Six frugal countries this week circulated a letter threatening to block a deal on the next EU budget unless “hundreds of billions” of euros in spending was cut. 

The Dutch and Germans, ever the most zealous keepers of the frugal flame, want to redirect what remains away from regional and farming funds, towards innovation and defence.  

For those following EU fiscal debates, this song will sound familiar. So-called ‘net payer’ countries have never liked sending money to the economic periphery. 

In 2013, after a year of bickering, Britain, Germany, and the Netherlands killed a European Commission plan for a five percent increase and pushed through the EU’s first-ever budget cut, with farm and cohesion funds taking the biggest hit.

But new research suggests that the frugals may be shooting themselves in the foot. 

Last week, Olga Ivanova, a senior researcher at the Netherlands Environmental Assessment Agency (PBL), published a study in Dutch economics journal ESB calculating what EU money actually does for the Netherlands’ 12 provinces. 

And, for most of them, she found that the growth effect of EU investment outweighed their share of what the Netherlands paid into the budget. 

Using PBL’s own economic model, she traced 10 EU funding streams between 2013 and 2024, from Horizon science research grants to farm subsidies and regional development money. 

Across the Netherlands as a whole, provinces get back about 99 cents in extra growth for every euro paid out to the EU budget.

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As the EU seeks budget cuts to break a stalemate in member states’ talks, women’s rights groups are on the chopping bloc, prompting advocates’ concern that the cause is fading from the common agenda.

Research published on Monday (28 September) by rights initiative MOTERIS showed a consistent loss of funding for feminist organisations across EU countries.

Some groups are also facing political conditions on the money they receive, for instance in Poland and Croatia, alongside groups reporting increasing dependance on unpaid work.

And the trajectory points toward decreased funding in the 2028-2034 EU multi-annual framework (MFF), which is currently being haggled in Brussels, making matters worse.

Feminist groups pointed toward AgoraEU as evidence of the trend – the proposed new single-funding stream is to merge grants for culture, media, equality and civil society under in the same MFF bracket, in what would make equally worthy causes and their defenders compete against one another for diluted resources.

And the ongoing cuts at national level meant that “EU funds are a crucial lifeline for many women’s rights groups where state funding is insufficient,” MOTERIS said.

Small, grassroots rights groups, many of whom MOTERIS represents, find it even harder to access grants due to heavy administrative requirements.

Meanwhile, the Czech Republic and Lithuania served as examples of EU countries whose philanthropy was dependent on external top-ups, making them “more vulnerable to geopolitical shifts, such as the withdrawal of US funding.”

MOTERIS staged a protest to push for MFF support for women’s rights groups outside the European Parliament in Brussels on Tuesday (29 September), ahead of an MEPs’ debate on the topic. 

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Production: By Europod, in co-production with Sphera Network.

EUobserver is proud to have an editorial partnership with Europod to co-publish the podcast series “Briefed” hosted by Léa Marchal. The podcast is available on all major platforms.

Find the full transcript below:

The EU is negotiating its next long-term budget, worth 2 trillion euros. But reaching an agreement among the 27 member states is proving difficult. The deadline is approaching, and the stakes are high.

Will the EU member states be able to agree on the budget? And what are the different options?

The bloc’s next long-term budget covers the period from 2028 to 2032.

The aim is to reach an agreement by the end of this year. Then, in 2027, the European Parliament will have to give its consent, and the political agreement will need to be translated into legislation, with funding allocated to the different programmes.

But with just three months left before the end of the year, reaching a deal on time is proving difficult. A meeting of EU ministers dedicated to the budget last week led nowhere. Countries stuck to their positions.

On one side are the so-called frugals: Germany, Austria, Denmark, Finland, the Netherlands and Sweden. But they prefer to call themselves “modernisers”. They want to limit spending and are reluctant to increase their contributions to the EU budget.

On the other side are countries worried about receiving less European funding in the years to come.

The European Commission argues that the next budget needs to be bigger than the previous one to address new challenges, including European competitiveness and defence.

And it’s not just the Commission’s view. The European Parliament and many observers share it.

But the countries calling for spending cuts say the EU cannot simply add new priorities to existing ones. They argue that choices have to be made.

So the Commission has proposed another option: increasing the EU’s own resources.

These are revenues that go directly into the European budget, rather than relying entirely on contributions from member states. The idea is to raise additional money without asking national governments to pay more.

But this proposal is also facing opposition from countries calling for spending restraint. They argue that the bloc should not simply look for more money to fund all its priorities.

So how can the 27 countries break the deadlock?

When ministers cannot reach an agreement, the issue is taken up by EU leaders themselves. And that is exactly what is expected to happen in the coming months.

The president of the European Council is planning several meetings of EU leaders before the end of the year, in an attempt to bring countries closer together.

He is even said to be considering a summit lasting three to four days at the end of November, to give leaders enough time to reach an agreement and avoid a difficult December.

But what happens if the 27 countries still fail to agree before the end of the year? There is some room for manoeuvre in 2027. According to media reports, several dates have already been set aside early next year for last-minute negotiations, should an agreement not be reached in time.

But this leaves very little room for delay.

The European Parliament will still need several months to give its consent, and the EU will then have to finalise the legislation and prepare the different programmes.

That brings us very close to 2028, when the new budget is supposed to take effect.

And if everything is not ready by then, the EU does have a mechanism to keep things running.

It can continue covering certain ongoing expenses and payments that have already been committed, even without a new long-term budget in place.

Unlike in the United States, where a budget deadlock can lead to a government shutdown and some public employees being temporarily sent home without pay, the EU has a system designed to avoid such a complete halt.

But this would only be a temporary solution.

It would not provide the certainty needed to launch new programmes or guarantee that all European funding will be available as planned.