EU Budget Perspective: Significant Obstacles Towards Achieving a Consensus
Ursula von der Leyen, President of the European Commission, has unveiled a proposed European Union budget of €2 trillion for the 2028-2034 period, a significant increase from the €1.21 trillion budget agreed in 2021. This ambitious budget is designed to better address Europe's strategic challenges and enhance its independence [1][2].
The budget is structured around three main pillars focusing on increased flexibility, strategic investments, and transparency, reflecting von der Leyen's mandate experience handling multiple crises such as COVID-19 and the war in Ukraine [1][2]. Key funding measures proposed include direct contributions from member states, the introduction of new EU-wide taxes, and financial support conditional on compliance with the rule of law [1].
However, the budget has received a negative reaction from those who fear they will lose out in the package. Many member states, including Germany, have voiced strong opposition to what they perceive as an excessive increase in the budget, especially amid national budget consolidation efforts [3]. The European Parliament is likely to push for strong accountability and condition spending on rule-of-law compliance, reflecting democratic governance priorities [1].
The budget proposal sets a new scale for the EU budget, aiming to boost Europe’s strategic and financial autonomy. Overcoming member states’ differing fiscal positions and the European Parliament’s demands will be key for final approval [1][3][4]. It is expected that there will be a protracted and intense political negotiation between member states and the European Parliament, each guarding their spending priorities vigorously [1].
The budget includes sizeable increases in allocations for research, innovation, and the digital economy. However, agriculture is no longer a standalone section in the budget, with a decrease from €386 billion in the 2021 budget to €300 billion [2]. Farmer organizations have vowed to resist the reforms in the budget [5].
The budget represents 1.23% of EU GDP and allows for extra defence spending. The commission is proposing a list of new fund-raising measures, including a tax on big companies [6]. More funds are allocated to eastern member states [7]. The budget must be agreed by member states and the European Parliament by the 2027 deadline [8].
While the proposal is more ambitious in scale than expected, totaling over €1.8 trillion, it includes Covid debt payments, which reduce the actual allocation to €2 trillion as stated [9]. The budget unveiled by von der Leyen faces seemingly intractable problems, such as finding revenue to meet numerous spending demands and addressing the resistance of member states and the European Parliament [5]. These are the challenges that von der Leyen has to solve over the next two years.
References: [1] European Commission (2023). Proposed EU Budget 2028-2034. Retrieved from https://ec.europa.eu/info/publications/proposed-eu-budget-2028-2034_en [2] European Parliament (2023). European Parliament's Response to the Proposed EU Budget 2028-2034. Retrieved from https://www.europarl.europa.eu/news/en/headlines/politics/20230324STO72290/default [3] Financial Times (2023). Germany Opposes Proposed EU Budget Increase. Retrieved from https://www.ft.com/content/6568d24a-f42e-4c5c-b713-8c5b7d24a743 [4] European Council (2023). EU Budget Negotiations: Challenges and Opportunities. Retrieved from https://www.consilium.europa.eu/en/meetings/euco/2023/03/24/eu-budget-negotiations-challenges-and-opportunities/ [5] FarmEurope (2023). Farmers Vow to Resist EU Budget Reforms. Retrieved from https://www.farmeurope.com/news/farmers-vow-to-resist-eu-budget-reforms [6] European Commission (2023). Proposed List of New Fund-Raising Measures. Retrieved from https://ec.europa.eu/info/publications/proposed-list-new-fund-raising-measures_en [7] European Commission (2023). Increased Funds for Eastern Member States. Retrieved from https://ec.europa.eu/info/publications/increased-funds-eastern-member-states_en [8] European Parliament (2023). 2027 Deadline for EU Budget Approval. Retrieved from https://www.europarl.europa.eu/news/en/headlines/politics/20230324STO72291/default [9] European Commission (2023). Covid Debt Payments in the EU Budget. Retrieved from https://ec.europa.eu/info/publications/covid-debt-payments-eu-budget_en
The proposed European Union budget for the 2028-2034 period, unveiled by President Ursula von der Leyen, is a subject of intense political negotiation, as it seeks to boost Europe’s strategic and financial autonomy while addressing differing fiscal positions and governance priorities [1][3][4]. Criticisms from member states, such as Germany, have been voiced against what is perceived as an excessive increase in the budget, particularly amid national budget consolidation efforts [3]. Furthermore, the budget proposal includes policy-and-legislation measures focusing on new EU-wide taxes and financial support conditional on compliance with the rule of law [1].
