Europe’s cities are not only engines of economic growth, they are also critical frontrunners driving the green and digital transitions. In December 2025, the European Commission published their latest communication establishing an EU Agenda for Cities. This marks a welcome next step in the EU’s recognition of the central role cities play in tackling the continent’s most urgent challenges. At Bax, we have long worked with cities and local actors to harness the power of local actions to drive global change.
In this insight, Bax Consultant Dennis Martinez shares his reflections on the new Agenda’s key points and what they mean for our urban partners.
Cities are where Europe’s future will be decided. With 75% of the EU population living in urban areas, it is not surprising that they are focal points for conversations and actions regarding decarbonisation, housing affordability, social cohesion and climate resilience. Nonetheless, cities often remain sidelined in the policy decisions and support tools implemented to help tackle these challenges.
The new EU Agenda for Cities recognises and seeks to address this weakness. It begins by mapping out the key urban challenges the continent’s cities will face in the coming years against EU priorities, before acknowledging cities as essential partners in tackling these challenges while recognising that current support for cities remains too fragmented. It therefore proposes a two-pronged approach to better support cities on this path. This will involve the transition towards mission-orientated portfolio financing (rather than isolated ‘project-based’ financing), and the consolidation of available resources and funding instruments for cities into a single digital platform.
1. Cities as active partners, not just beneficiaries
Recognising cities as essential partners in tackling the EU’s greatest challenges, the Agenda sets out the Commission’s plans to establish a direct bridge across governance levels. Starting in 2026, an annual High-level political dialogue will enable local leaders to identify bottlenecks and shape regulations. This will be supported by targeted technical consultations with local practitioners, ensuring that operational, on-the-ground realities directly inform EU policy.
2. Framing urban challenges as EU challenges
The Agenda does not shy away from the urgent crises cities face – and clearly signposts how these challenges link to broader EU priorities. Providing more affordable housing emerges as a top priority, which, as the Agenda points out, does not only require more funding, but also a more holistic approach that links housing policies together with spatial planning and energy efficiency.
The Agenda also foregrounds challenges surrounding transport, climate adaptation, social cohesion, economic prosperity and security resilience, aligning these with the 2028–2034 Multiannual Financial Framework’s focus on competitiveness and resilience. When it comes to transport, for instance, the Agenda discusses the development and expansion of «urban nodes» and compliance with the TEN-T strategy to improve city-to-city connectivity and stronger rural-urban links; this strategy reinforces the decarbonisation of transport while boosting economic competitiveness by enabling a more efficient movement of people across the continent.
3. Integrated financing for complex challenges
Perhaps the most significant shift for urban practitioners that is signposted in the Agenda is the move towards portfolio financing. The Agenda explicitly encourages cities to move away from «project-based» applications and towards long-term strategic planning.
This aligns perfectly with the «Mission» approach already seen in the Horizon Europe research framework (such as the Climate-Neutral and Smart Cities EU Mission). Cities are encouraged to tackle multiple challenges simultaneously, for instance, combining affordable housing renovation projects with energy efficiency and sustainable mobility. The goal is to create bankable investment strategies that blend public EU grants with private capital, with potential advisory services from the European Investment Bank.
4. From fragmentation to the consolidation of resources
The new Agenda directly addresses this «fragmentation of initiatives» by immediately launching the EU Cities Web-Portal, a single digital entry point designed to help cities navigate the different support options available to them. By 2028, the Commission plans to introduce an EU Cities Platform, a mature version of the Web-Portal that consolidates funding instruments, technical assistance, and knowledge resources in one place. This «one-stop-shop» especially aims to help small and medium-sized cities that often lack the capacity to chase complex grants.
What does this mean moving forward?
The EU Agenda for Cities sets the stage for a more streamlined, supportive relationship between Brussels and local governments. In this new relationship, cities are formally recognised as central drivers of change and are more actively involved in shaping those changes at the EU-level; resources, finance and knowledge are made more accessible and easy-to-navigate at the national and municipal level; and funding streams become more mission-oriented, rather than project-based.
This transition from the current status quo to a more aligned and integrated approach to urban innovation across EU member states will require robust guidance and planning. At Bax, we have been supporting cities to craft and implement their urban strategies for many years and have experienced firsthand both the challenges cities face and the potential that they hold to drive change across the continent. We are happy to see the EU recognise and support this potential and look forward to helping even more cities accelerate their ambitious ideas into action.
