EU leaders have failed to settle their differences over the 2028–2034 budget, with Germany demanding further reductions to the proposed spending framework and the European Council taking charge of negotiations ahead of a difficult December deadline.

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.

Germany rejects the compromise

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.

Agriculture, cohesion and defence compete for funding

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.

A timetable becoming difficult to defend

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.