Intense negotiations regarding the budget of the EU 2028-2034, with increased cohesion funds that support Greece and other lower-income countries.
The negotiations for the new Multiannual Financial Framework of the European Union are entering a critical phase, as the sharp divergences among member states highlight a deep rift between countries calling for strict fiscal restraint and those that advocate maintaining and strengthening of cohesion policies. At the center of the debate is the mammoth budget for the 2028–2034 period, with the “frugal” northern economies pushing for significantly deeper cuts, while Southern and Eastern Europe insist on protecting critical funding instruments for development and agriculture. Within this highly polarized environment, the redistribution of funds and the compromise proposals being put forward highlight both the political balances and the strategic priorities of the Union for the coming decade.
A group of wealthy northern European countries has launched a “rebellion” against the proposal for only limited cuts to the EU budget of 2 trillion euros.
The European Commission’s proposal
The plan to reduce by 2% (€32.8 billion) in the European Commission’s proposal for the 2028–2034 budget, which was promoted by the Cypriot presidency of the Council of the EU, falls significantly short of the demands of fiscally conservative countries, including Germany and the Netherlands.
“The proposal is not financially sustainable, it is not balanced, and it emphasizes the wrong priorities. The total budget remains excessively high at a time when fiscal space is limited across Europe and difficult choices are inevitable,” said Dutch Finance Minister Eelko Heinen.
Referring to the Cypriot presidency’s negotiating document, known as the “negobox,” Heinen made it clear that “for the Netherlands, this proposal is unacceptable.”
The 27 countries of the European Union are seeking to reach an agreement on the new multiannual budget by December, fearing that the French presidential elections in April 2027 could bring to power a far-right president who might block the agreement.
The budget, known as the Multiannual Financial Framework (MFF), sets the EU’s core spending, from agricultural subsidies and infrastructure projects to cultural programs.
“These are the first concrete figures on the table. We approached the issue with pragmatism and realism, but this is merely the basis for negotiations,” said Cyprus’s Deputy Minister for European Affairs, Marilena Raouna.
The proposals of the Cypriot presidency have drawn reactions from a group of Northern European countries, which are calling for a significantly smaller EU budget.
In contrast, a bloc of Southern and Eastern European countries, led by Italy, Spain, and Poland, welcomed the Cypriot amendments, mainly because they protect agricultural subsidies and regional development funds from cuts.
This disagreement foreshadows difficult negotiations ahead of next Friday’s EU leaders’ summit, where the size of the budget will be at the center of discussions.
Although the Cypriot presidency’s proposal will form the basis for the next phase of negotiations, there is still enough time for dissenting countries to seek significant changes. Starting in July, Ireland will assume the presidency of the Council of the EU and will be called upon to bring the 27 member states closer to a compromise.
The Cypriot presidency seeks a compromise
The European Commission’s proposal amounts to nearly 2 trillion euros, an amount that includes 166 billion euros for the repayment of debt incurred during the pandemic, a figure that has not been amended in the Cypriot presidency’s negotiating document.
As reported by Politico, the Cypriot presidency of the Council of the EU, which acts as a mediator in negotiations between member states and drafts compromise proposals, has attempted to strike a balance between two opposing camps: on the one hand, the 16 countries calling for more funds for agriculture and regional development, and on the other, the countries demanding drastic cuts.
Cyprus’s Permanent Representative to the European Union, Christina Rafti, held bilateral meetings this week with all her counterparts from the other 26 member states, seeking to secure political support for the negotiating text.
However, these contacts were not enough to stem the tide of opposition from Germany and its fiscally conservative allies, who continue to view the proposal as excessively costly.
“We are very far from what we were asking for. We wanted cuts in the range of 20% and ended up with just 2%,” said a European diplomat, who, like the other sources in the report, spoke on condition of anonymity.
In yet another development that sparked reactions, the Cypriot presidency proposed the largest cuts, amounting to 3.9%, to the European Competitiveness Fund, a €410 billion budget that funds innovative businesses, as well as to the Global Europe Fund, through which EU development aid is channeled.
This decision has sparked strong discontent in Northern European countries, which support shifting resources from traditional spending policies toward new strategic priorities, such as defense and boosting industrial competitiveness.
“The proposal funds yesterday’s priorities at the expense of tomorrow’s challenges. This shows exactly how we should not proceed,” said Dutch Finance Minister Eelko Heinen in his statement.
Agricultural subsidies and regional development funds, which mainly benefit countries in southern and eastern Europe and account for nearly half of the total budget, have essentially been exempted from the cuts.
Supporters of the Cypriot proposal argue that there was no political will for further reductions in these specific sectors, as they had already suffered significant cuts in the European Commission’s initial proposal. The total share of spending on agriculture and regional policy has been reduced from 60% of the current 2021to 41.4% of the revised negotiating framework.
“Indeed, some Member States made it absolutely clear that they wanted extensive budget cuts. However, there were also other groups of countries that supported maintaining the current level of spending or even increasing it,” said Marilena Rauna.
Supporters of the changes also emphasize that the new framework provides for a stronger link between the disbursement of European funds and reforms concerning the rule of law and democratic governance, a long-standing demand of the northern countries.
However, this explanation does not seem to convince the so-called “frugal” countries. “All the changes are moving in a single direction,” commented a second European diplomat. “This is what is causing concern about the momentum of the negotiations.”
Greece Among the Winners
In yet another victory for the bloc of Southern and Eastern European countries, the Cypriot presidency proposed a €5 billion increase in funds to be allocated to 15 member states, including Greece, Portugal, and the Baltic states, whose gross national income remains below 90% of the European Union average, Politico notes.
To finance this aid, Nicosia proposed cuts to the EU’s European Flexibility Fund, which is managed by the European Commission to fund the Union’s strategic priorities and address crises.
This change effectively increases the transfer of funds to member states at the expense of the budget’s fiscal flexibility, which is a key priority for the countries of the northern bloc.
“Such a proposal is far from any point of compromise,” said a third European diplomat. “The total budget remains excessively high.”
