Brussels, Berlin. Germany and five smaller net contributors to the EU budget are increasing the pressure to significantly reduce the next seven-year budget.
The EU Commission's proposal must be reduced by "several hundred billion euros", according to a joint letter from the six heads of government, which is available to Handelsblatt. “All headings will have to contribute to these savings.”
The letter, dated September 28, is addressed to Irish Prime Minister Micheál Martin, whose country currently holds the presidency of the Council of the EU. Federal Chancellor Friedrich Merz and the heads of government of Denmark, the Netherlands, Austria, Finland and Sweden signed. The Financial Times first reported on the letter.
Shortly before the crucial negotiation phase, the six countries are intensifying the dispute over the size of the next multi-year financial framework for the years 2028 to 2034. France and Italy, the second and third largest net contributors after Germany, are pursuing the opposite course and are demanding a larger budget.
The EU Commission led by President Ursula von der Leyen has proposed a volume of almost two trillion euros for the new budget. From the perspective of Germany and its comrades-in-arms, this is too much. The Commission has therefore proposed a nominal increase of around 60 percent compared to the current financial framework. That is "simply not realistic. Not economic. Not political," the letter says.
French President Emmanuel Macron, however, said in June that Europe must “accept” the Commission’s proposed budget increase in order to be able to invest more money in defense, technology and competitiveness. At the same time, France and Italy want to prevent national contributions from increasing.
The second and third largest economies in the EU are therefore demanding new EU own resources. France and Italy have proposed a new digital levy to finance the budget. This fee is intended to place greater responsibility on large tech companies that have previously paid very low taxes in Europe.
In their letter, the six states around Germany do not rule out new own resources, but warn that this will avoid a debate about the size of the budget.
Especially at a time when several member states have to consolidate their public finances, a large increase cannot be justified. More staff for the EU institutions is also “out of date” as national administrations cut jobs, they write.
In their view, additional funds should flow primarily into security and defense, competitiveness, innovation and the fight against irregular migration. “We are not calling for any cuts to the existing MFF,” they write. The budget will grow. How much is left open.
The signatories also justify their demand with their role as donors. Its six countries together finance almost 40 percent of member states' contributions to the EU budget, the letter said.
At the same time, the six countries are against new common EU debt as a way out of the financing dispute. The budget will ultimately be paid for by European citizens, regardless of the mechanism through which the money is collected. “Even taking on joint debt cannot be the answer,” write the heads of government.
The Irish EU Council Presidency is due to present a new so-called negotiating box in October, in which the central points of contention and figures will be recorded for further discussion among the member states. EU Council President António Costa recently stated that this was the beginning of the crucial phase of the negotiations.
The six governments are demanding that Ireland stipulate a lower overall level. The negotiating box must provide for a volume “that can realistically be financed by those who bear the brunt of the financing,” says the letter. Otherwise the Irish proposal could not serve as a basis for negotiations. “This question cannot be postponed.”
