BRUSSELS — The European Parliament voted for an EU budget exceeding €2 trillion for the next seven-year cycle. Germany and its frugal allies will fight hard to keep that from happening.
Negotiations over the EU’s next budget are heating up, with MEPs and national governments squaring up for a fight over money and how to spend it.
An overwhelming majority of EU lawmakers on Tuesday voted to increase the overall size of the budget by €200 billion; earmark more funds for specific EU programs; and impose new, EU-wide taxes against tech giants such as Amazon and Google.
Germany and its frugal allies responded to these three ideas with familiar answers: No, no and no.
The Parliament wants to increase the size of the Commission’s proposal for the 2028 to 2034 period, which envisages €1.8 trillion to be spent in areas such as subsidies for farmers, industrial development and international aid schemes. In addition, the Commission plan earmarks around €165 billion to pay back the common debt that was issued to finance the EU’s post-Covid recovery package — a measure that makes the total budget rise to €1.984 trillion.
By calling for more money to be spent, the Parliament’s plan takes the budget over the €2 trillion mark excluding debt repayments.
It is customary for national capitals to dismiss Parliament’s demands for extra cash — after all, most of the budget is financed by EU governments, which have the upper hand in the negotiations.
What is different this time is the Parliament’s recent track record of playing hardball and dragging its feet — much to the chagrin of national leaders.
“On other occasions, it is assumed that once the Council adopts its position, a phone call is enough to settle things in Parliament. Anyone who thinks this is the case does not know this Parliament very well,” said Iratxe García, the leader of the Socialists & Democrats, the second largest group in Parliament.
“Never underestimate the Parliament,” its president, Roberta Metsola, warned in a press conference after the vote, insisting lawmakers will not simply “rubber-stamp” the budget proposed by the capitals.
Parliament’s pro-EU parties — the conservative European People’s Party (EPP), the Socialists & Democrats, the centrist Renew group and the Greens — all backed the call for more money for the EU to grapple with challenges such as defense and competitiveness.
“We believe we cannot do more with less; that is a myth,” said Siegfried Mureșan, a budget negotiator for the EPP. “Obviously the majority of members can only vote in favor if our demands are incorporated into the budget to a satisfactory extent.”
But these calls have fallen on deaf ears in fiscally conservative countries such as Germany and the Netherlands, which are pushing for a smaller budget.
“It is sad to see that the European Parliament wants to tackle the geopolitical and geoeconomic challenges of the 21st century with budget priorities deeply rooted in the last century,” said an EU diplomat who, like others quoted in this story, was granted anonymity to speak freely.
Days before the Parliament vote, German Chancellor Friedrich Merz — whose country contributes one quarter of the EU’s total budget — ruled out the Commission’s proposal from July as too big.
“At a time when nearly all member states are undertaking the most rigorous fiscal consolidation efforts at home, a massive increase in the EU budget, as proposed by the Commission, does not fit the picture,” Merz said after a leaders’ summit in Cyprus last week.
The tax conundrum
Parliament formally has little say over the size of the budget, which is a prerogative of EU leaders.
Theoretically, MEPs can either reject or confirm the leaders’ final agreement with a reinforced majority — but in the past, they never pushed the nuclear button.
While Parliament’s demand of a 10 percent top-up of the total budget probably won’t ever see the light of day, several of its demands will likely be carried forward by governments.
The position of MEPs is broadly backed by countries such as Poland, Spain and Italy, which favor a big budget with sizable payouts for traditional beneficiaries, such as farmers and poorer regions.
In a boost to the EU assembly, national leaders tasked the Commission with exploring Parliament’s proposed new taxes — known in Brussels-speak as “own resources” — during the summit in Cyprus, said three officials with knowledge of the discussions.
MEPs supported new EU-wide taxes on online gambling, tech giants and crypto firms. They claim the new levies would allow the size of the budget to expand, without asking for extra contributions from national governments.
The Commission in July proposed five new taxes — on tobacco products, non-recycled electrical waste, carbon imports, carbon emissions and corporate profits — to raise an additional €65 billion per year. But most of these ideas failed to muster enough support among governments.
In another important development, leaders in Cyprus asked the Commission to look into delaying around €165 billion of repayments of common debt that was issued to finance the EU’s post-Covid recovery package, according to the three officials.
French President Emmanuel Macron said that pushing to reimburse the money rapidly is “idiotic.”
The idea of deferring payments — opposed by Germany, but supported by France and Spain — would be welcomed by many MEPs, as it would free up more spending for the EU.
The discussions in Cyprus effectively fired the starting pistol for the more sensitive phase of the budget negotiations.
Talks will come to a head during a summit of EU leaders in December 2026, which is the unofficial deadline to reach a deal.
“We’re entering the give-and-take period,” said a second EU diplomat.
“It’s the beginning of the end.”
Jacopo Barigazzi and Gabriel Gavin contributed to this report.
