The EU Budget: North vs South & East

Photo Credit: Nicolas Tucat/AFP via Getty Images

As a non-European citizen, I find it intriguing to contemplate how 27 member states can collectively decide on a budget for a vast bloc with widely varying economies. In the United States, Congress must also pass a budget, which is usually submitted as a reconciliation bill. It only needs to pass with a majority of states agreeing but in the European Union, it is much more complicated. According to the EU website, adoption of the bill has three possible outcomes:

1. If the joint text is approved by both Parliament and Council: the budget is adopted by the Parliament 

2. If the Council rejects the joint text: the Parliament can still adopt the budget but only if a majority of MEPs, accounting for 60% of the votes cast, vote in favour 

3. If the Parliament and Council both reject the joint text or fail to agree: the budget is rejected and the Commission must submit a new draft budget

Reaching such a consensus, considering the diverse economic priorities, is truly remarkable if they manage to unite. This time around, Ireland is at the head of the table as it is their turn to hold the presidency for the Council of EU and develop the negotiating document, or negobox. This budget is planned for the years 2028 to 2034 and considering the current geopolitical turmoil, it’s astonishing that such a plan can be made so far in advance.

There is a divide and significant disagreements on the budget between member states. The upcoming summit is starting to evolve into two sides: Germany, Austria, the Netherlands along with other member states are advocating for reducing the budget while the Friends of Cohesion, who comprise of southern and eastern European countries, are against the cuts. The seventeen countries have concerns about the impact on agricultural and regional payouts from the Multiannual Financial Framework (MMF). This framework “finances everything from farmers’ subsidies to development aid, and is among the toughest negotiations in Brussels.” The changes proposed by the European Commission originally budgeted nearly €2 trillion for the 2028-2034 period. The goal was to shift hundreds of billions from agriculture and regional payouts, known as cohesion policy, to new priorities such as defense and competitiveness. Friends of Cohesion believe that any further reductions “would only weaken it [budget] and risk undermining public support for the European project.” It is also important to note here of why these priorities are so important to eastern and southern EU countries. Their economies are comprised of large agricultural centres and many are not the economic powerhouses of the northern region of Europe. The map provides insight into who receives and who contributes in order to bring structure and promote economic convergence and stability across the region.

Some of the key points outlined in the negobox include defence, migration, energy, and Ukraine. These priorities have a significant impact on all of the countries that are apart of the EU but that means having to shift the budget around to fulfill those needs. It was anticipated that between €100-200 billion would be slashed but currently the negobox has envisaged “cuts of €122 billion in current prices from the previous negobox presented by the Cyprus presidency” earlier this year. More “reductions came from foreign aid which was cut by €38 billion; competitiveness which was axed by €75 billion and the EU’s administrative costs which were reduced by €10 billion.” The Irish will have their hands full as both sides are not happy with how much as well as how little was cut from this round.