Governments may need to curb their “ambitions” for the European Union’s common budget amid resistance to higher national contributions and disagreement over new revenue streams, Irish diplomats have told their counterparts in Brussels.
Negotiations to strike a deal on the size and focus of the EU’s next long-term budget, which will run from 2028 until 2034, are beginning to intensify in an attempt to land an agreement between all 27 member states by the end of the year.
The Irish Government, which holds the rotating presidency of the Council of the EU, is responsible for guiding the talks towards a compromise.
A coalition of fiscally conservative states, known as the “frugals” – which includes Germany, the Netherlands, Denmark, Sweden, Finland and Austria – want to substantially pare back the size of the seven-year budget.
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German chancellor Friedrich Merz has called for several hundred billion euro to be shaved off the initial €1.9 trillion budget proposed by the European Commission, the EU’s executive arm.
Governments in the frugal camp want to cut the amount set aside for Common Agricultural Policy (Cap) subsidies and “cohesion” funding to help develop poorer regions.
Alongside disagreement about the size of the budget, national capitals are fighting over proposals that would raise new revenue directly for the EU pot, known as “own resources”.
Options under consideration include an annual levy on companies with a turnover of at least €100 million, diverting some excise duty on tobacco products into the union’s budget, a tax on cryptocurrency assets and online gambling, and an EU-wide levy charged on digital platforms and tech companies.
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A September 4th assessment privately circulated by Irish officials said the amount raised would be “minuscule” if every criticism of the various measures was taken on board.
The internal Irish paper said most member states were opposed to the idea of a levy on large corporations. Several governments also flagged opposition to a digital levy, citing “geopolitical concerns”, a reference to the fact anything targeting US tech giants could draw retaliation from the Trump administration.
The frugals, and other member states, are sceptical about EU “own resources” siphoning off revenue that could otherwise flow into national coffers.
In recent days Irish diplomats in Brussels asked ambassadors from other EU states to set out what they viewed as the “potential landing zone”.
The September 14th note, seen by The Irish Times, said while some governments were keen to have an expanded budget, others wanted the size of the proposed package to be “significantly” reduced.
“When coupled with the reluctance of many to increase their contributions to the EU budget and the varying degrees of appetite for the different parts of the new own resources package, these factors point to a need to reflect on our level of ambition for expenditure increases,” the document said.
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The Irish Government will table a revised EU budget proposal in early October, after which point the debate will be kicked up to national leaders to settle.
There is a concern that Merz’s domestic political troubles could leave Berlin with less room to compromise.
Minister of State for European Affairs Thomas Byrne, who is involved in the budget negotiations, said the German government was a “very significant part” of the talks, but the country’s internal politics would not shift the direction of travel.
“In my opinion the sense of urgency has not changed,” he told reporters in Brussels on Monday.
Europe’s credibility would be damaged if the bloc’s 27 governments could not land a deal by the end of this year, to make sure the next round of Cap and other EU funding schemes were in place for 2028, Byrne said.
