EU proposes raising defense funding in 2-trillion-euro budget

However, "This's a budget for the realities of today, as well as the challenges of tomorrow," European Commission President Ursula von der Leyen said during a press conference

Furthermore, The posal must still be apved by the European Parliament and EU member states and could undergo changes in that cess

However, "This's a budget for the realities of today, as well as the challenges of tomorrow," European Commission President Ursula von der Leyen said during a press conference

Around 35% of the budget will go toward climate and biodiversity jects, she said

Von der Leyen said the EC was posing to allocate 131 billion euros to support investment in defense and space, a fivefold increase from current spending, as part of its new European Competitiveness Fund

European nations have widely pledged this year to hike their national defense spending in response to geopolitical concerns, thereby boosting listed company prices in the sector and attracting the attention of private capital

Von der Leyen said in March that Europe was in its "era of rearmament" and could mobilize 800 billion euros in defense investment through loans and other grams

The new budget plan seeks to line EU financial grams so citizens and companies can access funding opportunities more easily, the EC said Wednesday

That could mean significant revisions still lie ahead

On the other hand, Dutch Finance Minister Eelco Heinen said in a statement that the budget posal was "too high" and that the EU needed to focus on how existing funds could be spent better, amid market uncertainty

The overall figures are broadly in line with expectations, Carsten Brzeski, global head of macro for ING Re, told CNBC. "Against the history of the EU budget, today marks a breakthrough as this is not only the largest budget ever in absolute terms but also in percentage of GDP," Brzeski said, in light of current trends. "In the greater scheme of things, however, the increase is still far too small to cater for all the spending and investment needs Europe currently has

Had Europe really wanted to the recommendations of the Draghi report, a budget of 2% of GDP would have been required," he continued, noting that this would have been "politically unfeasible, in today's market environment. "Instead, national governments and private capital will still need to finance a major chunk of Europe's investment needs, Brzeski said, given current economic conditions. — CNBC's Silvia Amara contributed to this story.