A clash over the size and financing of the European Union’s next budget has deepened, with Germany demanding larger reductions and rejecting fresh shared debt as leaders pursue a deal this year.
The Irish presidency proposes €1.622 trillion for 2028-34 in 2025 prices. Its comparison puts the European Commission’s plan at €1.763 trillion on the same basis, making the proposed reduction €141 billion, or 8%. In current prices, the respective totals are €1.826 trillion and €1.985 trillion.
German Chancellor Friedrich Merz said on Oct. 10 that the proposed total was no basis for an agreement. After the Oct. 15-16 summit, he said Berlin still wanted a lower figure and governments remained divided.
Germany joined Denmark, the Netherlands, Austria, Finland and Sweden in an Aug. 27 call for several hundred billion euros in cuts from the Commission’s proposal. The six governments cited efforts to tighten national budgets and said every area of EU spending should contribute to the reductions. They also opposed new common borrowing as a way to settle these budget negotiations.
German Ambassador to the EU Thomas Ossowski repeated that borrowing stance in an Oct. 21 interview with Euronews. “No, definitely not new common borrowing,” he said.
That position concerns financing the next budget deal. The EU has already agreed to a separate €90 billion loan for Ukraine covering 2026 and 2027, funded through EU borrowing backed by budget headroom.
Ireland says it retained national allocations for cohesion, agriculture and fisheries after a majority of member states sought to protect them. Its plan would still make savings across spending areas. Ireland has also proposed revenue measures it estimates could raise about €55 billion a year, though governments remain divided over them.
The Commission’s plan seeks more funding for competitiveness, security and defense while retaining farm and regional support. Ireland’s comparison also leaves €168 billion in current prices for repayment of NextGenerationEU borrowing, the same amount listed for the Commission’s proposal.
The final budget needs unanimous approval in the Council and the European Parliament’s consent. EU leaders have asked European Council President António Costa to advance talks and want an agreement by the end of 2026, leaving time for legislation in 2027 before the new budget starts in January 2028.
