EU countries push back against linking budget payments to reforms

A group of 10 EU countries, including France, Spain and Italy, has opposed a European Commission proposal to link payments from the bloc’s next seven-year budget to the implementation of national reforms, four EU diplomats told Politico's Playbook.

Under the Commission’s proposal, regular payments from the EU budget would be linked to the fulfilment of reforms from 2028. The plan was opposed at a meeting of EU ambassadors on July 22 by the 10-member group, which also includes Hungary, Malta and Poland. The Netherlands defended the proposal.

Critics argue that the model could result in regions losing funding if national governments fail to implement the required reforms.

Fiscally conservative countries, including Sweden and Denmark, have long argued that such conditions could help less affluent EU members improve economic efficiency. However, opponents of the proposal say the system could be used to delay payments to poorer regions.

As negotiations over the EU’s next long-term budget intensify, resistance to the Commission’s proposal is growing.

“There seems to be a wake-up call,” one EU diplomat said.

A second diplomat said: “We don’t want recommendations to become impositions.”

Some EU leaders are expected to seek changes to the proposed system at summits after the summer break. Luxembourg, which voted against the budget blueprint last month over its opposition to linking funding to reforms, has made the issue a red line in the negotiations.

By Sabina Mammadli