EU leaders brace for clash over bloc's next seven-year budget - Reuters
Kyiv • UNN
Net donors and beneficiaries criticized the initial EU budget proposal. Germany demands spending cuts, while Spain considers the budget insufficient.
Leaders of the European Union were expected to clash on Friday over the bloc's budget after net donors and beneficiaries criticized the initial proposal for what the EU should pay for from 2028 to 2034 – and where the funds should come from, Reuters reports, writes UNN.
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The EU budget is how the bloc of 27 member countries finances all its policies – from supporting farmers and developing new technologies to student exchange programs and equalizing living standards in member states.
According to the European Commission's proposal, the budget for 2028-2034 should amount to 2 trillion euros ($2.3 trillion).
Richer EU countries pay more into the budget than they receive from it, while poorer ones receive more than they pay. Every seven years, these two groups fiercely fight to reach the unanimous agreement needed to adopt the budget.
A first compromise proposal, prepared last week by the Cypriot presidency of the EU, cut the European Commission's proposal by 2%, which was not enough for some and too much for others.
Entering Friday's negotiations, German Chancellor Friedrich Merz, whose country is the largest net donor, said the proposal was "too high."
"The numbers need to be reduced," Merz told reporters.
The Cypriot proposal also provides for more funds in the budget for farmers and cohesion policy at the expense of areas such as research and innovation, which annoys countries trying to compete with the industry of the US and China.
The Netherlands, another net budget donor, objected to the compromise plan because it is too focused on areas considered traditional spending rather than addressing new challenges such as defense and modernization.
"We all want a Europe that is more secure and competitive, and we need a budget that matches that," said Dutch Prime Minister Rob Jetten upon arriving at the EU summit. "We cannot do that with a 1990s budget," he added.
Spain, which is a small but still net beneficiary, said the budget is too small and that spending on farmers and "cohesion" should be increased due to inflation.
"The proposal... is even more inadequate than the one originally proposed by the European Commission, and therefore we certainly completely disagree with it," said Prime Minister Pedro Sánchez.
Legally, EU governments must agree on the budget by the end of 2027.
But due to elections in France, Italy, Poland, Spain, Greece, Estonia, Finland, and Slovakia next year, a deal must be reached by the end of this year to avoid becoming hostage to election campaigns.
To help reduce the national contributions of net donors while maintaining spending ambitions for net beneficiaries, EU leaders must agree on new sources of revenue that would not come directly from national treasuries.
"We can only spend as much money as we have," said Merz. "Today at the European Council meeting, I will repeat my request not to allow the European Union to take on further debt."
Among the proposed options, which some countries have rejected and others supported, are a share of the funds EU governments receive from selling CO2 emission permits to companies, and a share of the tax on goods imported into the EU that were produced in countries where climate policy is weaker than in the EU.
Other options include a tax on uncollected electronic waste, a share of the excise duty on tobacco, and an annual lump-sum contribution from large firms operating and selling goods in the EU.
Further proposals include a tax on extreme wealth, on digital services, online gambling, and capital gains from crypto assets.
Although leaders are unlikely to make decisions on Friday regarding specific new revenue streams, they will indicate their preferences to allow the future Irish EU presidency to prepare a new compromise proposal for October, the publication notes.