Amid geopolitical uncertainty, persistent inflation, and growing demand for strategic investment, negotiations on the bloc’s budget are expected to face considerable difficulties in reaching a consensus.
Discussions on the EU’s long-term budget for 2028–2034, known as the multiannual financial framework (MFF), are among the toughest negotiations in Brussels. The budget is equivalent to around 1.2% of the combined GDP of the 27 member states and relies primarily on contributions from them.
This seven-year financial framework is intended to address priorities including security, defence, competitiveness, migration, energy, and resilience to climate change, while continuing to support traditional policies such as agriculture and socio-economic development.
The EU has drawn up a new spending plan to enhance competitiveness amid high energy prices and international trade tensions, while also balancing resources for defence, agriculture, and less developed regions. This presents a major challenge, as the bloc must meet growing spending needs for defence, competitiveness, and economic security while maintaining funding for traditional policies amid tight financial constraints.
Differences have emerged as spending needs increase while many countries face limitations on their ability to contribute. EU member states are deeply divided over the size of the budget. Germany, Austria, Denmark, Finland, the Netherlands, and Sweden, which are net contributors to the EU budget, want deeper spending cuts and argue that any budget increase must go hand in hand with fiscal responsibility, spending efficiency, and targeted resource allocation.
Meanwhile, France, Spain, Italy, and Poland want to safeguard funding for the bloc’s priorities in order to address mounting challenges. Countries and regions that rely more heavily on EU development funds fear that budget cuts would undermine infrastructure investment, employment, productivity, and efforts to narrow development gaps within the bloc.
As negotiations on the EU’s long-term budget enter a decisive phase in the final months of this year, Ireland, which holds the rotating EU Council presidency, has proposed a budget of 1.62 trillion EUR, 30% higher than the current budget but 8% lower than the European Commission’s (EC) proposal. This compromise proposal suggests that the parties are beginning to seek a balance between the need for savings and the demand for new investment.
Nevertheless, the proposed budget has yet to secure full support from member states. As one of the EU’s major net contributors, Sweden argues that a further reduction of hundreds of billions of EUR is needed, while Ireland’s proposal could increase its contribution by 60%, putting pressure on its domestic budget.
German Chancellor Friedrich Merz welcomed Ireland’s efforts but said the parties remained far from reaching an agreement, stressing that the budget must remain within the means of the countries providing most of the funding. Meanwhile, recipient countries fear that reducing the overall budget or changing the allocation formula could affect funding for agriculture, regional development, and efforts to narrow disparities between regions.
The EU’s long-term budget is not merely a spending allocation plan; it also reflects the bloc’s shared economic, political and security priorities. Disagreements over the budget’s size and structure could therefore directly affect the EU’s ability to implement its strategic objectives.
EU member states are racing against time to reach a common budget agreement before the end of this year, ahead of national elections in several member states that could derail the entire negotiating process.
The outlook for the negotiations depends on whether member states can accept compromises on the budget’s size, spending structure, and sources of revenue. Ahead of the summit in Brussels, the budget challenge is becoming increasingly complex as member states face simultaneous pressures from geopolitical tensions and inflation, while having to allocate resources to demands that cannot easily be postponed, such as defence, security, digital transformation, and the green transition.
Therefore, the success of the EU summit should not necessarily be measured by whether a final agreement is reached immediately, but by whether it establishes a sufficiently clear roadmap for negotiations to continue towards the goal of securing an agreement by the end of this year.
