Every EU member country and the European Parliament must approve the bloc’s next long-term budget, putting national governments at the centre of a growing fight over spending, contributions and new rules. The 2028-2034 package amounts to around 1.2% of the 27-nation bloc’s gross national income. Member countries finance most of it, according to the size of their economies.
Who Pays for the Budget?
Ireland, which holds the EU’s rotating presidency, proposed a budget of 1.62 trillion euros over the weekend. The plan would raise the current seven-year package by 30%, while staying 8% below the European Commission’s proposal.
Sweden is one of about eight net contributors, paying more into the EU budget than it receives in allocations. It says the plan needs “several hundred billion euros” more in cuts. Sweden’s EU Affairs Minister Jessica Rozencrantz called the proposed spending “wildly unaffordable” and said “the volume must go down.”
Rozencrantz said the Irish proposal would mean “a 60% increase in the Swedish contribution.” She called it “a fee for the Swedish taxpayers to pick up, which limits us to make the necessary priorities back home.”
Germany, too, is a major net contributor. Chancellor Friedrich Merz welcomed Ireland’s “tireless efforts,” but said the EU remained “a long way from reaching an agreement.” He said the budget “must be affordable for those who bear the main burden of financing” and that “everyone must contribute to the necessary adjustments.” Merz was due to join other leaders in Brussels from Thursday for two days of talks.
Merz was referring to countries that oppose cuts to cohesion funds for poorer regions or to agricultural policy, which subsidizes farmers. Together, farm and cohesion spending make up about two-thirds of the EU budget. If countries won’t contribute more, the bloc must shrink spending on those areas, scale back its ambitions on defence and competitiveness, or find other funding sources.
National Budgets and EU Priorities
The negotiations are moving ahead as EU ambitions rise and room for fiscal manoeuvre shrinks in many countries. The EU budget is small beside national budgets. France, Italy and Belgium are mired in debt and oppose paying more.
The EU can’t levy taxes as a bloc. It gets revenue through mechanisms including customs duties and value added tax, while the European Commission is seeking new “own resources,” including through the carbon emissions trading system and a new tobacco duty.
Ireland’s EU Affairs Minister Thomas Byrne said the presidency had laid a foundation for negotiations, not reached a deal. “We weren’t asked to find a basis for agreement. That will come later,” he said. Byrne added: “Nobody’s going to get everything that they want. But we hope that there’ll be something there for everybody.”
Missing the end-of-December deadline wouldn’t mean money runs out immediately; countries would have another year. But lawmakers must adopt and approve legislation on spending programmes in time for funds to flow by January 2028. European Council President António Costa called a “timely agreement” “essential to provide our economies with the predictability and stability they need in an unstable and unpredictable world.”
A Proposed Brake on EU Rules
Separately, Merz, Italian Prime Minister Giorgia Meloni and Belgian Prime Minister Bart De Wever called for an “emergency brake” on new EU legislation they consider excessively burdensome for businesses. In a letter sent on Monday to António Costa, they described the proposed mechanism as “a last resort and additional safeguard” against unnecessary bureaucratic costs.
The proposal’s scope and procedures remain unclear. Diplomatic sources said leaders were expected to discuss it at Thursday’s summit in Brussels. A separate account of the letter said it called for EU capitals to have the power to block legislation they consider too burdensome for governments and businesses.
The letter builds on work by an informal group of 19 EU countries, led by Germany, Italy and Belgium and known as the “Friends of Competitiveness.” The three leaders also called for faster planning and approval of investments in decarbonisation, energy, artificial intelligence and defence. Under a proposed “priority rule,” some regulations in those sectors would face temporary suspension to accelerate the development and deployment of new technologies.
The leaders also called for reduced company reporting requirements and a reversal of the burden of proof when deciding whether those requirements are necessary. Under their proposal, officials would have to justify the need for a reporting obligation rather than assume it, potentially reducing administrative burdens for businesses, particularly small and medium-sized enterprises.