Multi-annual budget: October will be the moment of truth

Brussels – Nearly three hours of discussion for two short paragraphs of conclusions. The debate amongst EU heads of state and government on the draft of the multiannual financial framework (MFF 2028–2034) turned out to be a classic case of much ado about nothing. All the leaders took the floor in what is, by definition, a complex and delicate debate—and this time even more divisive than usual. The 27 have given Ireland, which is set to take over the rotating presidency of the Council of the EU from 1 July, a mandate to work towards presenting a new compromise proposal at the Council summit in October, hopefully the “right” one: the leaders emphasise that “an agreement by the end of 2026 would allow for the adoption of legislative acts in 2027, necessary to ensure that EU funding reaches beneficiaries without interruption in January 2028.” 

From a legal and technical point of view, the final approval of all the texts remains set for 31 December 2027, so that the next multiannual budget for 2028 can be adopted; consequently, the leaders’ indication that an agreement will be reached by the end of the year is purely political. There is no real sense of urgency, even though postponing the negotiations until 2027 would mean facing the uncertainties posed by the many elections scheduled in the various Member States. However, there is a sense that, despite the remaining differences, things are moving forward.

“A great deal of progress has been made,” EU sources reveal. On the repayment of the Recovery Fund and the national recovery plans, the Competitiveness Fund and the EU’s global programme, it appears that differences have been significantly narrowed. What remains to be resolved is the so-called “financial equation”: how much to allocate in total resources and how to distribute them. This is perhaps the most complex part of a Union divided, as usual, between those who would like more resources (the “friends of cohesion”) and those who would prefer fewer (“the frugal ones”).

The German Chancellor, Friedrich Merz, and the Spanish Prime Minister, Pedro Sánchez, made this very clear at the end of the meeting: “The Commission’s proposal amounts to an extra contribution of 15–20 billion a year, and for us this is not sustainable,” the German Chancellor emphasised. In other words: the budget “must be reduced.” Spain’s head of government echoed this: “Europe cannot become a geo-economic power unless we have the financial strength required to be one.” In other words: we need to cut less and invest more. French President Emmanuel Macron also stood his ground: “This budget must safeguard traditional policies such as the Common Agricultural Policy, fisheries, and cohesion policy.”

There is a general consensus in principle that the total amount of the multiannual budget must be commensurate with the EU’s ambitions. “This will also mean securing the necessary resources to fund the EU’s priorities,” the same sources point out. In this search for funding, the key issue will be the debate on own resources, i.e. how much the Commission can raise without having to ask national governments. That is why the Irish Presidency is being asked to put forward an “ambitious and balanced” proposal. 

In essence, the real issues still remain to be resolved. The leaders used the European Council summit as an opportunity to exchange views. Everything has now been postponed until the autumn.For the President of the European Council, António Costa, there is reason to be optimistic: “We are one step closer to a new European budget that meets our ambitions,” he said during the press conference at the end of the meeting.