Merz demands EU budget cuts of several hundred billion euros

As the EU's largest economy, Germany is by far the biggest contributor to the common budget. Alongside Germany, other net contributors such as the Netherlands, Sweden, and Denmark also advocate for a smaller EU budget. Net recipient states, on the other hand, reject further cuts to the existing proposal.

EU budget financing and own resources

The EU budget, officially referred to as the Multiannual Financial Framework (MFF), is drawn up in seven-year periods and must be adopted unanimously by the 27 member states. It is financed primarily from a share of member states' gross national income. In addition, so-called own resources, such as customs duties on imports from third countries, flow directly to Brussels and contribute to EU revenues.

Merz declared the cuts imperative, regardless of what progress is made on new own resources. "Diese Kürzungen sind zwingend, unabhängig davon, wie wir weit bei den neuen Eigenmitteln kommen," said the chancellor. He called for a budget draft "mit Kürzungen in allen Bereichen" and rejected a compromise proposal that contained only minor savings.

Ireland's role as Council Presidency

The occasion for the trip to Dublin was Ireland's assumption of the EU Council Presidency on July 1. As Council chair, Ireland is responsible for advancing the budget negotiations. Martin holds the office of Prime Minister (Taoiseach) of Ireland. A new Irish compromise proposal is expected in October, intended to give the negotiations new momentum.

Merz expressed confidence in the Irish presidency at the meeting. "Ich vertraue darauf, dass ihr, lieber Micheál, einen realistischen Vorschlag vorlegen werdet," he said, addressing the Irish prime minister. Given the widely differing positions of the member states, reaching agreement on the size of the new EU budget by year-end is considered extremely ambitious.

In addition to the cuts debate, the question of new own resources is also under discussion. The Commission has proposed, among other things, a levy on large companies with annual revenues exceeding 100 million euros. Whether and in what form such new own resources will be introduced is part of the ongoing negotiations among the EU member states.

Political ambitions and time pressure

The proposed EU budget is intended to finance a range of political initiatives, including defense procurement, agricultural policy, structural support, and the Erasmus exchange program. A compromise on the budget is being sought before the French presidential election, which adds additional time pressure to the negotiations.

The debate between net contributors and net recipients is shaping the ongoing negotiations. While Germany and other net contributors are pushing for significant savings, recipient states are resisting further cuts to the Commission's existing proposal. These opposing positions make a swift agreement unlikely.

Observers view the Irish Council Presidency as a decisive actor for the further course. Should the compromise proposal announced for October fail to garner the necessary support, the negotiations risk entering a difficult final phase. A final agreement is considered a prerequisite for the budget for the 2028 to 2034 period to enter into force as planned.