Germany and Spain go head-to-head in EU budget fight
German Chancellor Friedrich Merz and four other leaders compete with Spanish finance minister in POLITICO articles signaling EU budget deal is still far off.
DUBLIN – Germany and Spain have engaged in separate comments criticizing the proposed size of the EU’s forthcoming €2 trillion, seven-year budget, signaling the upcoming negotiations could be contentious. With talks approaching what officials anticipate will be their final few months, national capitals are engaged in a battle to protect their favored initiatives and prevent taxpayers from contributing further funds to Brussels.
Despite a year of intensive discussions, countries remain far from reaching an agreement, as disagreements intensify daily, as evidenced by the conflicting opinions published by Spanish Economy Minister Carlos Cuerpo and a coalition of German, Danish, Dutch, Austrian, and Finnish leaders. Spain's Cuerpo has demanded significant additional funding for the EU's collective fund, alongside a postponement of debt repayments from the Covid-19 crisis, which would yield an extra €11 billion annually for agriculture, defense, and competitiveness initiatives.
"The next long-term budget should be set at 2% of EU GNI, a level befitting the task of bolstering both the economy and social cohesion," he argued. However, Germany, Denmark, the Netherlands, Austria, and Finland's representatives have rejected both of Spain's proposals. They contend that increasing the budget and accumulating debt is not the answer but rather exacerbates the problem.
They urge Ireland, currently leading the six-month rotating presidency of the Council of the EU, to make substantial cuts to their next negotiating document slated for release in October. While officials familiar with the negotiations, who requested anonymity due to the confidential nature of the talks, believe moderate cuts are the most probable outcome, the pressure remains on to finalize a deal before elections in France, Italy, Spain, and Poland next year could disrupt negotiations and delay payouts to farmers and researchers.
The EU's seven-year budget, or Multiannual Financial Framework, covers a broad range of expenditures, from agricultural subsidies to student exchange programs, and has been the subject of fierce debates. European Council President António Costa has been touring EU countries to gauge their positions on the most contentious issues.
Spain's Cuerpo has proposed delaying the repayment of joint debt issued in 2021 to combat the economic impact of Covid-19, which totals €300 billion to be repaid from 2028 to 2058. Currently, the repayment timeline obliges EU governments to front-load the payments, resulting in €25 billion annually being allocated over the next budget cycle.
Critics argue this reduces available funds for other spending areas, further complicating negotiations. Cuerpo's alternative is to extend the repayment schedule, saving €11 billion per year. This idea has backing from the European Commission and several EU nations, including Italy, France, Portugal, and Poland. However, the German-led coalition argues that the post-Covid spending surge has already burdened the next MFF by nearly €170 billion, which is no longer available for new priorities.
They contend that postponing the repayment of the principal offers minor savings and is insufficient to offset the necessity of reducing the overall size of the budget. They emphasize that the budget is ultimately funded by European citizens, and no matter the financing method, the critical issue of the budget's total volume must be addressed.
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