Brussels: Germany, Denmark, Finland, the Netherlands and Austria are calling for a major reduction in the European Union’s proposed budget for 2028 to 2034, setting up a difficult debate over how the bloc should finance defence, economic competitiveness and other growing priorities.
The five countries, which are among the EU’s major net contributors, want the budget to be several hundred billion euros smaller than the European Commission’s proposal of almost €2 trillion in current prices.
They say the EU should make clearer choices within its budget and give greater priority to security and defence, competitiveness, innovation and migration management. They also argue that spending should be made more flexible so the bloc can respond to new challenges.
The European Commission proposed the nearly €2 trillion seven year budget in July 2025. The proposal represents an average of about 1.26 percent of the EU’s gross national income during the 2028 to 2034 period.
The proposed budget is a major redesign of the way EU spending is organised. It includes large amounts for national and regional programmes, as well as investment in competitiveness, research, energy, security and other strategic priorities.
The five countries have criticised both the size and structure of the proposal. They argue that too much funding remains committed to subsidies and transfers, leaving less room for new priorities.
The disagreement comes as European governments face growing demands for defence spending and efforts to strengthen the EU economy, technology and strategic independence.
Spain has proposed a different way of creating more room within the EU budget.
Spanish Economy Minister Carlos Cuerpo has proposed changing the repayment profile of borrowing used for the EU’s post pandemic recovery programme, known as NextGenerationEU.
Under the proposal, repayments could be linked more closely to economic growth and spread over a longer period. Spain says this could create about €70 billion of additional budgetary space during the 2028 to 2034 period.
The €70 billion would not represent new revenue for the EU. It would refer to budgetary space created by changing the timing of repayments on existing EU borrowing.
NextGenerationEU was created in response to the economic impact of the coronavirus pandemic and involved large scale borrowing by the European Commission. Repayment of the borrowing is expected to continue for decades, with the current repayment horizon extending to 2058.
Spain’s proposal has not been agreed by EU member states and remains part of the wider negotiations.
The budget dispute also affects funding for farmers and poorer regions. A smaller overall budget could put pressure on spending for agriculture, regional development and efforts to reduce economic differences between member states.
The European Commission has proposed bringing several existing funding areas together through national and regional partnership plans. EU governments have already reached partial negotiating positions on parts of the proposed structure, including arrangements covering cohesion funding and other major programmes.
However, the final financial amounts for the programmes have not been agreed.
The European Parliament is also seeking an ambitious budget, with greater investment in areas including research, strategic autonomy, defence and economic resilience. Parliament's position adds another important element to negotiations between member states, the European Commission and lawmakers.
The latest dispute follows earlier efforts by major EU contributors to push for a smaller budget. In August, Germany, Denmark, the Netherlands, Austria, Finland and Sweden issued a joint statement calling for the Commission’s proposal to be reduced by several hundred billion euros.
Sweden is not among the five countries named in the latest joint position.
The EU now faces several months of difficult negotiations over the size and structure of the next long term budget. The bloc also has to decide how to balance new demands for defence and competitiveness with established spending on agriculture, regional development and other programmes.
EU leaders are expected to discuss the issue at meetings in October, November and December. The bloc aims to reach an agreement before the end of 2026 so that the necessary legislation can be adopted in 2027.
The new budget is due to take effect on January 1, 2028.
For now, the Commission’s proposal of almost €2 trillion remains the starting point for the negotiations. The demand from five major contributors for several hundred billion euros in cuts and Spain’s proposal to change the repayment profile of EU recovery borrowing have added competing approaches to the talks.