The Irish government has set the path for a showdown between MEPs and governments over the next seven year EU budget after proposing an 8 percent cut worth €141bn to the European Commission’s spending plan. 

Savings from the commission proposal have been found across all headings in the so-called ‘negotiating box’ for the 2028–2034 Multiannual Financial Framework (MFF). But farmers’ subsidies under the common agricultural policy and the bloc’s cohesion policy, which provides funding to the EU’s poorest regions, have been exempted from any cuts. 

That is a nod to a sustained lobbying effort by a group of seventeen EU countries, known as ‘Friends of Cohesion’. 

As expected, meanwhile, cuts totalling €38bn have been made from the ‘Global Europe’ heading, which covers foreign aid, while €75bn has been taken from the competitiveness fund and €10bn from the EU’s administrative costs. 

In a statement on Saturday (10 October), Ireland’s minister for Europe, Thomas Byrne, said that the €1.62 trillion spending plan was “intended to bridge the many differences between Member States. It brings us closer to resolving the critical questions our Union faces on how to balance both new priorities and core policies, whilst also reflecting the fiscal realities that all Member States face.” 

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EU and Chinese officials agreed a series of trade concessions covering electric cars, rare earths and tariffs that dragged them away from a damaging trade war on Friday (9 October), following two days of crisis talks.

Following two days of talks in Beijing, EU trade commissioner Maroš Šefčovič said that he and China’s commerce secretary Wang Wentao had made a “crucial first step” towards rebalancing EU-China trade relations.

Europe can point to progress on hybrid vehicles, stronger assurances over the supply of critical raw materials, and continued engagement on market access issues in China.

Hours before Šefčovič arrived, Beijing rejected an EU demand for so-called “voluntary export restrictions” on its electric vehicles (EVs). However, in a joint statement on Friday, the two sides said that they had reached an “understanding on trade in hybrid vehicles in a WTO compliant manner”, but without providing further details.

They added that further negotiations on reducing tariffs and minimum pricing deals would allow Chinese EVs to enter the EU at a lower duty rate.

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Persuading China that its €1bn daily trade surplus with the EU is not sustainable was always going to be a hard sell for EU trade commissioner Maroš Šefčovič.  

And the early signs are that Šefčovič’s two days of talks with Chinese commerce secretary Wang Wentao, which conclude on Friday (9 October), are not going to deliver the breakthrough demanded by EU leaders when they gather for a summit in Brussels next week. 

“The message around the table was clear: the need to improve access to the Chinese market, while boosting our economic security,” Šefčovič posted on X ahead of the first day of talks. 

But rhetoric aside, three months after the EU Commission set up a series of ‘work streams’ with Chinese officials, with a mandate to address the multi-layered EU-Sino trade dispute, it is hard to see much tangible progress. 

Hours before Šefčovič arrived, Beijing rejected an EU demand for so-called “voluntary export restrictions” on its electric vehicles (EVs). 

In August, data published by Schmidt Automotive Research found that 14 percent of EV sales across Europe this year were Chinese-made, up from 9.4 percent last year. 

That is despite the EU imposing additional tariffs of between 17 and 36 percent on Chinese EVs in October 2024. 

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European Commission president Ursula von der Leyen has joined MEPs in urging the bloc’s governments not to gut the EU’s next seven-year budget, as talks on spending reach a critical phase. 

“I would like to caution against large cuts. It would risk cutting deep into critical priorities that we all together have agreed on,” von der Leyen told MEPs during a speech in Strasbourg on Tuesday (6 October), ahead of an EU summit on 15 October.

The commission has proposed a budget worth just under €2 trillion, equivalent to 1.26 percent of the EU’s gross national income, a small increase on the previous seven year spending plan. But the so-called ‘frugal’ group of countries, led by Germany, have demanded hefty cuts, complaining that they are contributing too much. 

“Having no new financial framework is by far the most financially advantageous solution for Germany,” chancellor Friedrich Merz said on Monday. 

But 17 EU countries from Southern and Eastern Europe signed a joint letter last week, demanding that farmers’ subsidies via the Common Agricultural Policy are maintained, as well as spending across the EU’s poorest regions, known as cohesion policy 

During a press conference on Tuesday, Siegfried Muresan, the Romanian centre-right MEP who is co-leading parliament’s negotiating team on the seven-year budget with Portuguese socialist and democrat Claudia Tavares, said that there was “still time” for the Irish presidency to avoid proposing “unjustified cuts” that “would make Europe weaker and severely undermine the institutional cooperation between parliament and council.” 

Though Muresan conceded that governments did not want to increase their national contributions, “there is a way out”, he said. 

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Having said several months ago that he had no intention of a ‘rerun’ of the Brexit debate, UK prime minister Andy Burnham told Labour delegates at the party’s annual conference in Liverpool last week that nothing should be off the table as far as EU-UK relations are concerned. 

Brexit had “done more harm than good”, he said, adding that “we will not give Britain the clear path we need into the rest of the century until we decide on a long-term relationship with what is still our largest market.” 

In fact, Britain could “go all the way” back into the EU, said Burnham.  

The new prime minister is still enjoying something of a honeymoon period. His Labour party now tops the opinion polls, albeit by less than 30 percent, and his early policy announcements on nationalising utilities and pension reform are the most radical in a generation. 

Even so, Burnham’s remarks were a surprise that left pro-European columnists positively giddy with optimism over the weekend. 

In truth, rejoining the EU – if it happens – would probably take a decade. 

Burnham didn’t offer any timetable or any other specifics, and has said that no moves towards EU membership would be taken before the next UK election due in 2029. And talk of rejoining the EU is not purely borne out of pro-European enthusiasm. 

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The EU has played down claims by the Dutch government that the bloc’s decision to suspend aid support for Sierra Leone was because the west African country refused to extradite one of the world’s most-wanted drug traffickers to face trial in the Netherlands. 

Speaking on Thursday, (1 October) after a meeting of EU justice ministers in Luxembourg, migration commissioner Magnus Brunner told reporters that the decision to suspend support was made for “technical reasons” — but without giving more detail.  

Sierra Leone was allocated €352m in EU funding between 2021 and 2027, under the bloc’s seven-year budget framework. The country was set to receive €18m from the EU this year. 

But Dutch justice minister David Van Weel insists that the suspension of funds is the result of months of pressure from the Dutch government to persuade president Julius Maada Bio’s government to hand over convicted Dutch drug trafficker Jos Leijdekkers.  

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The sudden escalation in fighting between Ethiopian federal forces and Tigrayan rebels in the Afar region, raising fears of a new civil war, is part of a wider potential cascade effect from Yemen that could hurt Europe. 

After months of low-level skirmishes, Ethiopian officials have accused the Tigrayan People’s Liberation Front of launching an all-out offensive against federal government positions in northern Ethiopia. 

So what does that mean for Europe and the EU? More than you might think. 

Ethiopia’s economy is particularly vulnerable following the capture of Yemen’s entire Red Sea coastline by the Houthi rebel group, who now control the Bab el-Mandeb Strait. 

Some 97 percent of Ethiopia’s trade is via Djibouti’s port. There is now a real prospect of a series of regional chain reactions and the prospect of civil war in northern Ethiopia is one of them. 

This doesn’t directly impact on the EU’s interests, but it could soon enough.  

Ethiopia is not alone in facing major new threats posed by the Houthis’ advances.  

Egypt, a vital ally for the EU on migration control, faces its own economic crunch as it relies on Suez Canal tolls as a main source of foreign currency. That could lead to more financial demands being made of Brussels 

For their part, Djibouti and Somalia face major security concerns. Djibouti hosts military bases for a handful of EU countries, as well as the EU itself, and the United States, China, and others.  

Somalia, meanwhile, has a longstanding African Union (AU)-led security mission aimed at combatting the Al-Shabaab terror group to which the EU is the biggest single donor.

And the AU mission is particularly reliant on the EU after the Trump administration pulled the plug on US financial support earlier this year. The Houthis already supply at least $100m (€88m) in arms to Al-Shabaab, a smuggling operation now made easier by its coastal advances. 

For the moment, the EU is offering only modest additional support. Last week, EU governments agreed to double financial support for the Djibouti Armed Forces to €20m under the European Peace Facility. 

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