legal basis for continuity, while simultaneously setting a condition:

"The Cloud and AI Leadership Initiatives may be supported by funding from Union programmes and other instruments, in particular from Horizon Europe and the Digital Europe Programme, as well as the InvestEU programme... Under the 2028-2034 multiannual financial framework, the Cloud and AI Leadership Initiatives could continue receiving support under successive Union programmes, subject to their adoption and in accordance with their respective legal bases."

This conditional language ("subject to their adoption") is significant. It means that while the policy objectives of CADA are enshrined in the regulation, the financial resources to achieve them depend entirely on the EU's future budgetary negotiations. The initiatives would not automatically receive funding; rather, they would need to be integrated into the strategic priorities of whatever successor programmes are adopted for the 2028–2034 period. If the successor programmes are not adopted or do not include CADA-aligned priorities, the funding stream would not materialise.

The Role of the European Competitiveness Fund

A key instrument expected to play a major role in post-2027 funding is the proposed European Competitiveness Fund (ECF). The CADA explanatory memorandum and the Legislative Financial Statement highlight strong synergies between CADA and the ECF.

Specifically, the proposal indicates that the ECF, particularly under its "Digital Leadership" window, could serve as the main deployment instrument for CADA objectives. While future research frameworks (successors to Horizon Europe) would support upstream research and innovation (Pillar I of the initiative), the ECF would likely focus on translating these research outputs into operational capabilities and large-scale deployments.

Recital 43 further notes that data centre strategic projects designated under CADA could be granted the "competitiveness seal" where they fulfil the conditions set out in the regulation establishing the European Competitiveness Fund. This creates a direct link between CADA's strategic project designation mechanism and the financial support available through the ECF. The Legislative Financial Statement confirms that the initiative is expected to receive a significant contribution from programmes under Heading 2 of the 2028–2034 MFF, specifically the European Competitiveness Fund.

Implementation Mechanisms and Joint Undertakings

Article 6(1) entrusts the implementation of the Cloud and AI Leadership Initiatives' operational objectives to the Commission and the Member States. It also allows for implementation by joint undertakings or other structures with appropriate expertise. For example, the Smart Networks and Services Joint Undertaking or the European High Performance Computing Joint Undertaking (EuroHPC JU) are mentioned as potential vehicles for implementation.

This means that after 2027, funding for CADA initiatives could be channeled through these joint undertakings if they are renewed or restructured under the next MFF. The Commission would work to ensure consistency, complementarity, and synergies between the CADA initiatives and relevant national and regional strategies, including those implemented under national reform programmes and recovery and resilience plans (Recital 31).

Financial Neutrality and Fee-Based Revenue

It is also important to note that certain administrative costs associated with CADA would be financed through fee-based revenue streams rather than the general EU budget. For instance, the administration of the EuroCloud Federation and the common procurement framework would be supported by fees levied on participating Member States and contracting authorities (Recital 4, Article 36, and Article 40). This fee-based model ensures that the operational costs of these specific CADA mechanisms do not directly burden the MFF budget, although the initial establishment costs might be borne by the general budget and reimbursed over time.

What this means for you

For public-sector procurement officers, policymakers, and industry stakeholders, the funding landscape for CADA after 2027 requires a proactive and flexible approach.

Monitor Successor Programmes: Since CADA funding is not guaranteed by the regulation itself but depends on the adoption of successor programmes, you must closely monitor the development of the 2028–2034 MFF, particularly the design of the European Competitiveness Fund and any successor to Horizon Europe. Ensure that your national cloud and AI strategies (required under Article 7) align with the expected priorities of these future instruments to maximise eligibility.
Leverage Multiple Funding Streams: Do not rely on a single "CADA fund." Instead, prepare to tap into a mix of instruments. Research-heavy projects may still rely on future research frameworks, while deployment projects, such as data centre construction or cloud migration, may look to the European Competitiveness Fund or InvestEU.
Engage with Joint Undertakings: If your projects involve high-performance computing or advanced cloud infrastructure, engage with existing joint undertakings like EuroHPC JU. These entities are likely to remain key conduits for EU funding in the AI and cloud sectors under the next MFF.
Plan for Fee Contributions: If your authority intends to participate in the EuroCloud Federation or the common procurement framework, be aware that these services will involve fee contributions. These fees are designed to cover administrative and operational costs, so they should be factored into your long-term budgeting for cloud services.

Common misconceptions

"CADA creates a new EU fund." This is incorrect. CADA is a regulatory act that sets rules and objectives. It does not create a new fund with its own budget. Funding comes from existing or future programmes like Horizon Europe, Digital Europe, or the proposed European Competitiveness Fund.
"Funding for CADA initiatives is guaranteed after 2027." This is misleading. Recital 28 states that initiatives could continue receiving support under successive programmes, subject to their adoption. This means funding is contingent on political and budgetary decisions made during the negotiation of the next MFF.
"Only the EU budget funds CADA projects." This is false. CADA encourages a mix of funding sources, including Member State contributions, private sector investment, and fee-based revenue for specific mechanisms like the EuroCloud Federation. The proposal explicitly mentions the importance of private-sector stakeholders aligning their investment strategies with the Cloud and AI Leadership Initiatives (Recital 29).

This is general information about a draft EU regulation, not legal advice.