Germany warns EU that €159B budget cuts are not enough
Frugal countries said an end-of-year agreement is less likely after Ireland's proposal.
Germany and its allies have rejected Ireland's proposal to reduce the EU's next seven-year budget by around 8%, claiming the cuts are insufficient. Irish President of the Council of the EU, who initiated the plan, was quickly thwarted by Germany's Chancellor Friedrich Merz, a crucial negotiator as Germany contributes nearly a quarter of the bloc's common budget.
Merz emphasized that the proposed cuts fall short of what is required to make the budget affordable for those bearing the burden of financing. The EU budget, currently at nearly €2 trillion, would still be higher than the current levels under the new proposal.
Germany leads a group of six "frugal" countries - Sweden, Denmark, the Netherlands, Finland, and Austria - which together contribute 40% of the Union's common budget. These countries criticized Ireland's proposal, deeming it insufficient. Sweden's Europe minister Jessica Rosencrantz called the negotiating document "a wildly unaffordable increase," as the overall amount would still be larger than the current budget.
Austria's Europe Minister Claudia Bauer expressed a similar sentiment, stating that the new budget remained "miles away from an Austrian yes."
Negotiations between EU leaders are set to intensify during a summit next Thursday and Friday, when they will discuss the negotiating box. EU governments are working towards a budget deal by the end of the year, before elections in France, Italy, and Poland in 2027 could disrupt the negotiations. However, Dutch Finance Minister Eelco Heinen warned that, at the current pace, a deal may not be reached by year-end.
The EU is divided between frugal countries, which advocate for budget cuts across the board, and other states, the Friends of Cohesion, who oppose reductions in farmers' subsidies and regional payouts, also known as the cohesion policy. These areas account for nearly half of the total budget and are politically sensitive due to pressure from farmer lobbies and regions.
To appease the 17 Friends of Cohesion, Ireland maintained the agriculture and regional budgets untouched, focusing cuts on other priorities such as competitiveness, defense, and development aid. The frugal countries remain dissatisfied, particularly with the disproportionate cuts targeting innovative policies like defense and competitiveness, which they support.
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