An Irish compromise proposal for the EU’s long-term budget has drawn fire from the net-paying countries over its size and its focus on cutting ‘modern’ priorities. The Commission and MEPs have countered, warning of the risks of a less ambitious, more rigid budget.
EU leaders are heading for a bruising battle over the bloc’s next long-term budget this week, after a German-led coalition of net contributors rejected the latest compromise proposal as insufficient.
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On Saturday, the Irish presidency of the EU Council proposed cutting €141 billion from the overall budget, bringing it to €1.622 trillion in 2025 prices for the seven-year period from 2028 to 2034.
But Berlin and its allies insist the cuts do not go far enough, while other member states and EU institutions have criticised the proposal for lacking ambition.
“We are still far from an agreement. The size of the new proposal is not a basis for agreement. The EU budget must be affordable for those who bear the brunt of financing it,” German Chancellor Friedrich Merz said in a statement.
“Everyone must contribute to the necessary adjustments, because prioritising and modernising EU spending is a task for us all,” he added.
Germany and its allies object not only to the overall size of the budget but also to how the cuts are distributed, with emerging priorities such as competitiveness and defence bearing the brunt.
“Defence, research and new technologies are being hit disproportionately hard. Europe needs to strengthen itself in these areas. Savings need to be found in a balanced way across the entire budget,” Finnish Prime Minister Petteri Orpo said in a statement.
The Irish proposal concentrates the deepest cuts on programmes favoured by the so-called “frugals”, who prefer to call themselves “modernisers”. Competitiveness funding would fall by 13% and global cooperation by 17%.
By contrast, traditional policies such as agriculture and cohesion are largely spared, with a mere 3% reduction. They are backed by the “Friends of Cohesion”, a group of 17 southern and eastern European countries including Italy and Romania.
It is not the first time the frugals’ own priorities have borne the brunt. In June, the then Cypriot presidency proposed cutting the European Competitiveness Fund and the Global Europe programme by almost 4%.
“There is an urgent need to strengthen the link between the political realities of the European leaders and the negotiations on the MFF [Multiannual Financial Framework],” an EU diplomat told Euronews.
“The Netherlands cannot accept this proposal. At this rate, there will be no deal by the end of the year,” warned Dutch Finance Minister Eelco Heinen.
Sweden’s Minister for EU Affairs Jessica Rosencrantz likewise called the proposal “unreasonable,” adding that “we are therefore nowhere near an agreement.”
The frugals are not alone in their disappointment. The Friends of Cohesion welcomed with a sigh of relief that funding for their farmers and poorest regions was spared significant cuts. But they also say the next budget looks unambitious given the challenges facing the bloc.
Excluding the repayment of NextGenerationEU, the post-pandemic recovery instrument, the budget would amount to a mere 1.02% of EU gross national income. According to leading MEPs, that is a 10% cut to the current budget in real terms.
“The choice before us is not between a cheap and an expensive Europe. It is between an underfunded Europe at the mercy of the next crisis, and a properly funded Europe that can tackle challenges and respond to Europeans’ needs,” said MEP Carla Tavares (Portugal/S&D).
Meanwhile, the Commission’s Director-General for Budget, Stéphanie Riso, told EU ambassadors on Sunday that she had severe concerns, not only about the lack of ambition but also because the proposal risked making the EU much more rigid.
She singled out the cuts to Brussels ' public administration, largely supported by the member states, and the EU Facility, an instrument meant to give the budget room to react to shocks, which the Irish proposal drastically cuts by 40%.
The long-term budget will be discussed at the European Council summit on Thursday and Friday, when EU leaders are expected to provide political direction to break the deadlock.
“We are hearing more of the same arguments. We are getting to a point where we need leaders to advance the discussion,” a second EU diplomat told Euronews.