The Irish presidency of the Council of the European Union has put on the table this Saturday a new proposal for the financial framework 2028-2034 that implies cutting around 141 billion euros from the initial plan of the European Commission, which amounts to an adjustment close to 8% and leaves the total volume of the accounts at 1.62 trillion euros.
The compromise document thus lowers the proposal from Brussels, which amounted to 1.76 trillion euros at constant 2025 prices (1.98 trillion at current prices), and concentrates the effort especially on the headings of competitiveness and security, with the intention of bringing positions closer among the Twenty-Seven on the size of the next multiannual budget.
The text, which still needs to be negotiated among the member states, arrives just before the European Council next week, where the heads of state and government will again examine the accounts for the next seven years with the goal of steering an agreement before the end of 2026.
The new scheme tries to reconcile the demands of Germany, the Netherlands, Denmark, Austria, Finland, and Sweden, which asked to reduce the Commission's proposal by "several hundred billion euros," with the positions of countries like Spain and France, which demand a "more ambitious" budget that does not undermine classic policies such as the Common Agricultural Policy (CAP) or cohesion funds.
"We have heard the calls from many member states to reflect the fiscal realities of our European Union and to draw up a responsible budget," said the Irish Minister for European Affairs and Defence, Thomas Byrne, at a press conference in Brussels, where he admitted that reaching a consensus will require moderating the increase in spending initially proposed by the community executive.
The largest cut in absolute terms is concentrated in the chapter of competitiveness, prosperity, and security, whose allocation decreases from 522.205 to about 456.000 billion euros, that is, a reduction close to 13% compared to the Brussels plan, although it still represents more than double the resources dedicated to these priorities in the current budget.
Within this block, one of the most affected programs is the European Competitiveness Fund, which loses around 11% of the planned funds, while Horizon Europe, the EU's research and innovation program, sees its allocation cut by almost 15 billion euros, down to 140 billion.
The adjustment also affects the heading of resilience, security, defense industry, and space, which is reduced by about 15 billion euros, as well as the Connecting Europe Facility, intended to finance strategic transport and energy infrastructures, which gives up more than 10 billion, and the Erasmus+ educational mobility program, whose funding falls by around 1.5 billion.
The CAP and cohesion, protected in essence
In the face of these cuts, the Irish presidency keeps unchanged, compared to the previous negotiation draft, the main allocations of the Common Agricultural Policy and cohesion, two of the most sensitive chapters whose protection has been defended by countries such as Spain, Italy, France, and Portugal.
Specifically, direct payments to the income of farmers and ranchers remain at 261.013 billion euros, while the economic, social, and territorial cohesion policy stands at 410.080 billion, the same figures included in the proposal presented in June by the previous Cypriot presidency, which had already introduced slight increases over the initial design of the Commission.
The overall chapter that groups agriculture, cohesion, fishing, rural development, and security does register a reduction of just over 3%, down to 914.179 billion euros, but the adjustment is concentrated in other instruments and common reserves, without touching the national allocations set for each member state.
Strong adjustment in the EU's external action
Another of the most significant cuts affects the Union's external action, whose funding decreases by 17% compared to the community proposal, down to 157.000 billion euros, although the Irish presidency emphasizes that this figure still represents an increase of 31% compared to the current budget.
The reduction impacts mainly on the 'Global Europe' instrument, which channels a large part of the development cooperation, neighborhood, and enlargement funds, with cuts in the allocations destined for various regions, including sub-Saharan Africa, the Middle East and North Africa, as well as Latin America and the Caribbean.
Nevertheless, the draft keeps intact the resources planned for the recovery and reconstruction of Ukraine, as well as a reserve of 25 billion euros at current prices for humanitarian aid, two priorities that, as Byrne has explained, have broad support among partners.
Debate on new own resources
In addition to the spending side, the Irish proposal reviews the package of new sources of income to fund the next budget, one of the most delicate points due to the reluctance of several governments to raise their national contributions.
Dublin proposes a set of own resources with which it aims to raise about 55 billion euros annually, which includes raising the share of revenues from the carbon border adjustment mechanism (CBAM) allocated to the community budget from 75% to 90%, as well as gradually introducing the contribution linked to the trading of emission rights for certain member states.
The presidency also maintains the Commission's ideas to create new contributions associated with large companies, tobacco, and electronic waste, but leaves out the alternatives defended by the Eurochamber to tax large digital platforms, cryptocurrencies, and online betting.
Final stage of negotiation and German rejection
With this new text, the Twenty-Seven enter a decisive phase of negotiation, in which they must bridge the gap between those advocating for greater budgetary discipline and those who argue that the Union needs to strengthen its financial capacity to take on its new responsibilities.
"No one is going to get everything they wanted in any proposal, but we believe there is something for all member states," pointed out the Irish minister, who emphasized that the document is not the outcome of the discussions, but a starting point to achieve a compromise.
The proposal will be analyzed this Tuesday by the ministers of European Affairs before reaching the European Council on October 15 and 16, with the aim of closing a political agreement in December.
In one of the first reactions, the German chancellor, Friedrich Merz, has criticized the latest budget proposal considering that "it is not a basis for agreement."
"The EU budget must be affordable for those who bear the brunt of the financing," he has argued. "Everyone must contribute to the necessary adjustments, as prioritizing and modernizing the EU budget spending is a task that concerns us all," he has added.
Germany and other net contributors, such as the Netherlands, Sweden, and Austria, have been demanding a reduction of several hundred billion euros in the draft community budget.