The European Commission has kicked off, on Wednesday, what will be a two-year negotiation period on the bloc’s spending plan for the seven-year period starting in 2028.
The European Commission has proposed a budget of 2 trillion euros for the period 2028-2034, with a new focus on economic competitiveness and defense, and plans to revise traditional spending for agriculture and regional development.
- Ursula von der Leyen presented the EU budget of 2 trillion euros, "for a new era". Siegfried Mureșan criticizes one of the proposals and announces that the European Parliament will reject it
- Germany categorically rejects the European Commission's budget plan: Unacceptable!
- We cannot act in Brussels like a lone wolf: how the EU budget proposed by von der Leyen looks for Romania
The Commission stated that its proposal amounts to 1.26% of the gross national income of the 27 EU countries, compared to 1.13% for the current seven-year budget.
The majority of the budget funds come from the EU member states' governments. However, the Commission has proposed several ways to raise more funds directly, including a new tax on companies operating in Europe with an annual net turnover of over 100 million euros in an EU country.
Politico has compiled a useful guide to see who stands to gain and who stands to lose.
Who are the losers:
- Farmers
In the EU's latest long-term budget, the Common Agricultural Policy (CAP) had 386.6 billion euros allocated. This time, 300 billion euros were allocated for agriculture.
To make matters worse, while the CAP used to form a separate section of the budget, it has now been merged with funding for other policies into a common fund for "national and regional partnership plans".
Under these plans, European countries must spend a minimum of 300 billion euros on agriculture and could spend more if they wish. However, farmer groups protesting in front of the Parliament and the Commission are not optimistic.
- Tobacco Industry
Although most of the budget will come from the EU countries' own contributions, the Commission has also proposed three new taxes targeting electronic waste, large companies, and tobacco products like cigarettes and cigars. These products are currently taxed by each country separately, retaining the revenues for themselves.
Cigarette prices will already increase across the EU following a long-awaited update to the Tobacco Excise Directive, with rough estimates indicating that the price of a pack will increase by 1-2 euros.
- Nature
Biodiversity will lose its share in the EU budget, being absorbed into a broader objective regarding "climate and environment," which is set to represent 35% of the budget, reaching approximately 700 billion euros.
Who are the winners
- Eastern European Countries and Ukraine
Eastern countries scored a significant victory on Wednesday, as the Commission announced that eastern regions, especially those bordering Ukraine, Russia, and Belarus, will receive more funds than others to meet both their security and economic needs.
They also won another battle: although the EU desperately needed new revenue sources, it did not include in the proposed package new revenue sources from the already planned extension of the EU emissions trading system to buildings and road transport.
Ultimately, the EU proposed to support Ukraine's reconstruction and its process of joining the EU with an additional 100 billion euros.
- Electricity Consumers
According to the proposal, the EU is set to significantly increase support for the modernization of the bloc's electrical networks to reduce electricity prices, identified in a report by former European Central Bank President Mario Draghi as Europe's weak point in competition with the US and China.
The budget for the European Interconnection Mechanism's energy, a fund that can be used for infrastructure modernization and investments in new technologies, will increase from just 6 billion euros to 30 billion euros.
- Digital Technologies
The Commission aims to multiply the bloc's funds for digital technologies by five, von der Leyen stated. This would bring digital funds to 54.8 billion euros in the next budget.
It is a significant increase in an area where the EU was already investing considerable funds in research and innovation. But the stakes have risen, with regions in the US and China fiercely competing for transformative technologies, especially artificial intelligence.
- Defense
The Commission's proposal is to allocate at least 131 billion euros for defense and space, which means "five times more than we have today," as von der Leyen pointed out.
- Research and Culture
The bloc's flagship program in research and development, Horizon Europe, is set to double, reaching 175 billion euros.
Currently, this is already one of the largest funds of its kind in the world, with a budget of 95 billion euros, although a group of experts argued that the EU should increase its research and development spending to 220 billion euros to remain competitive.
Reactions to the new EC budget proposal
Reuters gathered some reactions to the European Commission's proposal for the EU budget. An agreement on the new EU budget requires the support of all 27 member states and the approval of the European Parliament.
- Stefan Kornelius, spokesperson for Chancellor Friedrich Merz: "An increase in the EU budget is unacceptable at a time when all member states are making considerable efforts to strengthen their national budgets. Therefore, we will not be able to accept the Commission's proposal."
- Swedish Government: "We can never accept that EU common funds reach countries that do not respect basic democratic principles and European values. We will not solve the EU's problems with a larger budget and higher EU contributions, but by using current resources more intelligently and allocating funds where they are truly needed."
- Hungarian Prime Minister Viktor Orban: "Brussels' proposal can be summarized as a pro-Ukrainian budget, and its purpose is as clear as day: to send European money to Ukraine. The plan from Brussels is weak even as a negotiating basis, and we suggest that it be withdrawn and a new one be drawn up, not in the interest of Ukrainian President Volodymyr Zelensky and Ukraine, but in the interest of European citizens and European farmers."
- Dutch Finance Minister Eelco Heinen: "The proposed budget is too large. We should not always focus solely on how the EU can spend more, but rather on how existing funds can be spent more effectively. This requires tough choices. The financial contribution of the Netherlands to the EU is already significant. Therefore, we want to see an improvement in our net payment position. Regarding the Netherlands, the new instruments for common debt are therefore not on the negotiation table."
- French Minister for Europe Benjamin Hadad: "I welcome the ambition for the new multiannual financial framework presented today by the European Commission. I will be in Brussels on Friday to defend our priorities: rearming the European continent, supporting our competitiveness and technological sovereignty, our farmers' incomes, and creating our own resources."
- President of the European Council Antonio Costa: "I welcome the presentation of the proposal for the EU's long-term budget by the European Commission, a step that will allow the Council to begin its work. A budget is not just a matter of numbers – it is the ultimate political decision, a choice about our future, and we must approach this debate with an open mind and a spirit of collective responsibility."