THE European Commission yesterday proposed a 2 trillion euro ($2.31trn) EU budget for 2028 to 2034, placing a new emphasis on economic competitiveness and defence while aiming to reform the rules around farm and economic development subsidies.
“It is a budget that matches Europe’s ambition, that confronts Europe’s challenges and that strengthens our independence,” European Commission President Ursula von der Leyen told reporters in Brussels.
“The budget is larger. It is smarter and it is sharper. It delivers for our citizens and our business, our partners and our future.”
The Commission said its proposal amounted to 1.26 per cent of the 27-nation European Union’s Gross National Income – a measure of the size of the economy – compared to 1.13pc for the current seven-year budget.
The new budget must be agreed by all member countries and signed off by the European Parliament.
The proposal includes a new 451 billion European Competitiveness Fund focused on boosting Europe’s defence industry, fostering innovation and supporting the transition of industry across the bloc to clean energy.
The proposal allocates 131bn euros specifically to defence and space – a fivefold increase over the current level, according to the Commission.
It sets aside 302bn euros to support farmers and a minimum of 218bn euros for Europe’s least developed regions, as well as 200 billion euros for global programmes.
Most of the funding for the budget comes from the governments of the EU’s member countries.
But the Commission proposed several ways to raise more funds for the budget directly, including a new tax on companies doing business in Europe that have an annual net turnover exceeding 100 million euros in an EU country.
Some EU countries and lawmakers were quick to criticise the proposal.
“The EU is important for our prosperity, but the proposed budget is too high,” Dutch Finance Minister Eelco Heinen said.
The European Parliament said the Commission’s proposal was not big enough.
“We cannot do more with less. New priorities need adequate new resources – not cuts to existing priorities,” said Siegfried Muresan, a centre-right member of the European Parliament and a negotiator for the next EU budget.
Budget debates are among the most difficult in EU politics, bringing to the fore political and economic divisions among member countries.
Talks over the coming months are likely to underscore political tensions between the push to boost funding for new priorities and safeguarding traditional investments in agriculture and regional development.
The size of the budget, whether to link funding to reforms, how to fund EU expenditures and how to repay loans that financed the bloc’s Covid pandemic recovery fund are also likely to be focuses of debate.
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