Irish Council President warns of entrenched positions in EU budget dispute

The European Commission's proposal

Chancellor Friedrich Merz had clearly rejected the European Commission's proposal at the summit of European heads of state and government in June. "The proposal we currently have is, from Germany's perspective, unaffordable and also imbalanced," he said there. In the struggle over the new multi-billion euro EU budget, Chancellor Friedrich Merz had previously demanded significant cuts.

According to an internal paper from the German government seen by the news agency Reuters, Germany considers cuts on the order of around 400 billion euros to be necessary. This would correspond to a reduction of the Commission's proposal by about 20 percent. Germany rejects them categorically – meaning new extensive joint EU debt instruments.

Front lines between Berlin, Paris and Rome

This stance contradicts the position of other large member states. France and Italy are considered supporters of so-called Eurobonds, i.e. joint EU debt instruments. The question of whether the budget overall should be larger or smaller also divides the larger EU states. In Martin's words, this is precisely the "diametrically opposed positions" that will shape the upcoming marathon of negotiations.

Ireland took over the rotating presidency of the Council of the EU for six months at the turn of the month. The aim of the Irish Presidency is to reach an agreement on the next long-term EU budget this year still. That this will succeed is, given the hardened front lines, anything but certain. Martin spoke of opposing positions of some larger member states – for example on the question of the size of the budget and its financing.

Time pressure until the end of the year

The warning from Cork is directed explicitly also at Germany. Martin urged the German government and other states not to become fixated on extreme positions, but to remain flexible. Only in this way is there any chance at all of reaching an agreement in time. Time is pressing: no compromise, no budget – that was how the Irish Presidency summed it up.

Observers in Brussels interpret the admonition as a signal that the Irish Presidency, despite the difficult starting position, is banking on negotiated solutions. Should no agreement emerge by the end of 2026, a transitional budget threatens, which would delay or shrink numerous programmes. That in turn would have direct effects on the recipients of EU funds – from farmers through structurally weak regions to research and infrastructure projects.

It is awaited with tension how the German government will react to the indirect admonition from Cork. From the Chancellery's environment it was said recently that it would continue to clearly advocate its own demands for cuts, while at the same time remaining open to talks. The next rounds of negotiations at working level are already scheduled for the coming weeks.