Merz: use EU budget reform to boost European power

German Chancellor Friedrich Merz called for a "fundamental modernization" of the European Union's budget during an address on Thursday at a ceremony to award this year's Charlemagne Prize to Italian statesman Mario Draghi.

Merz said this was needed to establish the EU as an independent power in a world of change. The EU's medium-term financial planning should be oriented more towards military and economic strength, he said.

"Slimmed-down structure, investment in competitiveness and defence, a focus on European resources for European politics. All of this is needed, because resources are limited," Merz said.

But he also ruled out taking on new debt. "German cannot take this path, on constitutional grounds," he said.

The EU budget is set for seven years at a time, with talks ongoing on the 2028-34 budget. The European Commission has put forward a budget of €1.76 trillion euros ($2.06 trillion), adjusted for inflation. Germany contributes the largest share.

Merz noted that more than two thirds of the money went to "redistribution and subsidies," while his aim was to boost European sovereignty in a world in which great power politics as pursued by the United States, China and Russia, played a decisive role.

"We have to define our own interests in a self-confident way. And we must be prepared to invest something to maintain these interests," he said.

Europe had woken up and understood that it could maintain itself in this world only through economic strength and its security policies, he said.

"Europe has set itself the talk of becoming a power, a power that can stand up to the storms of the new era," he said.