EU struggles to cope with budget until 2034: new proposal announced

The dispute over the next EU budget has escalated to the level of heads of government. The European Council made no progress during its two-day meeting in Brussels on Thursday and Friday, with member states remaining deeply divided over the financial framework for the years 2028 to 2034. President of the European Council, António Costa, announced he would prepare a new proposal to be presented within four weeks, aiming to restart negotiations at a special summit scheduled for late November. According to reports, the Irish presidency’s proposed budget outline failed to gain traction among member states. Austria's Chancellor Christian Stocker stated that the current proposal, which includes a 50 percent increase in volume compared to the previous Commission draft, is too high. He emphasized that a significantly lower volume is needed for an agreement to be reached. A joint statement from the heads of state and government urged Costa to advance negotiations with a view to achieving a timely agreement. This would allow necessary legal acts to be adopted by the end of 2027, ensuring uninterrupted EU funding starting in early 2028. Costa aims to focus the negotiations primarily on three areas. First, preventing individual member states' contributions from reaching politically unacceptable levels. Second, working together with the European Commission and member states to develop a new package of additional EU own resources. New ideas, including proposals from the European Parliament and a potential 6G revenue source, are under consideration. Third, maintaining sufficient flexibility in the budget to respond to unforeseen crises. The 6G resource idea involves using revenues from the allocation or auctioning of mobile frequency spectrum for 6G technology to fund the EU budget. A group of net contributor countries, known as the "Frugals," met before the start of the summit on the initiative of Austrian Chancellor Stocker. They expressed unanimous opposition to the Irish proposal, stating it lacks a basis for agreement due to its high volume. They argue that a new proposal with a much lower volume is required to achieve consensus. On the other side, the "Friends of Cohesion," comprising 16 EU countries, strongly oppose any cuts to cohesion and agricultural subsidies, with Italy, Spain, and Poland among them. German Chancellor Friedrich Merz described the negotiations over the next EU multiannual budget for 2028–2034 as very difficult. He stressed the need for further reduction in volume, noting that no member state can afford it. For Germany, competitiveness and defense take precedence. Merz added that it makes no sense to discuss money without reducing bureaucracy in the EU. He called for Europe to remain capable of action and sovereign. An agreement at the December summit would be desirable, though he suggested participants should bring more than just a few shirts. The current proposal by the Irish presidency outlines a budget of 1.622 trillion euros for 2028–2034, representing a savings potential of around 140 billion euros or eight percent compared to the European Commission’s initial proposal of nearly two trillion euros. However, this has been rejected by the net contributors who argue it still represents a significant increase. Austria’s Stocker proposed a compromise solution regarding the EU agricultural budget, suggesting that it could be kept at the nominal level without an increase, which he deemed acceptable. He did not provide specific figures but indicated that the current agricultural policy accounts for approximately 36 percent of the overall budget. The Irish presidency proposed 914 billion euros for combined agricultural, cohesion, and fisheries policies, which is three percent less than the Commission’s proposal but eleven percent higher than the current period’s total. The ongoing discussions highlight the deep divisions between net contributors and net recipients, with the former advocating for reduced spending and the latter insisting on maintaining existing subsidy programs. With elections looming in several member states, the path to a consensus appears increasingly complex. A special summit is planned for November 26, followed by a regular summit in mid-December, where final decisions are expected to be made.