The European Commission (EC) has presented two strategically important documents: the draft European Union (EU) budget for 2027 and the 2026 European Semester Country Report and Recommendations for Lithuania. While one document focuses on financial priorities and the other on economic and social policy, together they provide a coherent vision of the direction European and national policies are expected to take in the coming years.

For workers and trade unions, these are far more than technical policy papers. They will shape future investment in public services, social protection, labour markets, skills development and, ultimately, people’s quality of life.

It is important to note that the 2027 EU budget is currently only a proposal put forward by the European Commission. In the coming months, it will be examined and negotiated by the European Parliament and the Council of the European Union before its final adoption.

More funding for defence, but fewer additional investments in the economy

The proposed 2027 EU budget, amounting to approximately €200 billion, will be the final budget under the current 2021–2027 Multiannual Financial Framework (MFF). The main spending priorities remain cohesion policy, agriculture, climate action and innovation, but the most significant shift is the substantially increased focus on European security and defence.

Russia’s war against Ukraine has fundamentally reshaped the EU’s priorities. Increasing amounts of funding are being allocated to the defence industry, military mobility and security, while support for Ukraine has become a permanent component of the Union’s financial policy.

At the same time, 2027 marks the end of the NextGenerationEU recovery instrument, which, following the COVID-19 pandemic, provided unprecedented investments in national economies, labour markets, healthcare systems and the green and digital transitions.

As these additional funds will no longer be available, the negotiations on the 2028–2034 Multiannual Financial Framework will be crucial in determining whether Social Europe remains one of the EU’s key priorities.

The European Commission sends Lithuania a clear message: economic growth alone is not enough

In its European Semester recommendations, published on 3 June, the Commission acknowledges that Lithuania remains one of the fastest-growing economies in the region, with GDP projected to grow by 3% in 2026 and 2.1% in 2027. It also positively assesses the country’s progress in renewable energy deployment, the strengthening of its innovation ecosystem and increased investment in national security.

However, the Commission stresses that strong economic growth alone will not solve the country’s social challenges.

The report highlights growing income inequality and the increasing risk of poverty, particularly in rural areas, an insufficiently effective social protection system, limited access to social housing and persistent inequalities in access to healthcare services. The Commission calls for stronger monitoring of the quality of social services and improved accessibility for all citizens.

The labour market also remains a major concern. According to the Commission, Lithuania continues to face a significant mismatch between workers’ skills and labour market needs. It therefore recommends strengthening vocational education and training, increasing the attractiveness of the teaching profession and investing further in science, technology, engineering and mathematics (STEM) education.

Defence spending is essential – but not at the expense of social policy

One of the European Commission’s strongest messages is that rising defence expenditure must be financed in a way that does not undermine public services or social protection.

To achieve this, Lithuania is encouraged to identify additional sources of public revenue by reviewing property and environmental taxation, strengthening efforts to combat the shadow economy and gradually phasing out fossil fuel subsidies.

These recommendations reflect a broader European debate on how to reconcile security needs with social justice. Increased investment in defence should not result in reduced funding for healthcare, education, workers’ skills development or social protection, as these areas are fundamental to building long-term societal resilience.

LPSK: a strong Europe requires a strong social dimension

The Lithuanian Trade Union Confederation (LPSK) recognises the necessity of strengthening Europe’s defence capabilities in the current geopolitical context and supports measures aimed at ensuring the security of Member States.

At the same time, LPSK emphasises that defence investment must not come at the expense of social policy. High-quality public services, accessible healthcare, effective social protection and continuous investment in workers’ skills are equally essential components of Europe’s resilience.

The forthcoming negotiations on the 2028–2034 EU Multiannual Financial Framework will determine the future direction of European social policy over the next decade.

Together with the European Trade Union Confederation (ETUC), LPSK will closely monitor this process and advocate for an EU budget that continues to place a strong emphasis on workers’ rights, quality employment and social cohesion.