Key facts
- German Chancellor Friedrich Merz is hosting a meeting of leaders from the Netherlands, Finland, Austria, Denmark, and Sweden to advocate for significant cuts to the next EU budget.
- These nations are pushing for hundreds of billions of euros to be sliced from the proposed €2 trillion budget for 2028-2034.
- European Council President António Costa is simultaneously touring EU capitals to broker a compromise on the budget.
- Key priorities for the budget-cutting group include shifting spending towards defense and security and imposing conditions on funding for democratic standards.
- Some countries, like Spain, oppose budget reductions and want to maintain agricultural spending, while others are open to new EU taxes to fund priorities like defense.
German Chancellor Friedrich Merz is set to convene leaders from the Netherlands, Finland, Austria, Denmark, and Sweden in Berlin to present a united front for substantial cuts to the European Union's next seven-year budget. The group aims to reduce the proposed €2 trillion budget for 2028-2034 by hundreds of billions of euros, shifting spending priorities towards defense and security.
This initiative comes as European Council President António Costa is engaged in a diplomatic tour of EU capitals, including Prague, to broker a compromise on the budget. Costa believes member states are closer to an agreement than their public statements suggest and is working towards a deal by the end of the year, especially with upcoming elections in France, Spain, and Italy posing potential risks to consensus.
While Merz and his allies argue for fiscal austerity, citing the need for belt-tightening at home, other nations like Spain resist budget reductions and advocate for maintaining agricultural funding. The discussions also involve exploring new revenue streams, such as EU taxes on emissions, carbon imports, digital services, and crypto assets, to finance increased spending on defense, migration, and potential EU enlargement.
Some countries, like Lithuania and Estonia, have indicated a willingness to consider new EU taxes if they provide adequate funding for strategic priorities and demonstrate genuine European added value. However, any new revenue streams require unanimous approval from all EU member states and must be legally and technically feasible by the start of the budget cycle in 2028.