EU braces for more than €100 billion in budget cuts

European Union governments are preparing for the bloc’s next long-term budget proposal to include spending cuts of more than €100 billion, according to four EU diplomats familiar with the discussions who spoke to POLITICO.

Several countries fear funding for priorities including farm subsidies and regional payments could be reduced when Ireland’s presidency of the Council of the EU presents a new negotiating document next week.

With about three months remaining before an informal deadline for concluding the talks, member states remain far from agreement. Germany and the cost-cutting group it leads called Tuesday for the European Commission’s original proposal, worth nearly €2 trillion, to be reduced by several hundred billion euros.

“If the Irish negotiating box [the next budget proposal] is to serve as the basis for further discussions, it must set out an overall volume that can realistically be financed by those who carry the main financial burden,” the leaders of Germany, Denmark, the Netherlands, Austria, Sweden and Finland wrote to Irish Prime Minister Micheál Martin.

The proposed cuts are opposed by the 17-member “Friends of Cohesion” group, including Italy, Spain and Poland, which favors a larger budget.

“I expect that there will be cuts that will make Friends of Cohesion unhappy,” one diplomat said.

Ireland has not publicly disclosed its position, seeking to act as a neutral broker. “We haven't even come to any considerations about cuts or increases,” Europe Minister Thomas Byrne said last week.

Parallel negotiations in the European Parliament are also at risk of delays because of political divisions and disputes among committees.

“We’re so far behind that we won’t even have a Parliament position by the end of next year if we continue at the same pace,” Damian Boeselager, a Greens negotiator, told POLITICO.

Parliament and the Council face pressure to conclude talks before 2027 elections in France, Italy, Spain and Poland potentially disrupt negotiations and delay payments. France’s National Rally, which has called for halving France’s contribution to the EU budget, is leading opinion polls.

“We have to move fast. With the upcoming elections in France, the EU budget could become very vulnerable if we don’t set clear guardrails now,” Boeselager said.

Parliament aims to agree its position by November and begin negotiations with governments as early as January 2027. Three committees overseeing the budget, agriculture and regional policy are already causing overlaps and delays over National and Regional Partnership Plans.

Agriculture lawmakers are seeking to shield the Common Agricultural Policy, which covers more than €300 billion in farm subsidies, from the plans.

“Everyone knows that CAP cannot be deleted out of the architecture without a new Commission proposal and an impossible one-year delay of negotiations,” Boeselager said.

By Tamilla Hasanova