With the countdown to the European Union’s new seven-year budget for the period 2028–2034 having begun, disagreements among member states over its size remain significant. The June European Council, following an exchange of views on a compromise proposal from the outgoing Cypriot Presidency, called on Ireland, which assumed the Presidency on July 1, to continue efforts to reach an agreement before the end of 2026, so that the necessary legislative procedures can be completed in 2027 and funding can begin in January 2028. Negotiations in the General Affairs Council are based on the European Commission’s proposal from last July and September for a significant increase in spending to nearly 2 trillion euros from approximately 1.2–1.3 trillion euros in the current programming period (2021–2027). 

   According to Euronews, the Cypriot Presidency is reported to have proposed reducing budget spending by 32.8 billion euros, or about 2%, compared to the European Commission’s proposal, a move that drew a backlash from northern countries—Germany, the Netherlands, Austria, Finland, Denmark, and Sweden—which are calling for a significant reduction in the proposed budget.

   According to Reuters, Germany—which is the country with the largest net contribution to the common budget—wants a very large cut of around 400 billion euros. A government document states that the Commission’s plan would increase Germany’s annual contribution to the European budget to over 50 billion euros per year, while noting that even after the 400 billion euro cut, the budget would still be 27% higher than the current one.

   In real terms, however—that is, after adjusting for inflation— the 2028–2034 budget proposed by the Commission is not that much larger than that for the 2021–2027 period. At constant 2025 prices, expenditures for the next programming period amount to approximately 1.7 trillion euros, which includes 134 billion euros for principal repayments on loans from the Recovery Fund (Next Generation EU), and therefore do not relate to the financing of new expenditures.

   It is clear that the Cypriot Presidency’s proposal did not satisfy the “frugal countries” in the North, which are pushing for further cuts, with the final battle expected to take place at the December Summit. The Polish Commissioner for the EU Budget, Piotr Serafin, warned the northern countries, however, that “a frugal budget does not necessarily mean it is modern,” as there is a risk that spending on new and pressing EU priorities, such as defense and energy security, will be cut first. He also added that, in the final analysis, a slashed budget will not cost European taxpayers any less, since a number of its expenditures will have to be covered at the national level anyway, but with lower efficiency.

   The budget increase in the Commission’s proposal stems mainly from new expenditures in areas where Europe faces major challenges, such as strengthening its defense and competitiveness at a time when it is facing significant trade pressures from both the U.S. and, above all, China.

   The Commission’s proposal calls for spending of approximately 500 billion euros to boost the EU’s competitiveness. For security (defense and space activities), 131 billion euros are earmarked—an amount five times that of the current programming period— while 175 billion euros are earmarked to fund research programs through Horizon Europe and 67.4 billion euros for the green transition and the shift of industry toward clean energy.

   €300 billion is earmarked to support agricultural incomes through the Common Agricultural Policy (CAP), and another €450 billion is earmarked for cohesion policies—primarily through the development funds (NSRF) and the Social Fund—an additional 450 billion euros is earmarked.

   One innovation in the Commission’s new proposal is the consolidation of all spending on cohesion, the agricultural sector, and migration into a single “National and Regional Partnership Plan” for each country, in line with the National Recovery Plan, which will link investments to reforms. Based on the Commission’s proposal, Greece is entitled to a total of 49.2 billion euros for the seven-year period 2028–2034 under this broader National and Regional Partnership Plan.

   The Commission’s budget also allocates 182 billion euros for EU foreign policy, specifically for development aid to third countries, humanitarian aid and its expansion, while spending on the EU’s administrative operations amounts to 104 billion euros.

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Source: APE-MPE