Germany warns EU that €159B budget cuts are not enough

 

Germany warns EU that €159B budget cuts are not enough

 

Frugal countries said an end-of-year agreement is less likely after Ireland’s proposal.

Friedrich Merz is pictured during a meeting with the British Prime Minister (not in picture) on October 8, 2026 at the Chancellery in Berlin. | Tobias Schwarz/AFP via Getty Images

October 10, 2026 4:43 pm CET

By Gregorio Sorgi

https://www.politico.eu/article/friedrich-merz-germany-warns-eu-e159b-budget-cuts-not-enough/

 

BRUSSELS — Germany and its allies rebuffed Ireland’s plan to downsize the bloc’s next seven-year budget, arguing that the proposed cuts are not enough.

On Saturday, the Irish presidency of the Council of the EU, which is steering the talks, proposed cutting around 8% from the bloc’s total budget from 2028 to 2034 in a bid to assuage a German-led camp demanding reductions of several hundred billions euros.

But Dublin’s hopes of facilitating a deal were immediately dashed by German Chancellor Friedrich Merz, one the key players in the negotiations as his country contributes to approximately one-quarter of the bloc’s common budget.

“We are still a long way from an agreement. The amount of the new proposal is not a basis for an agreement. The EU budget must be affordable for those who bear the brunt of the financing,” Merz wrote in a statement on Saturday.

Germany leads a group of six “frugal” countries — Sweden, Denmark, the Netherlands, Finland and Austria — which contribute 40% of the Union’s common budget.

Most frugal countries criticized Ireland’s proposed €159 billion in cuts in current prices from the Commission’s nearly €2 trillion proposal, saying they were insufficient.

Sweden’s Europe minister Jessica Rosencrantz described the negotiating document, or negobox, on X as a “wildly unaffordable increase,” as the overall amount would still be higher than the current budget.

Austrian Europe Minister Claudia Bauer echoed that criticism, saying that the new budget remained "miles away from an Austrian yes.”

Tensions will come to a head during a summit of EU leaders next Thursday and Friday, where they will discuss the negobox.

EU governments are racing to reach a budget deal among themselves by the end of the year — before elections in France, Italy and Poland in 2027 threaten to derail negotiations.

But Dutch Finance Minister Eelco Heinen warned on Saturday that “at this rate, there will be no deal by the end of the year.”

Ireland’s Minister of State for European Affairs Thomas Byrne, who leads the negotiations, dismissed criticism and described the proposal as a balanced compromise.

“The negotiating box acts to bridge the many differences between the Member states,” Byrne told reporters on Saturday.

Divided Union

The EU is split between frugal countries pushing for cuts across the board and a rival camp of southern and eastern states, the Friends of Cohesion, opposing reductions to farmers’ subsidies and regional payouts known as cohesion policy.

These areas account for almost half of the total budget and are politically sensitive because of pressure from farmers' lobbies and regions.

In a concession to the 17 Friends of Cohesion, Ireland left the agriculture and regional budgets untouched and focused cuts on other priorities such as competitiveness, defense and development aid.

“There was a strong support for heading one [agriculture and cohesion] from almost all of the member states, including some of the countries who would be considered to be net contributors” to the budget, Byrne told reporters.

Reactions to the negobox from the Friends of Cohesion were more conciliatory than those of their frugal peers.

“It’s an excellent starting point to have recovered the money for the CAP [Common Agricultural Policy], but we’re still not satisfied,” said Italy’s Agriculture Minister Francesco Lollobrigida.

Poland's Europe minister Ignacy Niemczycki welcomed the fact that his country "continues to receive the largest allocation," but noted that the "change in the overall size of the budget does not match the EU’s ambitions."

The frugals were also are disappointed that the cuts disproportionately target innovative policies such as defense and competitiveness, which they favor.

“They’re cutting the future to protect the past,” said one EU diplomat from the frugal camp.