Germany has called for substantial reductions to the European Union’s proposed long-term budget, arguing that the nearly €2 trillion spending plan for 2028–2034 is unaffordable and does not sufficiently reflect Europe’s changing economic and security priorities.
German Chancellor Friedrich Merz criticized the European Commission’s proposal following talks with European Council President António Costa in Berlin. He said the planned increase—estimated at around 60% compared with the current seven-year financial framework—could not be justified while national governments were under pressure to control spending.
Merz insisted that the EU must concentrate its resources on areas capable of strengthening Europe’s strategic position, particularly defense, industrial competitiveness, technological development and economic resilience. He argued that the bloc’s financial framework should respond to present-day challenges instead of preserving spending patterns designed for an earlier era.
Germany is the EU’s largest economy and one of the biggest net contributors to the common budget. Berlin’s position therefore carries considerable influence as negotiations begin over the next Multiannual Financial Framework, which will determine the bloc’s spending priorities between 2028 and 2034.
The German demand is reportedly supported by several fiscally cautious member states, including Denmark, the Netherlands, Austria, Finland and Sweden. These governments are expected to push for reductions across multiple spending areas and resist proposals that would substantially increase their national contributions.
The European Commission argues that a larger budget is necessary to meet a growing list of obligations. These include strengthening European defense capabilities, supporting Ukraine, improving border security, accelerating the green and digital transitions and helping European companies compete with heavily subsidized rivals in the United States and China.
The disagreement is not simply about the total amount of spending, but also about how the EU should finance its expanding responsibilities. European Council President António Costa has emphasized the need to develop additional sources of revenue for the bloc, reducing pressure on national budgets and giving the EU greater financial flexibility.
Merz, however, has rejected another large round of common European borrowing. Germany remains cautious about repeating the joint-debt model adopted after the COVID-19 pandemic, warning that excessive borrowing could create long-term liabilities and weaken fiscal discipline across the union.
Berlin’s position creates a difficult political equation for Brussels. Europe is being asked to invest more in defense and strategic industries while simultaneously dealing with sluggish growth, high energy costs, demographic pressures and strained national finances.
Agricultural subsidies and regional development funds are expected to face particularly intense scrutiny. Together, these programs account for a significant share of EU expenditure, but attempts to reduce them are likely to meet resistance from countries and communities that depend heavily on European funding.
The final budget must secure the unanimous approval of all 27 EU member states, as well as the consent of the European Parliament. This gives every national government considerable negotiating power and makes a prolonged dispute likely.
EU leaders aim to reach an agreement by the end of 2026, allowing sufficient time to prepare the new financial framework before it takes effect in 2028. Germany’s early intervention has nevertheless established the central battle line: whether Europe can finance its growing geopolitical ambitions through a much larger common budget, or whether it must redirect existing resources toward defense and competitiveness.
