Brussels, 29 September, (Brussels Morning Newspaper) – Germany and five other European Union countries are pressing for substantial reductions to the European Commission’s proposed EU budget plans for 2028-2034, opening a major dispute over how the bloc should finance defence, competitiveness and other priorities while national governments face pressure to contain spending.
Germany has been backed by Denmark, the Netherlands, Austria, Finland and Sweden in demanding a smaller long-term budget. The Commission has proposed almost €2 trillion in spending at current prices, equivalent to about 1.26% of the EU’s average gross national income between 2028 and 2034.
Six EU states seek substantial budget reductions
The six countries are net contributors to the EU budget and have argued that the proposed increase is too large when member states are already confronting significant domestic spending pressures.
Germany has pushed for cuts running into hundreds of billions of euros. Chancellor Friedrich Merz has also argued that EU spending should focus more heavily on competitiveness, defence and security rather than relying heavily on established subsidies and transfers.
The Commission proposal would reorganise spending into four main headings, including support for people and regions, competitiveness and security, global partnerships and the administration of EU institutions.
Merz calls Commission proposal unaffordable
Following talks with European Council President António Costa in Berlin on 9 September, Merz said the proposed budget increase was “simply unaffordable”, as he called for substantial reductions.
Merz has also opposed using additional common EU debt to finance the spending programme, arguing that excessive borrowing could restrict Europe’s future ability to act.
The German position creates a significant obstacle because the final Multiannual Financial Framework requires unanimous approval from all 27 EU member states. The European Parliament must also give its consent.
Costa backs new EU revenue sources
European Council President António Costa has emphasised the importance of finding additional sources of EU revenue rather than simply increasing national contributions.
“We cannot ask [for] more from member states,” Costa said during his September visit to Berlin, as negotiations focused on how to reconcile new European priorities with pressure on national finances.
The Commission has proposed five new categories of EU own resources, including revenues connected to the Emissions Trading System and Carbon Border Adjustment Mechanism, tobacco excise duties, electronic waste and contributions from large companies. The package is intended to generate an estimated €58.2 billion annually in 2025 prices.
EU budget negotiations enter critical phase
The dispute comes as governments seek to balance traditional programmes, including agriculture and regional cohesion, against greater spending on defence, migration, security, research and industrial competitiveness.
Fresh financing ideas are also emerging. Greece has proposed using future 6G spectrum revenues, while France said on 29 September that proceeds from EU fines imposed on large technology companies could help reduce member-state contributions.
What happens next?
The Irish presidency of the Council is leading negotiations during the second half of 2026. EU leaders are due to return to the issue at the European Council meeting on 15 October.
The objective is to secure a political agreement on the EU budget plans before the end of 2026, allowing legislation to be adopted during 2027 before the new financial framework begins on 1 January 2028.
