EU budget slashed by €159B in new Irish proposal

The European Union's upcoming seven-year budget has been slashed by €159 billion according to a new proposal from the Irish presidency of the Council of the EU. The budget, which runs from 2028 to 2034, suffered significant cuts in an effort to appease the German-led camp demanding major reductions. The Irish negotiating document, or negobox, envisions €122 billion in cuts when compared to the previous negobox presented by the Cyprus presidency in June.

This sets the stage for tense discussions among the EU's 27 leaders during an upcoming summit. The EU is divided between frugal countries demanding substantial cuts and a rival group of southern and eastern states opposing any reductions. To satisfy the latter, Ireland protected farmers' subsidies and regional payouts, which account for half of the total budget, from any cuts.

The rest of the reductions came from foreign aid, which was cut by €38 billion, competitiveness, which was slashed by €75 billion, and the EU's administrative costs, which were reduced by €10 billion. Ireland also eliminated the "EU Facility cushion," allowing the European Commission to deploy cash to tackle unforeseen emergencies during the budget cycle.

However, this proposal is unlikely to satisfy the frugal countries, who have warned against disproportionately cutting new EU-wide priorities such as competitiveness, defense, and development funding. Germany and its allies criticized the previous Cyprus presidency for cutting only €32 billion in June. The EU's 27 ambassadors will discuss the negobox at a meeting on Sunday, ahead of the leaders' discussion on Thursday.

Despite pressure to include additional taxes, Ireland has kept the five proposed taxes on the table, suggesting technical changes to overcome opposition. These discussions are crucial as governments aim to agree on a budget deal before elections in France, Poland, and Italy threaten to disrupt the negotiations.