Germany rejects 'unaffordable' EU long-term budget plan

Berlin rejected a proposed compromise on the European Union's next long-term budget as "utterly disappointing," sources told dpa on Friday, upping the ante for what is expected to be protracted wrangling among EU capitals. 

Cyprus, which holds the EU's rotating presidency, put forward a proposal on Thursday that makes modest changes to the European Commission's spending plan for 2028-34, suggesting a 2% cut worth €32.8 billion ($38 billion) to the commission's €1.76 trillion budget. 

The Cypriot blueprint forms the basis for EU member states to reach a common negotiating position for budget talks with the European Parliament. Its 7-year spending plan, put forward in April, calls for a 10% increase to the commission's initial proposal.

Germany, the EU's largest budget contributor, has argued that spending should be restrained as member states face budgetary pressures, while insisting that funding for defence and competitiveness be maintained.

Government sources in Berlin said the Cypriot proposal could "absolutely not" serve as a basis for talks, calling the plan "unaffordable."

"We need substantial cuts to the budget across all areas," the sources added.

EU leaders are set to convene in Brussels next week to address the budget plans. 

German Chancellor Friedrich Merz rejected the commission's original proposal last year, arguing that such spending levels were difficult to justify at a time when governments across Europe were trying to save money.

He repeated his calls in a major address to the Bundestag, the lower house of the German parliament, on Thursday.

The EU's multiannual budget is one of the most politically sensitive issues in Brussels, despite being dwarfed by member states' national expenditures.

The seven-year EU spending plan is financed mainly through contributions from member states based on their gross national income, supplemented by revenue sources such as customs duties.