Merz demands hundreds of billions cut from EU budget in Dublin talks

German Chancellor Friedrich Merz has called for the EU's budget for the coming years to be several hundred billion euros smaller than proposed by the European Commission, saying at a meeting with Irish Prime Minister Micheál Martin in Dublin that cuts must be made across all areas. 

"These cuts are essential, regardless of how far we get on new own resources," Merz said.

The EU budget is one of the most politically sensitive issues in Brussels. It is set for seven years at a time; negotiations are currently under way on the budget for 2028 to 2034. 

The vast pot is funded primarily from a share of member states' gross national income (GNI). As the EU's largest economy, Germany pays by far the largest contribution.

Merz calls commission proposal 'unbalanced'

The European Commission is proposing around €1.76 trillion ($2 trillion) in inflation-adjusted terms at 2025 prices to be used for various EU projects - including defence procurement, agricultural policy, structural funding and the Erasmus exchange programme. 

Merz firmly rejected both the commission's proposal and a compromise proposal currently on the table that would involve only minor cuts. "Such a wide and large expansion of the European budget is not acceptable to us. The figures are not balanced," he said.

Ireland has held the rotating presidency of the EU member states since July and is therefore responsible for driving the budget negotiations forward. 

Ireland is expected to present a new compromise proposal in October. "I trust that you, dear Micheál, will put forward a realistic proposal," Merz said, addressing the Irish prime minister.

Compromise sought by year's end

The current aim is to reach a compromise by the end of the year, and thus before the presidential election in France. 

Reaching agreement among EU member states on the size of the new joint budget by the end of the year is considered highly ambitious, however, given how far apart the 27 member states' positions remain.

Alongside Germany, other net contributor countries are also calling for a smaller budget, including the Netherlands, Sweden and Denmark. Net recipient states do not want the existing proposal cut further. 

The budget, officially known as the Multiannual Financial Framework (MFF), must be adopted unanimously.

In addition to national contributions, own resources also flow directly to Brussels - for example, tariffs on imports from outside Europe. Whether new own resources should be introduced, and if so what form they should take, is also part of the debate among EU member states. 

The commission is proposing, among other things, a levy on large companies with annual revenues of more than €100 million.