EU capitals to rip apart ‘sacrificial lamb’ first draft of new bloc budget
Who pays, and what gives?
If politics is the art of who gets what, when and how, the looming battle over the next EU budget is the ultimate test of bloc negotiations. And it’s about to get heated, writes Paola Tamma.
Context: Last year, the European Commission proposed a €2tn framework for the bloc’s next seven-year budget, due to begin in 2028. The plan would shift spending towards new priorities such as defence and economic competitiveness, at the expense of traditional items including agricultural subsidies and cohesion funds.
The Cypriot presidency of the Council of the EU, which is leading the negotiations, is expected this week to produce a “negotiating box” setting out how funding should be allocated across different priorities ahead of a summit of EU leaders next week.
The expectation among diplomats is that Cyprus will propose only a modest reduction, in the low decimals, to the overall budget. The cuts would fall more heavily on defence, competitiveness and the EU’s global reach than on traditional policies.
That would broadly align with the wishes of a majority of member states, including most net recipients of EU funds as well as Italy and Spain, which last month called for stronger support for traditional priorities.
But net contributors such as Germany, Austria, the Netherlands, Sweden and Denmark want larger cuts and argue reductions should be spread evenly across spending areas to preserve funding for security and growth.
“Such a proposal would be understood as putting traditional spending areas off limits [from cuts] and show that [the EU budget’s] modernisation and competitiveness agenda is only of secondary importance,” said an EU diplomat.
It would amount to “mowing down modernisation and protecting vested interests”, they added.
The two camps are also divided over how to finance EU spending. One group wants to roll over common debt incurred during the pandemic and scrap the contribution rebates enjoyed by several net contributors. Opponents argue the savings would be limited and insist the rebates should remain.
The aim is to reach a deal by the end of the year, before a packed 2027 election calendar that includes France, Italy and Poland.
How national capitals react to Cyprus’s proposal will provide an early indication of whether that timetable is achievable.
EU diplomats openly refer to the initial proposal as a “sacrificial lamb” that will be ripped up but will frame the subsequent wrangling.
“We know that this is not the final landing zone, but it is a crucial milestone. What we’ll present will be decisive . . . for member states . . . to start shifting their initial positions,” said another EU diplomat.