Practically all of the MEPs are unhappy, one group of national capitals wants to hit the brakes on any extra spending, other governments want a bigger pot of money, but don’t agree on how the new cash should be spent.
Negotiating the European Union’s (EU) next long-term budget is going to be a headache.
The union’s seven-year budget is always an intense, slow-motion arm-wrestle between the bloc’s competing institutions. The amount put aside for various funds, from farm subsidies to regional development grants and money for research and defence, will be a clear nod to Europe’s changing priorities.
Brokering a budget deal between the 27 states by the end of next year will be the single biggest test of Ireland’s spin in the EU council “presidency” hot seat, a six month deal-making role the Government will take over in July.
“What we need is a better budget, we don’t need a bigger budget,” Finland’s minister for European affairs Joakim Strand said this week, staking out the opening position of several fiscally conservative states.
The EU’s current €1.2 trillion budget runs out at the end of 2027 and politicking to hammer out a messy deal on the next one got under way earlier this summer. The European Commission, the EU’s executive arm that proposes laws, tabled an overhauled, €2 trillion budget plan, the starting shot on the negotiations.
Funding for Common Agricultural Policy (Cap) farm subsidies, “cohesion” grants for roads and other development projects in poorer regions, and the cost of paying back past EU debt leaves little room to throw a lot of cash elsewhere.
Commission president Ursula von der Leyen has proposed setting more funds aside for defence to toughen up borders, and for a competitiveness fund to boost industry.
Controversially, the commission wants to roll Cap, cohesion and other streams of funding into 27 national baskets of money, which governments would be responsible for doling out.
This could be a fairly deft slight of hand by the Berlaymont, making capitals, rather than Brussels officials, the face of any political fallout if farmers end up with less in the shake-up.
Many governments are wary, or outright opposed, to the proposed budget reforms.
Ireland’s junior minister for EU affairs, Thomas Byrne, said the Government’s top priority was to make sure Cap funding for agriculture was “ring-fenced” at the same rate. “It’s not 100 per cent clear as to whether we have that yet, we’re still working through that,” he said on Monday.
Speaking before EU ministers met in Brussels to discuss the budget, Byrne said talks would likely reach a “climax” when Ireland holds the rotating presidency next year.
Ireland, now the ninth largest contributor to the bloc’s budget, should not be “overly fussed” about its structure, so long as funds for Cap were protected. “We’re not there yet in the negotiations by any means,” Byrne said.
Political groupings across the European Parliament have kicked up over the planned changes, sending an early signal they will not just rubber stamp a deal agreed between the commission and capitals.
[ Proposed €2tn EU budget would increase funding for defenceOpens in new window ]
In a recent letter to parliament, von der Leyen said the existing budget “was designed for a world that no longer exists”. The commission president said the EU’s powerful executive was open to extra safeguards for Cap and regional funding.
In classic Brussels fashion, the budget talks will probably go down to the last minute, before some compromise is struck that pleases nobody, but everyone can live with.
Last time around the sticklers were a group known as the “frugal four”. The Netherlands, Austria, Denmark and Sweden resisted EU plans to jointly borrow money to finance a €750 billion Covid-19 recovery fund. German chancellor Friedrich Merz is another big sceptic of expanding the union’s budget.
Denmark has since shifted positions and no longer aligns itself with the frugals. Russia’s invasion of Ukraine changed the thinking in Copenhagen.
“It is not our policy that we should necessarily have a higher budget, it is not our policy that we should have more common debt. However, we are also going into these discussions with an open mind, because Europe is in another place today,” Denmark’s EU minister Marie Bjerre told reporters this week.
Poland and other states to the east want defence and security to be a much bigger feature of the next budget. Politically that could be difficult for the Government, which will be in the thick of the negotiations as holder of the EU council presidency.
It’s unlikely any extra money found for defence will come back Ireland’s way, given it has no defence or arms industry. That means safeguarding Cap subsidies and boosting this new economic competitiveness fund will be important to head off charges Ireland finds itself paying more into the joint EU kitty and getting a lot less out.
