Ireland has proposed a 1.62 trillion euro budget for the European Union’s 2028-2034 spending period, as governments argue over how to divide funds among poorer regions, farmers and other priorities. Sweden calls the plan unaffordable, while Germany’s chancellor says the bloc remains far from agreement.
Known as the multiannual financial framework, the budget equals around 1.2% of the 27-nation bloc’s gross national income. Member countries finance it mostly according to the size of their economies. All member countries and the European Parliament must endorse the package.
Who pays, and what gets funded
Ireland’s proposal would lift the current seven-year package by 30%, but it remains 8% below the European Commission’s proposal. Sweden, one of about eight net contributors that pay more into the budget than they receive in allocations, says it needs “several hundred billion euros” more in cuts.
“It’s wildly unaffordable, and the volume must go down,” Sweden’s EU Affairs Minister Jessica Rozencrantz said as ministers met to discuss the proposal. She said the plan would mean “a 60% increase in the Swedish contribution,” calling that “a fee for the Swedish taxpayers to pick up, which limits us to make the necessary priorities back home.”
Germany also ranks as a major net contributor. Chancellor Friedrich Merz welcomed Ireland’s “tireless efforts” on Sunday, but said, “we are still a long way from reaching an agreement.” He added: “The EU budget must be affordable for those who bear the main burden of financing. Everyone must contribute to the necessary adjustments.” Merz was due to join counterparts in Brussels from Thursday for two days of talks.
Cohesion funds for poorer regions and agricultural subsidies sit at the heart of the dispute. Together, they account for about two-thirds of the budget. If countries don’t contribute more, governments must cut spending on farms or cohesion, scale back EU ambitions on defence, competitiveness and other priorities, or find money elsewhere.
Ireland’s EU Affairs Minister Thomas Byrne said the presidency had laid the groundwork for negotiations, not secured a deal. “That was our task, to find that basis,” he told reporters in Luxembourg. “We weren’t asked to find a basis for agreement. That will come later.” He said: “Nobody’s going to get everything that they want. But we hope that there’ll be something there for everybody.”
Business rules and the proposed brake
Separately, Merz, Italian Prime Minister Giorgia Meloni and Belgian Prime Minister Bart De Wever have urged an “emergency brake” on EU legislation they consider excessively burdensome for businesses. In a letter sent on Monday to European Council President António Costa, they described the proposed mechanism as “a last resort and additional safeguard” against unnecessary bureaucratic costs. Its scope and procedures remain unclear, and diplomatic sources said leaders were expected to discuss it at Thursday’s summit in Brussels.
The letter builds on work by an informal group of 19 EU countries known as the “Friends of Competitiveness,” led by Germany, Italy and Belgium. The three leaders also called for faster planning and approval of investments in decarbonisation, energy, artificial intelligence and defence. Under a proposed “priority rule,” authorities could temporarily suspend some regulations in those sectors to speed up the development and deployment of new technologies.
Their proposal calls for cutting companies’ reporting requirements and reversing the burden of proof when deciding whether those requirements are necessary. Officials would have to justify the need for a reporting obligation rather than assume it, potentially reducing administrative burdens, particularly for small and medium-sized enterprises. A separate account of the letter said it called for EU capitals to be able to block legislation they consider too burdensome for governments and businesses.
Pressure ahead of the next budget
Negotiations advance as EU ambitions rise and room for fiscal maneuver shrinks in many countries. France, Italy and Belgium are mired in debt and oppose paying more. The EU cannot levy taxes as a bloc, but it receives revenue through customs duties, value added tax and other mechanisms. The European Commission is seeking new “own resources,” including through the carbon emissions trading system and a new tobacco duty.
Elections in France, Italy, Poland and Spain in 2027 could test the bloc’s resilience. The hard right leads in opinion polls in France, while outcomes in Poland and Spain are difficult to predict.
Missing the end-of-December deadline wouldn’t mean that money runs out: countries would have another year. But lawmakers must adopt and approve legislation on spending programmes in time for funds to flow by January 2028. In a letter inviting leaders to the summit, Costa said a “timely agreement” was “essential to provide our economies with the predictability and stability they need in an unstable and unpredictable world.”