Ireland has cut €141bn from a proposed EU budget in an effort to find consensus among deeply divided capitals on the size and priorities of the bloc’s spending.
The revised 2028-34 budget is 8 per cent smaller than the European Commission’s original proposal in a sop to rich countries led by Germany, which had demanded “hundreds of billions” in cuts to secure their approval.
The €1.62tn proposal still represents a 30 per cent increase on the bloc’s 2021-27 budget.
The common budget, which is agreed every seven years, is largely financed by EU countries’ contributions based on the size of their economies.
Member states are racing to strike an agreement by the end of the year before a elections in big countries including France, Italy and Poland next year that are set to derail future negotiations.
Ireland holds the rotating EU presidency, giving Dublin responsibility for leading the talks.
“The [budget proposal] will make savings on the initial Commission proposal, while representing an increase on the current [joint EU budget],” said Thomas Byrne, Ireland’s EU minister, who is in charge of negotiations.
Dublin left funding for traditional policies — agriculture and regional funding — largely uncut at €914bn, down from €946bn in the Commission’s proposal. This would be an 11 per cent increase from the previous budget period.
Most of the cuts come from EU foreign policy and development aid, which fell from €190bn to €157bn, a 17 per cent cut.
Ireland also slashed funding for innovative companies and defence by 13 per cent, from €522bn to €456bn. This is still more than double the current budget period. It cut €9bn from the costs of running the EU administration.
But the cuts are unlikely to be sufficient for some.
“The Irish proposal is a disappointment and not even close to a landing zone,” said one EU diplomat who described it as “unaffordable and financially not viable at all”.
“By favouring policy priorities of the 20th century the proposal fails to prepare the EU for the 21st century,” the official added. “This [proposal] is no basis for an agreement among member states. We urgently need more financial realism and less financial La-La Land.”
Six countries that are net contributors to the budget, led by Germany, had demanded “hundreds of billions” in cuts, dismissing new joint borrowing and only tepidly embracing EU-level taxes as a way to finance common spending.
But the majority of EU countries maintain that spending — especially on the bloc’s traditional policies of agricultural subsidies and payouts to poorer regions, which make up two-thirds of the current budget — should remain at current levels. They are pushing for joint debt and higher contributions from member states to fund it.
Dublin’s plan increases the amount of revenue expected to come from new EU-wide taxes to €55bn per year, and keeps all five of the bloc’s new proposed taxes. These include revenues from the bloc’s cap-and-trade carbon market, tariffs on carbon-intensive imports, a tax on non-recycled electronic waste, tobacco duties and a levy on large companies.
EU leaders are set to discuss the proposed budget at a summit in Brussels on Thursday and Friday.