Germany's Merz opposes new EU debt as leaders mull long-term budget

German Chancellor Friedrich Merz has spoken out against increasing debt, as European Union leaders discuss the bloc's long-term budget for the years 2028 to 2034 at a summit in Cyprus.

"From a German perspective, increased debt is out of the question, and European bonds on the capital market are also out of the question," Merz said on Friday in Nicosia.

The main stumbling point for the next long-term budget is how the bloc's ambitions, including boosting the EU's faltering competitiveness and improving Europe's defence capabilities, can be financed when many capitals are short on cash after consecutive crises.

"I have already told my colleagues that we will have to set new priorities and that means we will also have to reduce spending in some areas," Merz, who leads Europe's biggest economy, said.

Many in the EU share his view, he added. "Europe must make do with the money we have."

After the EU budget consultations, leaders are to meet representatives from Egypt, Jordan, Lebanon and Syria later on Friday afternoon to discuss shared challenges.