Spain set to become net EU budget contributor
European leaders are struggling to reach an agreement on the next seven-year Multiannual Financial Framework (MFF), with countries’ positions drifting further apart. The European Commission unveiled its €2 trillion budget proposal for 2028 to 2034 last July, aiming to meet the bloc’s future needs, including strengthening its armies and responding to climate disasters.
The Irish Presidency presented a revised text slashing the budget from €2 trillion to €1.6 trillion on October 10, but it remains unclear whether this will build the necessary consensus. The Friends of Cohesion group, led by Italy and Romania, has called on the bloc to preserve its budget capacity and leave agricultural and cohesion envelopes intact.
Negotiating Positions
Spain will become a net contributor to the EU’s upcoming long-term budget for the first time, with its priorities clearly defined: enhancing EU competitiveness is essential, but it must not undermine traditional areas like agriculture and cohesion policy. Spain has put forward a proposal to restructure interest payments on NextGenerationEU debt, which would free up €11 billion annually in the EU budget.
Spanish Economy Minister Carlos Cuerpo has reiterated Madrid’s stance, asserting that the November 29 elections will have no impact on Spain’s position or the ongoing negotiations. ‘We will keep defending this stance to the very end,’ he stated during a meeting of EU finance ministers in Luxembourg in October.
France has been a vocal advocate for new EU-wide taxes, which it sees as a way to reconcile its aversion to further cuts to the MFF while avoiding increased state contributions. The Commission has proposed channeling funds from the carbon market, a carbon levy, tobacco, and uncollected e-waste taxes into the new budget, expected to generate €58.5 billion per year in 2025 prices.
Most of these newly proposed taxes have encountered strong opposition, with European governments either viewing them as conflicting with the EU’s competitiveness push or as diverting funds from their own national budgets. France is also categorically against using EU resources for return hubs, where member states can send irregular migrants with no legal right to remain.
Country Positions
Italy, a major recipient of cohesion and CAP funding, has fiercely defended its allocation. Italian negotiators are still aiming for an agreement by year-end, fearing that prolonged discussions could harden positions and lead to deeper cuts.
Germany, a fiscally cautious nation, has long opposed the Commission’s €2 trillion proposal. Chancellor Friedrich Merz stated that the EU budget must be affordable for those financing it. Germany, along with other conservative nations, recently argued that even Ireland’s latest budget reduction plan does not go far enough.
Poland has drawn a red line against the European Commission’s proposals for new EU-wide taxes, specifically opposing plans to divert Emissions Trading System (ETS) revenues directly into the EU budget. With ETS allowances already accounting for roughly 24% of retail electricity bills in Poland, Warsaw insists that channeling carbon revenues to Brussels can potentially penalize Central Europe’s energy-intensive industrial base during a capital-intensive energy transition.
Warsaw strongly opposes proposed budget cuts that target future-oriented priorities, European competitiveness, and defense. Poland is heading to the polls for a critical parliamentary election, potentially limiting Prime Minister Donald Tusk’s flexibility in Brussels. Any Brussels agreement that raises domestic energy costs or reduces funding for Polish regions is likely to face public disapproval.
Finland and Lithuania are among the countries pushing for a smaller, modernized budget that prioritizes security and competitiveness. Finland wants cuts to the European Competitiveness Fund to be distributed evenly, rather than affecting defense, research, and new technologies disproportionately. Lithuania is calling for increased defense spending, given its geographical location and experiences with Russian aggression.
