Negotiations on the EU budget have not yet begun at the European Council. The member states’ positions remain far apart

Brussels. The European Union’s aim of reaching an agreement on the 2028–34 EU budget is in danger of falling short, as the positions of the Member States remain far apart on the total amount of funding and spending priorities. During yesterday’s discussion at the European Council – the first since the Irish Presidency presented a new ‘negotiation box’ to bridge the gap between positions – heads of state and government reiterated their red lines. The document serving as the basis for negotiations provides for an 8 per cent cut from the Commission’s original proposal of €163 billion: a reduction of €141 billion. The cuts have been concentrated on the budget headings dedicated to new priorities, such as competitiveness and defence, whilst preserving the funds made available to Member States for farmers and cohesion. However, for the group of ‘frugal’ countries – Germany, the Netherlands, Sweden, Finland, Denmark and Austria – the overall cut is insufficient and the sector-specific cuts are misguided. In their view, it is the traditional policies – the Common Agricultural Policy and Cohesion Policy – that should be cut, not investments for the future. On the other hand, the ‘Friends of Cohesion’ group – led by Italy and Romania – is calling for a more ambitious EU budget and, above all, for national allocations for agriculture and cohesion to be preserved. Even at the cost of sacrificing the new priorities. In both cases, the fine words spoken in support of Mario Draghi’s recommendations are contradicted by narrow national budgetary interests: paying less for the ‘frugal’ states, and securing as much as possible for the ‘friends of cohesion’.

No one expected an agreement following yesterday’s discussion at the European Council. Unanimity is required, and negotiations have barely begun. The President of the European Council, António Costa, has set a deadline of the end of the year. Failure not only risks affecting the beneficiaries of EU funds in 2028, but also risks projecting an image of division and impotence on the global stage. The presidency’s ‘nego-box’ is intended to act as a ‘catalyst’ for the negotiations. Another extraordinary summit is already scheduled for late November, ahead of the decisive meeting on 15 December. Outside the meeting room, the leaders reiterated their official positions. The ‘nego-box’ must be reduced ‘significantly’, said German Chancellor Friedrich Merz, leader of the ‘frugal’ states. Otherwise, Germany would be forced to pay 50 per cent more to Brussels. The Irish proposal “is not even a starting point for negotiations” because “it is too large” and “would entail a 6 per cent increase in Sweden’s contribution”, said its Prime Minister, Ulf Kristersson. Giorgia Meloni chaired a meeting of the “Friends of Cohesion”: 17 Member States stated that they do not intend to agree to further cuts, let alone if these were to affect agriculture and cohesion.

Costa had hoped that inside the summit hall, away from the cameras, the leaders would begin to narrow their differences by discussing own resources: the taxes that fund the budget. Instead, the leaders “continued to dig in their heels”, a diplomat from a member state that considers itself neutral between the two groups explained to Il Foglio. Sweden, Denmark, Italy, Hungary and Germany have indicated that they are in no hurry to reach an agreement. For them, waiting until 2027 is not a problem. But the year-end deadline is not merely technical. It is also political and electoral. As the French presidential elections draw nearer, the issue risks becoming a flashpoint in the election campaign. Should Marine Le Pen win – she has promised to halve France’s contribution to the EU budget – an agreement could become impossible. Unable to agree on the EU’s long-term budget, the 27 member states are also divided over how to tackle the energy price crisis. The Commission has proposed further relaxing the rules on state aid and joint purchases of hydrocarbons, but is short of effective short-term solutions. Italy, together with Poland and the Visegrád Group countries, has proposed revising the mechanisms for setting electricity prices, relaxing the ETS system for businesses and delaying the implementation of ETS 2, which imposes a surcharge on fuel and heating for consumers. The Nordic countries have opposed this out of fear that it would undermine the pillars of decarbonisation.