France and Germany lock horns over long-term EU budget

Brussels: Germany and France are embroiled in a contentious battle over the future scope of the European Union's upcoming seven-year budget, with deep divisions over the extent of potential cuts. The EU aims to finalize a deal by Christmas, fearing a delay would jeopardize talks during an election year when eurosceptic victories in France and other countries could impact future negotiations.

The European Commission initially proposed a budget worth nearly two trillion euros for 2028-2034, while the previous 2021-2027 budget amounted to around 1.2 trillion euros.

Germany and a coalition of other member states, including Austria, Denmark, Finland, the Netherlands, and Sweden, demand substantial cuts of several hundred billion euros. In contrast, France, the second-largest economy and a net contributor to the budget, insists on maintaining a strong budget to address the bloc's increasing challenges. French President Emmanuel Macron has vehemently opposed massive cuts, emphasizing the need for a robust European budget to support EU priorities, including defense.

Ireland, currently holding the rotating EU presidency, is expected to present a revised budget proposal on Saturday in an attempt to bridge the significant gap between the conflicting sides. However, European officials warn that bloodshed is inevitable during the negotiations, with the risk of missing the December deadline looming larger than ever. Spain recently called for a snap election, further complicating the negotiations.

A senior European diplomat dismissed speculation about alternatives before Saturday's proposed budget, stating that the EU recognizes the urgency and downplaying the likelihood of exploring different options. The budget will be a focal point during the upcoming two-day summit of EU leaders in Brussels. While Germany and the frugal members seek significant cuts, a group of southern, central, and eastern European nations known as the "Friends of Cohesion" demand increased funding for agriculture and regional development.

The frugals argue that the proposed budget represents a 60% increase at a time when member states must reduce their expenditures. France, however, argues that the budget must be substantial to support farmers and bolster the European economy to compete with US and Chinese rivals. On the other hand, the super-frugals insist on retaining their rebates, effectively weakening the budget.

Germany and the frugal members criticized the proposed high budget during a time of painful fiscal consolidation, with Chancellor Friedrich Merz weakened politically by the rise of the far-right AfD party. France, facing its own budgetary challenges, has been pressured by far-right leader Marine Le Pen to reduce the country's contribution to the EU budget as a means to curb its debt.