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The non-geek’s guide to the Brussels budget fight

July 14, 2025
in Environment, News, Politics
The non-geek’s guide to the Brussels budget fight
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BRUSSELS ― As Europe teeters on the edge of a full-blown trade war with the United States, the EU’s 27 commissioners will gather on Wednesday to settle one of the thorniest issues in Brussels: its own finances.

Farmers, startups, filmmakers and defense lobbies ― they all have a stake in the EU’s seven-year cash pot, which is currently worth €1.2 trillion. And everyone’s fighting tooth and nail to protect their share of the pie from European Commission President Ursula von der Leyen’s likely cuts.

You’ll be forgiven for dismissing this as a subject for geeks. But reforming the EU’s mammoth budget might instead be remembered as one of von der Leyen’s legacy achievements ― or a fiasco.

“The budget is politics cast in figures,” said Johannes Hahn, the EU’s former budget commissioner.

And the last weeks of fierce negotiations over the seven-year spending plan from 2028 are proving him right.

Commissioners are up in arms against von der Leyen’s attempts to trash their pet programs, governments are filling her inbox with angry messages ― and farmers are ready to take to the streets if their demands aren’t met.

“I have the tractor and I’m ready,” Massimiliano Giansanti, the head of Europe’s powerful Copa farming lobby, warned in response to rumored cuts to the EU’s massive farm aid budget.

With a few days to go until von der Leyen unveils her proposal on Wednesday, a lot is still up in the air ― and anything that’s decided by the Commission can be binned by national governments and the European Parliament during two years of serpentine negotiations.

Before Wednesday, commissioners and their top advisers will have to answer crucial questions — How big will the budget be? Which taxes will be levied to repay the EU’s debt? Will regions still matter? ― during emergency talks in the Berlaymont.

Here’s what they’ll be arguing about:

How much money …

The EU in the coming years will have to do more with roughly the same amount of money.

A big question mark hangs over the figures, which are kept secret until the very last minute. But it’s an open secret that the available money won’t be enough to cater for the new priorities ― from defense to innovation to climate disasters ― that have kept piling up over the last few years.

At a time of squeezed budgets and slowing growth, the EU’s two largest countries ― France and Germany ― and several others have little appetite to send more money to Brussels, putting the Commission in a tight spot.

To free up more funding for defense and startups, the bloc’s budget department is thinking of cutting up to 20 percent from the EU’s farming and regional budgets ― which jointly make up two-thirds of its current cash pot.

But that won’t be a walk in the park as the farmers lobby, researchers and regions across Europe ― and their powerful backers in the Parliament and the European Council ― are pushing back against any cuts.

Will regions still matter …

Von der Leyen’s big idea is to merge a plethora of programs into a single national cash pot, which will determine spending in sectors ranging from farm subsidies to social housing.

Under this new system, budget payments ― especially regional spending, which makes up a third of the EU budget ― will be linked to the fulfillment of reforms.

Supporters argue this will make it easier for recipients to access EU money and will encourage productivity by incentivizing national reforms. However, a majority of EU governments are worried that the change would empower central administrations and sideline regions, which currently play a big role in spending EU funds.

There are lingering fears that handing the money to national governments ― as opposed to poorer regions, as is currently the case ― could undermine the EU’s goal of reducing disparities across the bloc. 

Which new taxes will be introduced …

The Commission is under a lot of pressure to introduce new EU-wide levies or transfers from national tax revenues ― known as “own resources” ― to pay back €25 billion to €30 billion per year in joint debt that was issued to finance the bloc’s post-Covid recovery.

But the last years of discussions in Brussels have confirmed Winston Churchill’s maxim that “there is no such thing as a good tax.”

National governments are wary of giving the bloc too much power to extract money from their voters and generally oppose handing a share of their domestic tax revenue to Brussels. Currently, the vast majority of EU funds come from governments’ contributions.

The Commission on Friday floated three new taxes targeting nonrecycled electric waste, tobacco products and large companies in the EU with a turnover of more than €50 million, according to an internal document seen by POLITICO.

This comes on top of two separate ideas from 2021 to levy a carbon border tax and to take a share of the revenues generated by the Emissions Trading System.

While the ideas are still on the table, each one is opposed by different groups of EU members. Finding unanimity on any new tax won’t be easy.  

How much green spending …

During the last budget negotiations, the EU agreed that at least 30 percent of its expenditure should be directed toward climate goals. But green spending has fallen out of fashion, with right-wing parties surging and competitiveness overtaking the environment on the EU’s priority list.

EU climate chief Teresa Ribera, a Spanish socialist, is fighting to increase ― or at least preserve ― the 30 percent climate target to show that the EU isn’t abandoning its green agenda.

But Budget Commissioner Piotr Serafin is pushing in the opposite direction over fears that such a high threshold will make it harder to shuffle funding according to needs.

There’s little time for von der Leyen to make a final decision on the climate target ― and on everything else.

The post The non-geek’s guide to the Brussels budget fight appeared first on Politico.

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