The Irish presidency is facing a big challenge in trying to get agreement on the next EU budget, which had been one of its key goals. Its proposal on a new seven-year package was never going to please everyone, in view of the opposing positions among member states, the European Commission and the European Parliament. However, the widespread backlash to the draft budget meant very little, if any, progress was made at the European Council meeting during the week, bar the various sides setting out their objections.
This may have been an inevitable step before real negotiations. EU member states are broadly split into two camps. The “frugals” comprising Germany, the Benelux and Nordic countries want hundreds of billions shaved from the commission’s budget proposal of €1.76 billion. Moreover, these countries want the seven-year budget from 2028 to 2034 to prioritise spending on improving economic competitiveness and defence.
A group of 17 mostly southern member states are opposed to any cut, and want the budget to prioritise agriculture and regional aid. As Taoiseach Micheál Martin put it, the presidency’s job is like “trying to reconcile the irreconcilable.”
The Irish Government proposed cutting the budget by 8 percent, or €141 billion, which has failed to resonate with any of the differing camps. How its plan aims to achieve these savings is equally divisive. It proposed a 3 per cent cut to farming and regional aid subsidies but a much larger 13 per cent cut to competitiveness and defence, as well as reducing funds set aside to respond to contingencies.
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The Northern states and the European Commission argue that the proposal would undermine the future viability of the EU. One commission official said that Ireland had drafted a budget fit for the 20th century. There was further criticism of the lack of detail on new sources of taxation that the Commission could use to generate much needed additional revenues.
It is important that progress is made over the coming months. Marine le Pen, the far-right candidate, is leading the polls ahead of the French presidential election next year. She has pledged to slash France’s contribution to the EU budget if she wins. However the politically parlous position of French president Emmanuel Macron, and of his German counterpart, chancellor Friedrich Merz, complicate the search for a solution.
Meanwhile, the EU faces a growing array of threats. It risks being squeezed by the economic might of the US and China and Russia poses a military threat on its doorstep.
A period of drift without a budget agreement would be damaging. Recent years have shown the imperative of European cooperation in response to crises. But politics is making the search for a budget solution very difficult.
