The negotiations for the next Multiannual Financial Framework (MFF) of the European Union, amounting to 1.8 trillion euros, are entering a critical juncture. Despite accelerating talks at Friday’s summit in Cyprus, the “27” remain locked in a deep divide over the size, targeting and sources of funding for the common fund for 2028-2034.
An “extremely difficult” equation
Italian Prime Minister Giorgia Meloni described the process as an “extremely difficult negotiation”, reflecting the climate of uncertainty in Brussels. European leaders are pressed for time, seeking a deal before next year’s French presidential election, as a possible outbreak of “National Alarm” could make any compromise virtually impossible.
The need for new momentum is imperative as the energy crisis, fueled by turmoil in the Middle East, requires increased spending to shore up the European economy.
The austerity front and the “ambitious”
The debate highlighted two diametrically opposed camps. On the one hand, countries like Poland are asking for an enlarged budget to cover increased security and development needs. On the other hand, the “frugal” bloc, led by Germany and the Netherlands, categorically rejects the European Commission’s proposals to increase spending.
“At a time when almost all member states are making the most stringent fiscal consolidation efforts at home, a massive increase in the EU budget does not fit the picture,” said German Chancellor Friedrich Merz, calling for horizontal cuts.
On the same wavelength, the Dutch Prime Minister, Rob Jetten, characterized “unacceptable” the current draft, requiring a significant reduction in overall size.
The search for new revenue
For France and the EU institutions, the solution to economic suffocation lies not in national contributions, but in the creation of “own resources” – direct taxes that will flow into the European coffers. The Commission’s proposal includes a package of measures that could bring in €66 billion a year:
- Taxes on imports of products with a high carbon footprint (CBAM).
- Revenue from the Emissions Trading System (ETS).
- Taxes on non-recycled e-waste and tobacco consumption.
- Charges on corporate profits.
Despite the cold reception given by most member states to these proposals, the President of the Commission, Ursula von der Leyen, appeared adamant.
Von der Leyen’s dilemma
“Without own resources, the choice is stark: either higher national contributions or lower spending capacity”warned the President at the close of the session. She made it clear that reducing the Union’s economic power would mean “less Europe”, at a time when geopolitical rivals in Asia and the Americas are investing massively in strategic sectors.
Although no formal consensus was reached, the Cyprus summit is seen as a first step forward, with the coming weeks being decisive as to whether Europe chooses the path of investment or retrenchment.
