The European Commission will present its proposal Wednesday for the EU’s next long-term budget, kicking off two years of fraught negotiations as Brussels grapples with competing priorities—from defense spending to climate goals—while facing fierce pushback from farmers and austerity-minded member states.
The draft seven-year budget comes as the bloc confronts mounting financial pressures, including €25-30 billion in annual debt repayments starting in 2028 from the EU’s €800 billion COVID recovery fund. At the same time, Brussels is under pressure to boost funding for defense, green transition, and industrial competitiveness amid growing trade tensions with the U.S. and China.
Budget Battle Looms
The previous 2021-2027 budget totaled €1.2 trillion, funded by member state contributions (around 1% of gross national income) and EU revenues like customs duties. But with new expenses piling up, the European Parliament insists an increase is unavoidable.
“The Union cannot do more with the same amount or less. An increase will be unavoidable,” said Siegfried Muresan, the lead negotiator for the European Parliament.
To bridge the gap, the Commission is considering new revenue streams, including a tax on large companies with annual turnovers exceeding €50 million, higher tobacco duties, and levies on non-recycled electronic waste. However, critics argue these measures may not be enough.
Farmers Fight for Subsidies
One of the most contentious issues will be the future of the Common Agricultural Policy (CAP), which currently consumes nearly a third of the EU budget (€387 billion, including €270 billion in direct farmer payments). The Commission’s plan to merge CAP into a broader “national and regional partnership” fund has sparked fears of reduced support.
Farmers’ lobby Copa-Cogeca warns the move risks “dissolving” CAP protections, while hundreds of farmers are expected to protest outside EU headquarters Wednesday—reviving memories of last year’s continent-wide demonstrations over cheap imports and environmental regulations.
Muresan’s center-right EPP group is pushing to maintain CAP funding at inflation-adjusted levels. The Commission insists direct payments will remain, but it may propose capping subsidies at €100,000 per hectare—a politically explosive idea unlikely to gain traction.
Long Road Ahead
With EU leaders deeply divided over fiscal priorities, negotiations are expected to drag on before a final deal—likely in a marathon, last-minute summit. “As usual, it will end with five days of negotiations,” predicted one EU official.
The outcome will shape Europe’s ability to fund its ambitions while keeping farmers, frugal member states, and an increasingly skeptical public on board.
