European Union leaders have ended their Brussels summit without agreement on the bloc’s next seven-year budget, after German Chancellor Friedrich Merz rejected the scale of spending envisaged under the latest compromise proposal and demanded deeper cuts.
The discussions on 15–16 October exposed the continuing division between governments determined to contain national contributions and those seeking to protect agricultural subsidies, regional development and new European investment programmes. The dispute now threatens the political timetable for approving the 2028–2034 Multiannual Financial Framework, the budget that will determine the Union’s spending priorities over the next seven years.
In their formal summit conclusions, leaders invited European Council President António Costa to take negotiations forward towards a timely agreement. No new spending settlement was endorsed, despite the Irish presidency having presented revised figures immediately before the summit.
The European Commission originally proposed a framework approaching €2 trillion in current prices, arguing that Europe needed greater financial capacity to meet its growing responsibilities in defence, competitiveness, technological development, migration and external security.
Ireland, which holds the rotating Council presidency, submitted a revised negotiating document on 10 October intended to narrow the differences between governments. The latest proposal includes substantial reductions compared with the Commission’s initial ambitions while seeking to preserve financing for established EU programmes.
Those concessions have not satisfied Berlin. Merz argues that the Union must recognise the difficult fiscal position facing national governments and that the proposed increases in common spending remain excessive.
Germany, the largest contributor to the EU budget in absolute terms, has been working with other budget-conscious governments to seek reductions from the original Commission proposal.
EU Today reported on the proposed €141 billion in reductions, including the implications for defence and competitiveness funding.
The Irish compromise has done little to bridge the divide. The revised framework seeks to combine greater financial restraint with protection for agricultural and cohesion policies, while retaining significant investment in security, research and competitiveness.
Yet every attempt to rebalance the proposed spending exposes another political conflict.
The Common Agricultural Policy and cohesion funding remain among the largest and most politically sensitive components of the EU budget. Agricultural payments support farmers across the Union, while cohesion programmes finance infrastructure, regional investment and economic development, particularly in less prosperous territories.
Governments benefiting heavily from those programmes are reluctant to accept reductions, particularly when national finances are already under pressure.
France, Italy and other countries defending traditional EU expenditure have therefore resisted attempts to transfer the burden of budget restraint disproportionately onto agriculture and regional support.
At the same time, the Commission has argued that the EU cannot simply preserve the spending structure of previous decades while promising a stronger role in European defence, industrial development and economic security.
The contradiction is increasingly apparent. European governments demand greater independence from external suppliers, stronger military capabilities and sustained financial support for Ukraine, yet remain unwilling to agree on the larger common budget that might help deliver those objectives.
Cuts to research, innovation, cross-border infrastructure or defence-industrial programmes would not necessarily produce immediate political costs. Their consequences would emerge later, through investments postponed, capabilities not developed and projects left dependent on national budgets.
Conversely, reducing agricultural payments or regional investment would produce more immediate resistance from farmers, local authorities and national governments.
The demands of 17 EU governments seeking to protect farm and cohesion spending illustrate the growing tension between established programmes and the Union’s newer strategic priorities.
The Council’s budget negotiations had been intended to deliver a political agreement before the end of 2026. That would leave 2027 for the European Parliament and member states to complete the legislation required for the new financial framework to operate from January 2028.
Failure to reach that timetable would not immediately stop EU expenditure. It would, however, compress the period available for completing the detailed legal arrangements underpinning individual programmes and could complicate the uninterrupted delivery of funding at the beginning of the next budget cycle.
The political environment is hardly favourable. Several governments face difficult domestic debates over public spending, taxation and the demands of European integration. In France, the approach of the 2027 presidential election adds another complication to negotiations requiring sensitive national concessions.
Agreement on the seven-year framework requires unanimity among member states, followed by the consent of the European Parliament. The latter has already argued that the EU needs sufficient financial resources to match the responsibilities its governments have assigned to it.
Costa now faces the task of converting competing national positions into a financial settlement that all 27 governments can accept. That will require decisions not only about the overall ceiling but also about the balance between national allocations and programmes managed at European level.
The Brussels summit has demonstrated that the principal disagreements remain unresolved. The next negotiating round will determine whether governments are prepared to compromise on spending priorities or whether their ambitions for a more capable European Union will once again run ahead of their willingness to finance it.
On Friday, thousands of students and teachers took to the streets in several Italian cities to protest the policies of Prime Minister Giorgia Meloni.
RELATED:
Italy’s Giorgia Meloni Trademarks Her Voice Against AI Deepfakes
The protests followed several days marked by a wave of school occupations in Milan, Naples, Turin, Genoa, Bologna and Rome.
The nationwide mobilization, dubbed “No Meloni Day,” combined demands over budget allocations with direct criticism of the Italian government’s environmental policies.
Student groups denounced the progressive deterioration of school infrastructure and called for the €13 billion allocated to military spending to be redirected toward education.
Representatives of the Alternative Student Opposition criticized the rising cost of living and announced a general strike scheduled for Oct. 30.
Un carro armato di cartone è stato dato alle fiamme durante il corteo degli studenti a Torino. Alcuni manifestanti hanno incendiato il modellino con fumogeni colorati, accompagnati dai cori "Brucia, brucia" e dallo slogan "Noi la guerra non la paghiamo", per protestare contro le… pic.twitter.com/RM7BH94cf9
— Sky tg24 (@SkyTG24) October 16, 2026
The text reads, “During a student protest in Turin, a cardboard tank was set on fire. Demonstrators ignited the model using colored smoke flares, chanting “Burn, Burn!” and the slogan “We will not pay for war,” as a form of protest against military spending.
The demonstration was part of the “No Meloni Day”—a day of student mobilization against the government’s educational policies, rising tuition costs, and increased military expenditure.
Similar protests took place across Italy, specifically in Rome, Milan, Florence, Genoa, Venice, Padua, Treviso, and Cagliari. In the capital, organizers estimated the turnout at 20,000 people, while in Turin, more than 2,500 students took to the streets.”
During marches in Rome, tensions escalated when some protesters threw firecrackers and trash containers outside the Education Ministry. Riot police and Carabinieri officers established security cordons and used tear gas to disperse the crowd on Via Marmorata.
“Thousands of students marched from the Colosseum to the Education Ministry. Tensions rose because of a group of masked protesters who threw bottles and improvised explosive devices at law enforcement officers, as well as discharged fire extinguishers,” RaiNews reported.
Similar clashes occurred in Turin and Bologna outside the prefecture and the central railway station, where police responded with water cannons. The violence led to confrontations involving blunt objects, the detention of a masked minor and severe disruptions to rail traffic in northern Italy.
"No Meloni Day"
— 𝕃𝕦𝕔𝕚𝕒𝕟𝕠 𝕃𝕦𝕝𝕫 (@altrella_l) October 16, 2026
Police charges against students
in Rome and Turin. pic.twitter.com/5IGt2pUQLU
Students Reject Discrimination and Racism
Thousands of people marched peacefully in Milan, holding signs and chanting slogans in support of social integration. Youth organizations strongly opposed Meloni’s “Valditara Decree,” which they described as discriminatory and racist.
In effect since June, the decree bans sex and relationship education at the preschool and elementary school levels and requires parental consent to address these topics at other educational levels. It also sets a maximum of 30% for foreign students in each classroom.
“Are these really the problems that need to be solved?” and “Racists out of our schools!” protesters shouted, according to RAI News.
“An entire generation has taken to the streets because it refuses to bow its head — to mind its own business — while others destroy our future,” said Alice, who linked the student movement’s demands to the genocide in Gaza.
“And it all starts right here, in our schools. The pro-Palestinian demonstrations made that clear: Some people have blood on their hands — the blood of genocides taking place around the world — and those same hands are cutting funding for our schools, our lives, and a dignified future in this city.”
“Outside the regional education authority’s headquarters, some participants threw eggs filled with red paint, declaring, ‘This is the blood of Gaza and Palestine,’” RaiNews reported.
No Meloni day here in Italy and antifascist students are facing-off with her cops right now in Bologna. Solidarity comrades.
— GhostofDurruti (@DurrutiRiot) November 14, 2025
No Fascism. No Genocide. No Meloni. pic.twitter.com/wQsgtjRRV2
Truckers, Farmers and Environmentalists Voice Discontent
On Friday, southern Italy faced a severe fuel shortage in the provinces of Calabria, Basilicata and Apulia because of protests by truckers and farmers. Steelworkers’ blockades at Eni’s Taranto refinery brought gas stations to a standstill, causing long lines and operational difficulties for public transportation.
The transport industry association Conftrasporto reported an increase of more than 50 euro cents per liter in diesel prices and demanded the immediate release of budget funds.
Facing the imminent risk of supply shortages, the Ministry of Infrastructure and Transport called an emergency meeting with industry representatives for Oct. 27.
The student mobilization also coincided with global protests organized by “Fridays for Future” in support of climate action and against fossil fuels.
Italian environmentalists marched to the Environment Ministry in Rome to demand reductions in polluting emissions and action to combat energy poverty across the country.
teleSUR/ JF
Source: RAI – EFE – teleSUR
More than one in five people living in the European Union remained at risk of poverty or social exclusion in 2025, according to Eurostat figures that reveal substantial differences in living conditions across the bloc’s regions.
Approximately 92.7 million people, representing 20.9 per cent of the EU population, fell into the category during the year. Although the total declined slightly from 93.3 million in 2024, regional data show that economic vulnerability remains heavily concentrated in particular areas.
In 26 of the 243 EU regions for which figures were available, at least 31 per cent of residents were at risk of poverty or social exclusion. At the opposite end of the distribution, 24 regions recorded rates below 13 per cent.
The regional figures published by Eurostat show that the highest rate was recorded in French Guiana, at 54.8 per cent, while Slovakia’s capital region, Bratislavský kraj, recorded the lowest at 2.9 per cent.
The contrast is not confined to richer and poorer member states. In several countries, internal regional disparities are more pronounced than comparisons of national economic performance might suggest.
Within Slovakia, the proportion of people at risk of poverty or social exclusion in Východné Slovensko was 9.1 times the rate recorded in the Bratislava region.
In Italy, the equivalent rate in Calabria was 8.1 times that of Valle d’Aosta, illustrating the persistent economic divide between parts of the country’s north and south.
These differences are recorded in Eurostat’s regional living-conditions statistics, which provide a more detailed picture than EU-wide or national averages.
The comparison requires care. Eurostat’s measure of poverty or social exclusion combines three indicators: relative income poverty, severe material and social deprivation, and very low household work intensity.
Consequently, the figures do not mean that every person included lacks sufficient income to meet basic needs. They identify people experiencing at least one of the defined forms of economic disadvantage.
Differences in income, employment, household composition and living costs can also influence the results, making direct comparisons between metropolitan areas, rural districts and overseas territories more complicated than a single percentage might imply.
Nevertheless, the scale of regional variation illustrates why national economic growth does not automatically produce equivalent improvements in living standards throughout a country.
The European Union has set a target of reducing the number of people at risk of poverty or social exclusion by at least 15 million by 2030, including at least five million children.
The limited annual reduction recorded in 2025 indicates that progress remains modest relative to the scale of that objective.
The problem has become increasingly important for European policymakers as housing costs, energy prices and employment insecurity affect household finances in different ways across member states.
In May, the Commission presented an anti-poverty and housing policy package, bringing together measures concerning social inclusion, housing exclusion and child poverty.
The regional figures indicate that such initiatives will need to account for considerable differences in local economic conditions.
Policies designed for prosperous urban economies may have limited relevance in regions characterised by low employment, weak infrastructure or dependence on a small number of industries. Conversely, economic activity and relatively high average incomes do not necessarily prevent serious poverty problems within major cities.
The findings have direct relevance to negotiations over the EU’s next long-term budget, covering 2028 to 2034.
The European Commission’s proposal envisages roughly €450 billion for economic, social and territorial cohesion under national and regional partnership plans, including at least €218 billion for less developed regions.
The proposed structure would combine several funding programmes within broader national plans, with the Commission arguing that the changes could improve coordination and make spending more responsive to local requirements.
However, regional authorities have expressed concern that greater national control over financial allocations could weaken their influence over investment decisions.
As EU Today reported earlier this week, representatives of European regions have warned that the proposed budget arrangements could concentrate decision-making in national capitals.
The latest poverty statistics provide a concrete context for that disagreement. Investment priorities may differ considerably between a region experiencing industrial decline, an agricultural area with limited employment opportunities and a metropolitan district facing severe housing affordability problems.
A central question for EU institutions is therefore how funding allocations will reflect measurable regional needs rather than being driven primarily by national political negotiations.
The Commission maintains that its proposed partnership arrangements will protect allocations for less developed regions and continue supporting social inclusion.
Negotiations over the financial framework will determine how those commitments are translated into enforceable rules, while Eurostat’s figures provide a statistical basis against which future claims of progress can be assessed.
With 92.7 million people still at risk, the debate is not simply about the overall size of the EU budget. It is also about whether spending reaches the communities where economic disadvantage remains most concentrated.
EU leaders met Thursday (15 October) for their first face-to-face talks on the 2028–2034 budget, killing the latest negotiation proposal put forward by Ireland.
Dublin, which holds the symbolic EU Council presidency, proposed cuts of up to €141bn from the long-term budget, about eight percent less than the commission proposal. But it failed to make anybody happy, for different reasons.
And now, EU Council president António Costa has been tasked to deliver a new compromise before EU leaders meet again on 26 November in Brussels, with the goal of striking a deal during the summit in December.
An EU official said Costa deemed the deal in December as “essential,” urging EU capitals “to assume their responsibility”.
For Denmark, for example, it is important to have more funds for defence, borders, illegal migration, and competitiveness. “It will probably be as difficult as it was last time or even more difficult,” said Danish prime minister Mette Frederiksen ahead of the meeting.
“We need unanimity in the Council. We are far from that unanimity,” also said German chancellor Friedrich Merz before meeting counterparts.
The EU is divided into two camps. The so-called Frugals (Germany, Austria, Denmark, Finland, the Netherlands, and Sweden) want “several hundred billion” more to be cut, mostly from agriculture and cohesion funds, while 17 EU member states (self-named as Friends of Cohesion) criticise the savings.
But time is of the essence to reach a deal this year, especially for French president Emmanuel Macron. France will hold presidential elections in the spring, and if Marine Le Pen, leader of the far-right National Rally party, wins, reaching an EU deal would become far more difficult.
Le Pen has pledged that, if she comes to power, she will halve France’s contribution to the EU budget.
And Macron reportedly said in the room with EU leaders that from January onwards, there will be no political room for reaching an agreement.
This article continues, but the full version is available only to EUobserver.com subscribers. Visit account.euobserver.com/membership
The federal government just closed fiscal year 2026 with a deficit of nearly $2 trillion, according to figures the Congressional Budget Office (CBO) released last Thursday. Only the two pandemic years of 2020 and 2021 were worse. Today, though, there is no recession and no emergency. These enormous budget deficits are the new normal.
The usual response to a deficit warning is that the government just needs more money. It doesn't. Thanks to the remarkable strength of the private sector, federal revenue rose by 3 percent, to more than $5.4 trillion, over the fiscal year. But spending rose by 6 percent, reaching $7.4 trillion.
Some will blame the Supreme Court for striking down most of President Donald Trump's tariffs and forcing the government to issue refunds. But even if Washington had kept the $130 billion in illegal levies, it would cover less than one-tenth of the gap. Tariffs were never a serious revenue source at our insanely high level of spending.
Look at where the money went. Spending on the three main entitlement programs—Social Security, Medicare and Medicaid—grew by 7 percent. That's faster than total spending growth. Defense grew by 5 percent. Interest on the debt rose by 11 percent, exceeding $1.1 trillion. That last figure is the bill for every earlier year of borrowing—years when Washington was sending clear signals that it isn't serious about fiscal responsibility.
If you want to see where such irresponsibility can lead, look at France. The country that big spenders from Paul Krugman to Sen. Bernie Sanders (I–Vt.) have cited as proof that big government is viable and full of upsides is now on the brink of a serious crisis. France's debt equals 120 percent of its gross domestic product (GDP), and interest payments are rising quickly. Slow growth and social unrest aren't helping.
The U.S., of course, has some advantages that France doesn't, largely because we're a country of innovators with a private sector unmatched at creating wealth. Nonetheless, debt that is swelling out of control should still worry us. First, the same anti-wealth and anti-growth forces that brought France to where it is now are gaining popularity here. Second, we too will see debt reach 120 percent of GDP in a few years, and our interest payments are already consuming an alarming share of resources.
A wise Congress would put us on safer footing if only because debt raises interest rates for everyone, from homebuyers to small businesses. This operates as a drag on growth, and hence on wages. In other words, controlling debt should be part of an affordability agenda in the same way as streamlining regulation.
When legislators decide to take affordability seriously, I recommend looking at a September Advancing American Freedom (AAF) report on this topic. Its section on fiscal restraint offers a useful menu of reforms, including targeting the programs that most drive the debt.
Start with Social Security. Under current law, benefits will be cut by roughly 20 percent when the program's trust fund runs dry in the early 2030s. Nobody believes Congress will actually let that happen, but we'd better hope its answer isn't to double down by borrowing the difference between payroll taxes and benefits.
Nor are tax increases an option. The payroll tax meant to fund entitlements is now 12.4 percent of wages. It began at 2 percent when Social Security was first rolled out. It is also the most burdensome tax for many Americans. Enough already. The fixes AAF fellow Rachel Greszler proposes are worth considering: Index the retirement age to life expectancy, use an accurate inflation measure for cost-of-living adjustments, and move gradually toward a flat universal benefit that protects lower-income retirees while ending Social Security's de facto welfare for the wealthiest.
Next is Medicare. More than 40 percent of its financing already comes from general revenue rather than from payroll taxes. The report recommends converting the program to premium support, giving beneficiaries a fixed contribution to spend on traditional Medicare or on competing private plans. It would also raise the eligibility age to 67, matching Social Security, and trim subsidies for well-off seniors. That's a start.
As for Medicaid, the problem is one of pricing. And yet competition based on price—the best cost-control tool—has never been seriously tried. Washington covers 90 percent of the cost of states' expanded Medicaid programs for adults. A state can buy a dollar of spending with just a dime of its own money. Changing the states' incentives would be key here. Implementing risk-adjusted per-capita caps, through which the federal government would give states a fixed amount per enrollee, would do just that. States would pay for their own inefficiencies or would be able to use every dollar they save by becoming more efficient.
The same logic supports returning more welfare programs to states, starting with the federal share of the Supplemental Nutrition Assistance Program. State governments have to balance their budgets in some form.
None of these reforms are painless. But the alternatives will prove far more painful. The U.S. will either continue paying a slow, unlegislated tax called inflation or face a fast, ugly fiscal crisis when bond buyers stop giving Washington the benefit of the doubt.
COPYRIGHT 2026 CREATORS.COM
The post The Federal Government Collected $5.4 Trillion. It Still Can't Pay Its Bills. appeared first on Reason Magazine.
Ukraine is seeking fresh funding for 2027 and says it is ready to deliver the reforms. Prime Minister Serhii Koretskyi says Ukraine’s external budget financing need for 2027 exceeds $52 billion, with more than $32.6 billion still to be raised.
That money underwrites the basics of a country at war: the army, pensions, hospitals, and support for business, he notes. Defense and security alone will take almost 44 percent of GDP in the 2027 budget, and the gap comes as Russia keeps hammering the infrastructure that generates Ukraine’s own revenue.
“The defense capability of the country, the payment of pensions, the support of hospitals and business depend on these funds,” Koretskyi says.
Russia’s strikes widen the gap even as Kyiv tries to close it. Russia systematically attacks critical infrastructure, business, production and civilian sites, and the destruction and halted enterprises will leave tax revenues about $1.5 billion below forecast by the end of the year, he warns.
For instance, output of Ukraine's steel industry, one of the pillars of its wartime economy, fell 57.3% in August due to Russian strikes. This sector is Ukraine's second-largest foreign-currency earner, employing more than 70,000 people directly and another 250,000 in related industries, and paying close to $1 billion a year in taxes.
Beyond the budget itself, the off-budget needs of Ukraine’s Defense Forces for 2027 are estimated at $45 billion, or about 40 billion euros, a figure that sits on top of the $52 billion budget requirement, he says.
The money hinges on reforms Ukraine still has to deliver. In the next few days, the government is to approve all the decisions needed to continue financing.
“Ukraine continues to work on fulfilling its part of the commitments. This week, the government is expected to approve all the necessary decisions to ensure continued funding,” the Ukrainian prime minister says.
Meanwhile, the Parliament plans to consider the bills required under the support programs of the IMF, the World Bank and the EU.
Last Saturday, the Irish presidency of the EU proposed cutting nearly €160bn from the EU’s next seven-year budget against the European Commission’s proposal, a bid to bring the wealthiest, frugal member states on board. The deepest cuts fall on competitiveness (€75bn), external action (almost €38bn) and the EU’s administration costs (€10bn).
What the plan leaves alone is the borrowing.
The Irish text, known in Brussels as the negobox, keeps all three of the commission’s borrowing programmes that sit outside the budget’s normal limits: Catalyst Europe, a €150bn lending facility; a crisis mechanism of up to €395bn for major unforeseen shocks; and support for Ukraine of up to €100bn.
Add loans for defence and lending to other non-EU countries and, by our estimates, joint borrowing could still equal around 44 per cent of the new budget, about €800bn at current prices, up from 41 per cent under the Commission’s proposal. The budget shrinks, but the borrowing hardly changes.
Ireland’s proposed budget is too small for Europe’s mounting common challenges, and its borrowing approach is too ad hoc and risky.
Excluding the distorting effects of NextGenerationEU (NGEU), the Covid recovery fund, the Commission’s budget proposal is already far smaller than the headline figures suggest, and Ireland’s proposal would make it smaller still.
That matters because, as the Draghi report argued, Europe’s shared challenges such as Ukraine, rearmament and competitiveness require European public goods because no single member state captures their full benefits.
A budget worth just over one percent of the EU’s gross national income (GNI) is a poor match for that responsibility.
By comparison, total government expenditure across EU countries comes to close to half of their combined GNI. Keeping most fiscal capacity at national level, while expecting such a modest EU budget to finance increasingly vital continental priorities, is a bad use of public resources.
A stronger common budget needs more of its own revenue, at least what the Commission proposes in its Own Resources Decision, which Parliament broadly supports and which would raise nearly €60bn extra a year.
The Irish plan’s acceptance of five new resources is encouraging. But it has to survive the negotiations, and the details of the final reform will decide whether it means anything.
The Council’s approach to common borrowing remains haphazard, lacking a permanent framework and relying on crisis-driven compromises. Governments may not like it, but a more European approach is coming, and the €800bn is likely to grow.
Support for Kyiv, to be provided outside budget ceilings via the Ukraine Reserve and policy loans, is capped at €100bn for the whole period. This is already looking tight given the accelerating rate of disbursements to Ukraine seen in recent years.
And a successor to SAFE, the EU’s defence loan scheme, is widely expected, since €150bn has proved far from enough for Europe’s rearmament.
France has just shown what it costs to borrow alone. Its yields recently hit a 24-year high, and the state now pays more to borrow than some major French companies. Sharing the effort through the common budget, including prudent joint borrowing, would help spread that risk.
Yet Europe has no clear, sustainable plan for borrowing. To date, EU governments have reluctantly signed up to each new borrowing instrument and called it an exception.
European borrowing capacity has been assembled one crisis at a time, starting with the euro area crisis and accelerating since the pandemic.
NGEU was accepted by fiscally cautious states as a one-off decision to deal with the Covid-19 emergency. Then the war in Ukraine and the need to fund rearmament produced new exceptions.
This year, EU governments used enhanced cooperation, a procedure that lets a subset of member states go ahead without the rest, to approve the €90bn Ukraine Support Loan, the EU’s largest foreign loan ever.
For defence, they reached for Article 122, the treaties’ emergency clause, to set up SAFE. Parliament, which felt sidelined, decided to sue the Council before the European Court of Justice.
There is a catch though.
These exceptional programmes are guaranteed by the so-called budget headroom, the margin between the EU’s revenue ceiling and the spending limits in the seven-year budget, rather than by money set aside in advance.
In barely five years, headroom-backed exposure has climbed to €681bn (see Figure 1), 82 percent of all EU debt.
The European Court of Auditors has warned that if a Ukraine loan guaranteed this way goes bad, future EU budgets, and the national contributions that fund them, would have to cover the loss.
EU capitals remain divided over the new budget and over joint borrowing. Net contributors, sometimes referred to as the Frugal Six, want deep cuts in the commission’s proposal, argue that new common borrowing is not the solution and have misgivings about the creation of new own resources.
By contrast, a group of sixteen southern and eastern countries, that call themselves the “Friends of Cohesion”, are much more open to joint borrowing and back an approach closer to the Commission and Parliament on the budget and own resources.
Ireland’s plan largely reflects the influence of the frugal countries, yet one diplomat has already dismissed it as “not even close to a landing zone.”
Europe needs an ambitious budget, backed by at least the Commission’s proposed new own resources, so it relies less on national contributions based on GNI. Joint borrowing should become a permanent, predictable part of it, with safeguards.
First, it should fund loans, not grants, as the Commission suggests. Second, riskier exposures, especially to non-EU countries, should be at least partly backed by money set aside in advance, as the Court of Auditors recommends.
Where it makes sense, the headroom guarantee could be topped up with national guarantees in proportion to each country’s size, as under SURE, and like-minded partners outside the EU could sometimes take part.
Stronger capital at institutions such as the EIB, or at any future defence-financing vehicle, would also let Europe borrow more together without putting its creditworthiness at risk.
Governments should also consider deferring repayment of the NGEU bonds, as the Draghi report suggested, especially if the own-resources reform falls short. It would protect priority spending when it is needed most.
Sustained joint borrowing brings a bonus: more common safe assets in euros, which strengthens the euro’s international role. The demand is already there.
Last month Piotr Serafin, the EU’s budget commissioner, flew to Seoul and Tokyo to meet investors. Asian buyers’ share of EU bond syndications has risen from 5 per cent to 9 per cent in the second half of 2025.
Wobbles in US bond markets, which partly reflect doubts about America’s fiscal health, its reliability as a partner and the dollar’s safe-haven status, give the euro an opening.
But it can only take it if EU governments put their own fiscal houses in order.
Ongoing tensions in the French bond market provide a clear warning. Putting France’s finances on a sustainable path would do more than reassure markets about the euro. It would restore French debt as a safe euro asset.
EU leaders meet on Thursday and Friday in Brussels. Whatever they discuss (and later decide) on the budget, Europe should keep borrowing together, and in large amounts.
The task now is to give that borrowing a coherent plan: a permanent framework, money set aside in advance and safeguards that cautious capitals can accept.
The warning was delivered in Brussels on 12 October by Kata Tüttő, President of the European Committee of the Regions, during the opening of the European Week of Regions and Cities.
Her intervention comes as EU leaders prepare to negotiate the 2028–2034 budget, with disagreements over agricultural funding, regional development, defence, industrial competitiveness and the distribution of financial responsibilities among member states.
The Committee of the Regions warned that greater centralisation could concentrate economic opportunities in already prosperous areas while limiting other territories’ capacity to attract investment and develop essential infrastructure.
The concern goes beyond money allocated to regional development. It addresses who controls spending decisions and whether local authorities retain a meaningful role in determining how European funds are used.
EU cohesion policy has traditionally sought to reduce disparities between richer and poorer regions through investment in transport, infrastructure, education, business development and public services. While national governments administer considerable funds, regional and local authorities are frequently involved in identifying priorities and delivering projects.
The Committee argues that restructuring which concentrates decision-making at national level could weaken this arrangement. National governments may favour country-wide industrial or infrastructure programmes, while regional authorities identify specific problems arising from local conditions.
A national infrastructure strategy could prioritise major transport routes and industrial centres. Regional administrations might instead emphasise connecting smaller communities, maintaining local services or developing specialised economic activities.
The dispute concerns whether the next EU budget will maintain flexibility for regional priorities. In Belgium, Germany, Spain and Italy, regional institutions possess important responsibilities across economic development, education and infrastructure. Changes to EU spending governance could alter established relations between European, national and regional institutions.
Ireland’s rotating Council presidency has proposed reducing the Commission’s original seven-year budget plans by approximately €141 billion while largely protecting agriculture and cohesion compared with other expenditure categories.
The proposed financial framework would nevertheless remain substantially larger than the current budget. The distribution of resources remains contentious, and an overall cut does not necessarily translate into the same reduction for every region.
Effects will depend on allocation formulas, national spending plans and programme governance. Meanwhile, European institutions face demands for stronger investment in defence production, digital infrastructure, competitiveness and support for Ukraine while maintaining agricultural and regional commitments.
The Committee presented its seventh annual assessment of Europe’s regions and cities during the European Week of Regions and Cities, held in Brussels from 12 to 14 October.
The assessment examines competitiveness, resilience, public services, democratic governance and financial conditions. Regional disparities remain a significant feature of the EU economy despite decades of common investment programmes.
Large metropolitan areas often benefit from concentrations of universities, research institutions, advanced industries and capital. Less densely populated territories may struggle with demographic decline, shortages of skilled workers and the cost of maintaining infrastructure.
These differences can reinforce themselves over time. Businesses invest where suitable workers, transport networks and customers are already concentrated. Younger workers moving towards metropolitan economies may further reduce the economic prospects of communities they leave behind.
The increase in European defence expenditure introduces another dimension. Regions containing defence manufacturers, engineering firms, research institutions and military installations could benefit substantially from new spending, while others may receive little direct economic advantage.
If industrial investment concentrates in already advanced manufacturing centres, geographical disparities could widen. Conversely, procurement programmes and infrastructure investment could bring opportunities to weaker regional economies with suitable facilities and labour.
The Committee of the Regions has limited formal authority over the EU’s long-term budget. National governments will negotiate the framework, and the European Parliament must consent to the final agreement.
Regional leaders are seeking to influence those negotiations before political compromises are established. Their central argument is that aggregate European economic growth alone does not capture the distribution of investment, employment and public services across the Union.
The approaching European Council negotiations will indicate whether governments intend to preserve regional influence over EU spending or concentrate greater authority over investment decisions at national level.
The revised proposal, circulated ahead of the European Council meeting scheduled for 15–16 October, would reduce the planned 2028–2034 financial framework by approximately eight per cent to around €1.6 trillion, calculated in constant prices.
Despite the reduction, the proposed budget remains approximately 30 per cent larger than the current seven-year framework. Germany, Sweden, the Netherlands and other governments concerned about national contributions have nevertheless argued that further restraint is necessary.
The compromise, detailed in negotiations over the EU’s next financial framework, reduces proposed spending across several areas while largely protecting the Union’s established agricultural and regional development programmes. The distribution of those cuts is becoming as contentious as the overall size of the budget.
Under the Irish proposal, agricultural and regional development allocations would decline by approximately three per cent compared with the Commission’s initial plans. By contrast, funding intended for competitiveness and security would be reduced by around 13 per cent, while external action and development cooperation face cuts of approximately 17 per cent.
The difference raises questions about whether the next EU budget can support the strategic ambitions repeatedly endorsed by European leaders.
The Commission has presented industrial competitiveness, technological development, defence readiness and economic resilience as central priorities for the remainder of the decade. Yet these sectors would absorb proportionately larger reductions under the revised framework than agricultural and cohesion programmes.
The consequences could extend to investments in advanced technologies, European industrial supply chains, research programmes and cross-border defence cooperation. They could also constrain the Union’s capacity to fund external partnerships and development initiatives.
The debate is particularly sensitive because the EU’s responsibilities have changed considerably since the previous budget was negotiated. Russia’s invasion of Ukraine has increased defence requirements, while competition with China and the United States has intensified demands for industrial investment.
The central disagreement concerns how much additional expenditure European governments are willing to finance through the common budget. Germany and other major net contributors face domestic fiscal constraints, rising borrowing costs and demands to increase national defence spending.
For these governments, accepting a substantially larger EU budget would add to financial commitments already being made through national budgets.
The Irish compromise therefore faces opposition from two directions. Some governments consider the reductions insufficient, while others fear that the remaining cuts will weaken programmes essential to their national economies.
Traditional recipients of agricultural and regional funding have an interest in protecting established expenditure. Governments seeking stronger European investment in defence, innovation and industrial competitiveness have different priorities.
The European Parliament is another obstacle. Its consent will be required before the final financial framework can enter into force, giving MEPs considerable leverage in negotiations with national governments.
The proposal also envisages approximately €55 billion in additional annual financing through new or revised EU revenue sources, including customs revenues, emissions-related income and corporate contributions.
The Commission’s framework for the next long-term budget reflects a broader debate over the extent to which the Union should develop independent financing mechanisms rather than rely predominantly on national contributions.
Such mechanisms would potentially give Brussels a more predictable revenue base. However, they also raise questions about fiscal sovereignty, the distribution of costs among member states and the political accountability of European taxation.
National governments remain reluctant to surrender substantial authority over revenue collection, particularly when proposed resources could impose costs on domestic industries or consumers.
The negotiations will influence the Union’s ability to respond to future enlargement. Ukraine and several Western Balkan countries are pursuing accession, but the financial implications of bringing additional members into the Union remain substantial.
Existing arrangements for agricultural subsidies and regional development assistance would require reconsideration if large new beneficiaries entered the budgetary system.
At the same time, the EU faces pressure to support Ukraine financially and strengthen defence production without depending indefinitely on extraordinary borrowing or ad hoc national contributions. These responsibilities cannot be addressed simply by preserving the structure of earlier budgets.
European Council President António Costa will seek to narrow the divisions among the 27 leaders, but agreement on the financial framework requires unanimity. Any government can withhold its consent if it considers the final distribution of costs unacceptable.
The forthcoming summit is therefore likely to establish the parameters of further negotiations rather than eliminate the underlying disagreements. The immediate political question is whether member states can reconcile their commitment to greater European strategic capacity with their reluctance to finance it collectively.
Getting co-decision powers on the budget, finally enshrined in the Lisbon Treaty after more than a decade of inter-institutional battles, was one of the European Parliament’s big wins.
The challenge facing MEPs in the coming months is whether they are really going to use those powers on the 2028-34 budget.
The early signs are that they are spoiling for a fight. The Irish government’s compromise proposal tabled on Saturday (10 October) – an 8 percent cut worth €141bn to the European Commission’s spending plan – isn’t exactly butchery.
But it does display a startling lack of ambition, in particular on the raft of ‘own resources’ proposed by MEPs to make the budget process less vulnerable to member states wanting to reduce or at least freeze their annual contributions
This time round, MEPs have proposed a digital services levy, an online gambling levy, and a levy on crypto-asset capital gains.
Put together the parliament reckons that these new taxes could bring an additional €30bn to the EU’s budget, on top of the €57.4bn that the EU commission believes can be raised from other levies, such as the emissions trading scheme and the carbon border levy.
This article continues, but the full version is available only to EUobserver.com subscribers. Visit account.euobserver.com/membership
European Union leaders are preparing for a two-day summit in Brussels dominated by the economic consequences of the Middle East conflict, Russia’s continuing war against Ukraine and mounting pressure on governments to reconcile defence commitments with deteriorating public finances.
The European Council meeting on 15–16 October will bring together the leaders of the 27 member states to consider immediate measures addressing high energy prices alongside longer-term decisions on competitiveness, enlargement, migration and the EU’s budget for 2028–2034.
European Council President António Costa has placed economic competitiveness and energy costs at the centre of the discussions, reflecting concerns that the disruption of global oil and gas markets is threatening the bloc’s industrial recovery.
The meeting also takes place against the background of renewed disputes over national spending limits, with Italy and Greece seeking greater freedom to finance energy relief and France facing increasing pressure over the credibility of its budget.
The Middle East conflict has created a renewed energy shock for European economies, raising transport and industrial costs while pushing inflation higher.
The disruption of shipping through the Strait of Hormuz has also affected global oil supplies, exposing Europe’s continuing dependence on internationally traded fossil fuels despite efforts to diversify imports following Russia’s invasion of Ukraine.
European leaders are expected to consider targeted and temporary support measures for households and businesses, as well as longer-term policies intended to reduce energy dependence.
The political disagreement concerns how those measures should be financed.
The European Commission has resisted requests from Italy and Greece for further exemptions from the EU’s fiscal framework. Both governments argue that extraordinary energy costs require additional budgetary flexibility.
Brussels maintains that existing provisions already permit exceptional expenditure within defined limits.
The disagreement is particularly difficult for indebted governments that must simultaneously finance military expansion, maintain public services and protect their economies from energy inflation.
France’s position has added urgency to the debate. Its borrowing costs have increased sharply as investors question whether the government can adopt a credible budget ahead of the 2027 presidential election.
A summit agreement on emergency energy assistance would therefore have to accommodate substantially different national fiscal circumstances.
Support for Ukraine remains a central item on the summit agenda as Russia continues attacks against Ukrainian cities, energy infrastructure and industrial facilities.
EU leaders are expected to review military and financial assistance, the implementation of sanctions against Moscow and the resilience of Ukraine’s economy.
The discussions take place amid renewed uncertainty surrounding American weapons deliveries.
Washington’s reported threats to suspend supplies under the NATO-backed PURL procurement arrangement have raised further questions about Europe’s dependence on the United States for advanced military equipment.
European governments have increased defence expenditure and committed additional support to Ukraine, but replacing American capabilities remains difficult, particularly in air defence, precision-guided weapons and certain intelligence systems.
The summit is unlikely to resolve those industrial limitations, but the broader question of Europe’s ability to sustain Ukrainian defence over several years will influence discussions.
Member states must also consider how increased defence expenditure will be financed alongside other demands on national budgets.
The EU’s published summit agenda includes Russian-linked hybrid attacks within Europe.
The issue has gained prominence as European governments investigate sabotage, cyber operations, information interference and threats against infrastructure and defence-related industries.
Recent warnings concerning possible Russian assassination operations targeting European defence executives and employees of companies supplying Ukraine illustrate the changing nature of the security threat.
Such activities place additional demands on national intelligence services, police forces and European institutions responsible for cross-border cooperation.
The EU has strengthened its sanctions instruments against hybrid activities, but enforcement remains dependent on coordination between national authorities.
Any further measures would need to address intelligence sharing, protection of critical infrastructure and the relationship between internal security and the Union’s wider Russia policy.
Enlargement will form another important part of the discussions following the Commission’s proposals for preparing a wider Union.
Brussels has outlined possible institutional safeguards intended to prevent future members from undermining democratic standards or blocking common decisions.
Montenegro and Albania are advancing through their accession negotiations, while Ukraine and Moldova remain central to the EU’s geopolitical enlargement strategy.
The financial implications will become increasingly important as governments negotiate the next multiannual financial framework covering 2028–2034.
Existing members are already divided over how much the EU should spend, which programmes should receive priority and whether additional common resources should be raised.
Agricultural expenditure, cohesion funding, defence investment and support for Ukraine will compete for resources within the same budget negotiations.
The Commission argues that enlargement can be accommodated through targeted reforms, but securing agreement among member states will require decisions on future expenditure and the distribution of financial benefits.
Leaders will also examine progress on the One Europe, One Market agenda, which aims to reduce barriers to economic activity within the EU and improve conditions for European businesses.
The initiative is intended to address structural weaknesses affecting investment, industrial development and the ability of European companies to compete internationally.
High energy prices have made those concerns more immediate, particularly for industries competing against producers in economies where electricity and fuel are cheaper.
The European Council will be asked to provide direction on measures planned for 2026 and 2027, but implementation will depend on subsequent legislation and decisions by member states.
The October meeting brings several unresolved European policy questions into the same negotiation: how to protect economic competitiveness, maintain fiscal credibility, finance defence, sustain Ukraine and prepare for enlargement.
The immediate test will be whether leaders can agree on a credible response to energy prices without reopening broader disputes over national budgets.
More difficult decisions concerning defence financing, institutional reform and the EU’s long-term expenditure commitments will extend well beyond the two-day summit.
France is coming under increasingly direct pressure from its eurozone partners to resolve the political dispute surrounding its 2027 budget, with European finance ministers warning that continued uncertainty threatens confidence in the country’s public finances.
The warning follows a sharp increase in French government borrowing costs. Yields on ten-year sovereign bonds have risen by nearly 80 basis points since September, reaching levels last recorded in 2002. Investors are demanding higher returns to finance a government whose debt continues to increase while its capacity to impose spending restraint remains constrained by parliamentary divisions.
At the Eurogroup’s October discussions, finance ministers and European Central Bank officials pressed Paris to demonstrate that it can adopt a credible budget and comply with its commitments under the EU’s fiscal framework.
France’s difficulties have implications beyond its domestic politics. As the eurozone’s second-largest economy, France occupies a position fundamentally different from smaller countries that experienced sovereign debt crises during the previous decade.
The French government expects to borrow approximately €340 billion in 2027, making continued access to financial markets at sustainable rates an essential element of its fiscal strategy.
That financing requirement reflects both the need to cover the annual deficit and to refinance existing debt as government securities mature.
France’s public debt is already approaching 120 per cent of gross domestic product. As EU Today previously reported, official projections indicated that the debt ratio could reach 121.7 per cent in 2027, up from 115.7 per cent at the end of 2025.
The latest increase in yields adds another complication. Higher interest costs do not affect the entire stock of debt immediately because much of it was issued at earlier rates. They do, however, increase the cost of new borrowing and refinancing, progressively reducing the money available for other government commitments.
France also faces a difficult political timetable. With the presidential election approaching in 2027, parties are reluctant to accept measures involving spending reductions, higher taxation or changes to public services.
Prime Minister Sébastien Lecornu’s government has been attempting to reduce the deficit from an estimated 5.4 per cent of GDP in 2026 towards five per cent. Even that objective remains substantially above the EU’s three per cent reference value.
Economic Commissioner Valdis Dombrovskis has emphasised the importance of predictable fiscal policy and credible deficit reduction.
France is already subject to the EU’s excessive deficit procedure, under which member states must demonstrate progress towards agreed fiscal objectives.
The reformed European fiscal framework permits certain deviations from expenditure commitments in exceptional circumstances, but it does not provide an unrestricted exemption from debt sustainability requirements.
Paris therefore faces a double constraint. It must convince domestic political forces to support a budget while demonstrating to Brussels that its spending plans are sufficiently credible.
The danger is not necessarily an immediate financing crisis. France retains a large, diversified economy, deep financial markets and substantial tax-raising capacity.
The more immediate risk is that prolonged political deadlock produces progressively higher borrowing costs, making future fiscal adjustments more expensive.
The European Central Bank has instruments designed to counter destabilising market conditions, but these are not intended to finance governments that are unwilling or unable to implement sustainable fiscal policies.
Bank of France Governor Emmanuel Moulin said on 7 October that France did not currently require ECB assistance. He argued that the solution lay in adopting a credible budget rather than expecting monetary intervention.
His position follows increasing speculation about whether the ECB could intervene if French bond yields continue rising.
Such intervention would raise difficult questions about the relationship between monetary policy and national fiscal responsibility. The ECB must consider financial stability across the entire eurozone, but it cannot remove the political obligations of individual governments.
France’s existing excessive deficit procedure also complicates its eligibility for certain forms of exceptional support.
France’s problems are developing at a particularly difficult moment for European public finances.
Governments are confronting higher defence commitments, expensive measures to protect households against energy inflation and demands for greater investment in industrial competitiveness.
Italy, another heavily indebted eurozone economy, is facing related pressures. The combination places additional importance on the credibility of the EU’s fiscal rules.
The political consequences within France are already visible. Marine Le Pen has presented a programme proposing €140 billion in spending reductions, while other parties have advanced sharply different approaches to taxation, debt and public expenditure.
Those competing programmes illustrate the difficulty of securing a parliamentary consensus capable of reassuring markets.
The approaching presidential election reduces the likelihood of a durable settlement before voters choose France’s next head of state.
Eurozone partners cannot resolve that impasse from Brussels or Frankfurt. They can insist on fiscal commitments and provide a framework for adjustment, but the political decisions remain with Paris.
France’s immediate challenge is to prevent its budget dispute from becoming a broader loss of confidence in the government’s capacity to manage its finances.
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.”
This article continues, but the full version is available only to EUobserver.com subscribers. Visit account.euobserver.com/membership
This morning in parliament has seen a ‘ding-dong’ exchange of words and views over the AD minority government’s draft proposal for the 2027 State Budget. Expresso’s headline, written overnight, says
The post PM fields criticism over AD’s State Budget proposal appeared first on Portugal Resident.
Portugal’s AD coalition government is set to table the draft State Budget bill for 2027 in Parliament this afternoon, two full days before the deadline. The information was provided in
The post Government to deliver 2027 State Budget bill to parliament today appeared first on Portugal Resident.
When certain governments discuss the EU’s next seven-year budget, their first reflex seems to be: what can we cut? That is the wrong question. The real question is not how much the EU budget costs, but how much an insufficient budget will cost us all.
Economic benefits of EU membership are estimated to be two to six times the financial contribution of individual member states. For every euro we contribute to the EU budget, we can receive up to six euros in return.
That is the power of investing together: European investment delivers more than fragmented national spending. And it does so with a budget of just one percent of EU GNI, while national budgets can reach 50 percent.
The EU budget is not simply money transferred from national capitals to Brussels: it is an investment that creates value benefiting citizens through stronger economies, better infrastructure, food security, cutting-edge research, educational opportunities, regional development, and security.
Ultimately, all member states benefit from the added value created by the EU, making the concept of ‘net contributors’ obsolete.
Easing the pressure on national contributions is a legitimate objective, and it has a clear solution: an EU revenue reform.
The European Parliament supports the basket approach of the European Commission on new own resources and its proposals. It also proposed three additional options capable of generating substantial revenue by 1 January 2028: a digital service levy on major platforms (€25.2bn per year), a levy on online gambling (€3.9bn per year) and a crypto-assets-based own resource (€3bn per year).
Our position is clear: large global companies that benefit most from Europe’s single market should contribute fairly to the EU budget that makes those benefits possible.
Cutting the EU budget may look like saving money. But if it means weaker competitiveness, less social investment and a less secure Europe, we save nothing and taxpayers foot the bill.
The European Union’s common budget has not grown in real terms for 40 years. On the contrary, its purchasing power has been steadily eroded due to high inflation. The current EU budget has lost around 10 percent of its purchasing power compared to when it was adopted in 2020.
A more ambitious EU budget does not automatically mean that member states will have to contribute substantially more from their national budgets. When amounts are compared in constant prices and as a share of the size of the European economy – like with like – a more realistic picture emerges.
In terms of spending capacity, and without counting repayment of the Covid-19 recovery fund (NextGenerationEU), the commission’s proposal for the 2028-2034 budget would be below the relative size of the current 2021-2027 MFF at the time of its adoption.
Even with parliament’s proposed increase for key EU programmes, member states’ contributions would still not substantially increase.
Let us not forget: Europeans benefit considerably more than their countries’ headline contributions suggest. The single market is the clearest example. By removing barriers between 27 economies, it creates opportunities and delivers growth that no country could generate alone.
By reducing the budget, the EU and its member states will have less capacity to deliver the economic and social benefits that citizens expect. We’ll have less cohesion, less competitiveness, a weaker agricultural sector, less global influence, reduced social investment and a much less secure Europe. And this also comes at a cost. A big one.
Instead of “what can we cut” we should be asking ourselves, “how can we finance a budget that delivers more for all”.
If we genuinely want to use limited public resources efficiently, we must invest together. Economies of scale work for successful businesses, and they work for Europe.
Siegfried Mureşan (EPP, Romania) and Carla Tavares (S&D, Portugal) are the parliament’s co-rapporteurs on the EU budget, also known as the multiannual financial framework (MFF)
Russia is spending more on the war than at any point since it began. Russia's military funding is on track to hit a record this year after President Vladimir Putin added almost $60 billion to the outlays set in the budget, Bloomberg reports, citing people close to the government.
Defense spending is expected to approach about $199 billion by the end of 2026, roughly 40% above the plan Moscow announced in late 2025. That reverses the course of a year ago, when the Kremlin meant to slow military growth, narrow its deficit, and rebuild reserves drained by the war.
Putin ordered the shift late last year, after concluding that talks with the US in Alaska would not produce an acceptable deal to end the fighting, the report says.
By January, the Kremlin judged an agreement with Ukraine to be out of reach, and the government began accelerating advance payments to defense firms and raising other war-related spending.
"The government is finally budgeting for a prolonged war in Ukraine, but still understates its cost," Bloomberg Economics economist Ekaterina Vlasova said.
Paying for the war has blown out the budget. The projected 2026 deficit has climbed to more than $81 billion, up from about $44 billion as first planned, and the government covered the extra spending through increased domestic borrowing and gold sales.
The spending is not set to fall soon. Under the budget plans, Russia's military outlays reach about $200 billion in 2027, then ease to $194 billion in 2028 and about $191 billion in 2029, a signal that Moscow is planning for a long war.
Earlier, Euromaidan Press reported that Russia was raising 2027 defense spending by 27% to a record, even as its deficit widens and oil and gas revenues fall.
Europe’s Green party has called on the European Commission to exercise the powers it previously used during the Ukraine war to tax the exceptional profits made by big oil and gas companies during the ongoing conflict in Iran.
“There are models in Europe that we can use to tax these super profits,” German MEP Rasmus Andresen told a European Parliament debate in Strasbourg on Wednesday (7 October), in his call to crack down on Iran-crisis profiteering.
The Strasbourg debate came after Austria, Germany, Italy, Poland, Portugal, and Spain wrote to Ireland’s finance minister in August calling for an EU-wide framework to tax windfall profits.
Ireland holds the rotating EU presidency and can set agendas in the EU Council until the end of the year.
Several of those in the group of six EU states already put in place energy windfall taxes since this summer, ranging from 60 percent levies on excess fuel profits in Poland to 33 percent in Portugal.
Many other EU countries oppose introducing another tax at European level, which would require unanimity among all 27 member states to put in place.
But for his part, the Greens’ Andresen told MEPs in the hemicycle on Wednesday: “I don’t understand how despite the fact that there is this initiative from these six member states, that the commission is not taking action.”
Estimates from NGO Transport and Environment found that excess profits of €7.5bn were seen by eight oil companies alone in the first half of 2026 in Europe.
The figures were twice what they had made in the previous quarter.
The EU had reacted to soaring energy prices after Russia’s full invasion of Ukraine in 2022 with a special “solidarity” tax on oil and gas firms, said groups on the Parliament’s left.
A commission assessment found that the measure raised €28bn in 2022-2023.
A senior official representing the Irish presidency, Thomas Byrne, said on Wednesday that windfall taxes “could be considered to respond to the concern related to the rising cost of living“.
But energy commissioner Dan Jørgensen poured cold water on appeals for EU-level action, saying “corporate taxation falls mainly in the realm of national competence” in legal terms.
Andresen’s fellow Green MEP, Marie Toussaint, said taxing Iran profits could be used “to pay for the energy transformation” in Europe, in the context of difficult talks on the EU’s next multi-annual European budget.
If they were not taxed, “how can they be exonerated from all responsibility in the rise of prices at the gas station?,” said the French vice-president of the Greens group.
This article continues, but the full version is available only to EUobserver.com subscribers. Visit account.euobserver.com/membership
Portugal’s minority government has secured a clearer path to passing its next State Budget, after PS Socialists signalled they would allow the proposal through its first parliamentary vote — a
The post Budget breakthrough: President welcomes PS-Government compromise appeared first on Portugal Resident.
Login