Germany and five EU states are calling for cuts to the EU budget

Brussels. Germany and five other EU states only want to agree to the Union's next multi-year budget if planned spending falls by "hundreds of billions" of euros. Chancellor Friedrich Merz and the heads of government of the Netherlands, Sweden, Denmark, Austria and Finland are calling for a fundamental reform of the budget in a letter to the Commission, reports the Financial Times. Without cuts there will be no agreement this year, warned a diplomat from one of the signatory states.

The six countries want to direct the funds more towards defense and innovative companies. At the same time, less money should flow into agriculture and the development of poorer regions - areas that currently make up around two thirds of the EU budget. The Commission has proposed a budget of around two trillion euros for the years 2028 to 2034.

The move exacerbates conflict with a group of 17 states, including Spain and Italy. They demand that agricultural and regional funding be maintained at a minimum and that the overall budget be expanded beyond the two trillion euro mark. Some of these countries also support shared EU debt - an option that Berlin and its allies reject.

The negotiations are also delicate because the budget requires the unanimous consent of all 27 member states. The six signatories together account for around 40 percent of the EU budget revenue.

Ireland, which currently holds the rotating presidency of the Council, is expected to present a compromise proposal by mid-October. At the same time, time pressure is growing: next year, elections in France, Italy, Spain and Poland could make the talks even more difficult.

EU-wide taxes are possible new sources of income. The Commission expects around 60 billion euros annually, for example through higher contributions from emissions trading, tariffs on CO₂-intensive imports or taxes on tobacco, electronic waste and large companies.