The negotiation of the next major budget of the European Union enters its decisive phase with 141 billion euros less on the table. Ireland, which holds the rotating Presidency of the EU Council this semester, presented a new negotiation framework on Saturday for the period 2028-2034 that reduces the European Commission's initial proposal by approximately 8%. The accounts would go from 1.76 trillion euros at constant 2025 prices to around 1.62 trillion, although the initial figure was 1.98 trillion when expressed at current prices. It is not yet the definitive budget: the document aims to bring the positions of the Twenty-Seven closer before the European summit on October 15 and 16.
The adjustment responds to months of pressure from several countries that demand greater budgetary discipline, including Germany, the Netherlands, Sweden, Austria, Denmark, and Finland. On the other side are governments like the Spanish and Italian, which have warned against further cuts in traditional items such as the Common Agricultural Policy and Cohesion funds. The result presented by Dublin tries to reconcile two objectives that are difficult to align: to contain the size of the accounts and, at the same time, find money for defense, innovation, competitiveness, Ukraine, and new crises, in addition to addressing the repayment of the debt incurred to finance the European recovery fund.
Competitiveness and security, among the areas that would lose the most
One of the largest adjustments would fall on the items allocated to competitiveness and security, which would be approximately 13% below what was initially proposed by the Commission, according to the breakdown known this Saturday. It is a particularly significant reduction because Brussels had presented the next financial framework as an opportunity to close the technological and industrial gap with the United States and China, strengthen the European industry, and increase investment in defense.
In this block are framed instruments linked to research, innovation, strategic technologies, and security, although the final distribution among programs still needs to be negotiated. The future European Competitiveness Fund is one of the major bets of the new budget and is designed to concentrate funding in sectors considered strategic, from clean technologies to digitalization and industrial capabilities. The paradox is that precisely some of the priorities that have gained the most prominence in the European discourse are the ones now facing some of the largest cuts compared to the original proposal.
Foreign policy and cooperation could fall by around 17%
The other major victim would be external action. The new framework proposes a reduction of nearly 17% in foreign policy and development aid compared to the initially planned figures, according to the breakdown advanced on the Irish document. This would affect the EU's financial margin for international cooperation, aid to third countries, and various geopolitical initiatives outside its borders.
The EU is also reorganizing a good part of these policies under the Global Europe instrument, which includes funding for the European neighborhood, the Middle East, sub-Saharan Africa, Asia, Latin America, the enlargement of the Union, and Global Gateway projects. The Council had already defended giving greater weight to enlargement, migration, and European neighborhood, so the cut will force a decision on which priorities remain protected and which will have less margin.
Agriculture and Cohesion would also decrease, but less
The Irish Presidency is trying to partially protect the two major historical policies of the European budget: agriculture and regional development. Along with fisheries, this block would suffer a cut of approximately 3% compared to the Commission's proposal, much lower than the adjustment proposed for competitiveness or foreign policy. Overall, agricultural and regional policies would retain around 914 billion euros, according to the calculations released on the proposal, an amount that would still be higher than that of the current financial framework.
The comparison needs, however, a precision. That these items increase compared to the budget of 2021-2027 does not mean that they come out intact from the negotiation: money is being cut compared to what the Commission wanted to allocate to them starting in 2028. Furthermore, the next framework changes the architecture of spending and aims to integrate Cohesion, agriculture, fishing, migration, security, and other policies within broader national and regional plans, something that has caused concern among regions and municipalities due to the risk of greater centralization.
Why Spain looks especially at the CAP and the Cohesion funds
Spain has a special interest in protecting these two items due to its status as an important recipient of agricultural and regional funding. The Spanish Government has allied with other States to demand that the CAP and Cohesion do not suffer additional cuts, arguing that they must coexist with the new European priorities instead of becoming the source of funding for defense or competitiveness.
Madrid has also tried to expand the budget margin through another formula: restructuring the repayment schedule of the Next Generation fund debt. The Spanish proposal estimated that redistributing the payment of interest could free up around 70 billion euros during the next financial framework, but Germany and other countries have shown reluctance and the Commission's services have warned that prolonging the debt could also raise its total cost.
Up to 9 billion less for the European administration
The adjustment would not be limited to investment programs. The proposal also contemplates around 9 billion euros less in administrative spending compared to the Commission's initial design. This item covers the functioning of European institutions and part of their personnel and structural costs.
Ireland defends that its document constitutes a commitment capable of responding to the "fiscal realities" of the Member States without dismantling the major community priorities. Its Minister for European Affairs, Thomas Byrne, has emphasized that, even after the 141 billion adjustment, practically all major programs would have more resources than in the current financial framework and the total budget would still be more than 30% higher than that of 2021-2027 in comparable terms.
Germany and the frugal countries want to go even further
The problem for Ireland is that the cut may be too large for some and too small for others. Sweden and the Netherlands have already considered the adjustment insufficient and continue to demand a smaller budget. The party bloc advocating for spending restraint argues that national governments are also facing fiscal difficulties and that Brussels cannot increase its budget at the pace initially proposed.
On the opposite end, the President of the Commission, Ursula von der Leyen, has warned in recent days against "large cuts," while the European Parliament has indicated that it will not give its consent to accounts that, in its opinion, weaken the Union's capacity to act. The negotiators of the Eurochamber have even defended a budget that is still more ambitious than the one initially presented by the Commission.
New European taxes to balance the accounts
The other leg of the negotiation is in the revenues. The Irish document contemplates new sources of community financing linked, among other elements, to customs duties, a portion of the revenues obtained from the sale of CO2 emission permits, and a contribution from large companies operating in the EU. The goal is to reduce the amount that national budgets have to transfer directly to Brussels to sustain the increase in spending.
The Commission has been arguing for months that increasing the so-called "own resources" would allow financing new priorities without forcing States to raise their national contributions in the same proportion. But there is also no consensus on these instruments: some governments reject the idea of the EU acquiring greater fiscal capacity and consider that, although they are called European resources, they still represent money obtained from citizens and companies of the member States.
The 141 billion is the beginning of the negotiation, not the end
The new framework will be discussed by European leaders at the summit on October 15 and 16. The political goal is to reach an agreement before the end of 2026 so that all necessary legislation can be approved in 2027 and the new budget comes into effect on January 1, 2028. The task will not be easy: the Multiannual Financial Framework requires the unanimity of the 27 member States and subsequently the consent of the European Parliament.
For this reason, the 141 billion euros do not yet constitute an approved cut, but rather the new basis on which governments will begin to negotiate. If the Irish document were to survive without major changes, the items most exposed to the original plan would be foreign policy and cooperation, with an adjustment close to 17%, and competitiveness and security, with around 13%. Agriculture, fishing, and regional development would be more protected, although they would also lose approximately 3%. The pulse of the coming weeks will decide whether these percentages are maintained or if the pressure from Germany and the more austere countries forces the search for even more savings.