Six EU states demand hundreds of billions in cuts to secure budget deal

German Chancellor Friedrich Merz and the leaders of five other EU member states have warned that they could block agreement on the bloc’s next seven-year budget unless it includes “hundreds of billions” of euros in spending cuts.

The EU’s budget “must be fundamentally reformed. We must make choices”, the leaders of Germany, the Netherlands, Sweden, Denmark, Austria and Finland wrote in a joint letter seen by the Financial Times (FT).

“Unless the budget is cut by hundreds of billions, there won’t be an agreement this year,” a diplomat from one of the six countries told the newspaper.

The warning highlights growing divisions over the EU’s future spending priorities, particularly as member states seek to increase defence funding and strengthen struggling industries facing competition from China and the United States, while maintaining support for farmers and economically weaker regions that have traditionally received the largest share of EU funds.

The six leaders are calling for a redistribution of EU resources towards defence and innovative companies, arguing that spending priorities need to reflect mounting economic and security challenges. At the same time, they are seeking reductions in funding for farmers and poorer regions, which together have traditionally accounted for roughly two-thirds of the bloc’s budget.

The EU’s 2028-2034 financial framework requires the unanimous backing of all 27 member states. By threatening to withhold their approval, the six countries are challenging a commitment made by EU leaders in June to secure a budget agreement this year, before upcoming elections in France, Italy, Spain and Poland could make negotiations more difficult.

The bloc’s budget is funded largely through contributions from member states, with Germany, the Netherlands, Sweden, Denmark, Austria and Finland together accounting for around 40 per cent of total EU budget revenues. The six governments are pushing for significant reductions to the €2 trillion overall budget proposed by the European Commission, in line with their broader efforts to curb public spending domestically.

By Jeyhun Aghazada