EU leaders push back on a major budget proposal, putting a deal by end of the year in doubt

BRUSSELS -- European Union leaders voiced strong opposition on Thursday to a new proposal for the bloc’s long-term budget, raising serious doubt about whether the key spending package will be agreed by the end of year.

“This is far too big, far too expensive,” Swedish Prime Minister Ulf Kristersson told reporters at an EU summit focused, in part, on trying to narrow down agreement on the seven-year budget, known as the multiannual financial framework.

“It would increase the Swedish net contribution (by) almost 60%. That is simply totally unacceptable,” Kristersson said. Sweden is one of about 10 net contributing countries paying more into the EU budget than they get back in allocations.

The 2028-2034 budget is likely to amount to between 1% and 1.2% of the 27-nation bloc’s gross national income. The MFF is financed mostly by the member countries based on the size of their economies, with net contributors paying almost half.

Putting money where Europe’s ambitions are

The spending package is a statement about the EU's ambitions. It's being negotiated as the bloc deals with outside challenges such as supporting Ukraine as it fights off the Russian invasion and remaining competitive in the face of high energy prices and trade tensions with the United States and China.

But Chancellor Friedrich Merz of Germany, Europe’s biggest economy and a major net budget contributor, said “no member state in the EU can afford to pay contributions into the Union on such a level.”

Merz said he doubts the leaders can “reach a conclusion these days, this weekend.”

Ireland, which holds the EU’s rotating presidency, last weekend proposed to set the budget at 1.62 trillion euros ($1.81 trillion), skimming 141 billion euros ($158 billion) off an opening offer made by the European Commission.

Ireland manages a thankless task

Ireland's plan has been widely criticized by the net contributors and 17 other countries known as the “Friends of Cohesion” who want to protect farm subsidies and funds for poorer regions. Those policies make up about two thirds of the entire budget.

The commission, the EU’s powerful executive branch, is unhappy too.

“The proposed cuts risk leaving us with less capacity to act together at a time where, because of the developments around us, we need to act more together than ever before,” EU Budget Commissioner Piotr Serafin said Tuesday.

“We were never going to please everybody on this one,” Irish Prime Minister Micheál Martin conceded to reporters. “It’s a very difficult balancing exercise.”

EU members racing against time

Ultimately, if countries aren’t willing to stump up more cash, then either farm or cohesion spending must shrink or Europe’s ambitions on defense, competitiveness and other priorities be scaled back. Unless money can be found elsewhere.

Time is of the essence though, and with no clear path to a quick deal in sight, European Council President António Costa will take over from Ireland to try to chaperone an agreement through at leaders’ level.

“We need to deliver by the end of this year,” Costa said ahead of the summit. “We must reach an agreement in time to have the new budget operational … with no disruption in funding for farmers, workers, researchers, businesses, cities and regions across Europe.”

Complicating things is a series of elections in France, Italy and Poland in 2027 and Spain in November. The hard right is leading in surveys in France and results in Poland and Spain are difficult to predict. New governments could try to unpick the spending package.

Whatever happens, missing the end of December target does not mean that money runs out. Nations have another year, but much time is needed to adopt legislation on spending programs and approve it all so money can be flowing by January 2028. All 27 member countries and the European Parliament must endorse it.

EU leaders are likely to discuss the budget when they meet in late November and at an end-of-year summit in mid-December.