Will the European Union’s 27 leaders overcome their red lines and unanimously agree a new common budget by the end of the year?
António Costa is keen to find out.
The European Council president, who is set to steer the tempestuous negotiations on the 2028-2034 EU budget, has embarked on a four-week tour of the bloc to meet leaders in their home capitals and assess their willingness to compromise. Sweden will be excluded because of its upcoming general election.
Costa’s first meetings will be with Slovakia’s Robert Fico and Estonia’s Kristen Michal on Tuesday, followed by Latvia’s Andris Kulbergs and Lithuania’s Gitanas Nausėda on Wednesday, and Czech Prime Minister Andrej Babiš on Thursday.
His main aim is to form a “coherent picture” of each national position and assess a possible path towards a final deal in December, a senior official said.
Costa and his team believe that if talks spill into next year, the process could be derailed and the seven-year budget may not be operational by 1 January 2028.
“It’s been quite comforting to see that this horizon has been well integrated by leaders and accepted by all as an imperative,” the official said, noting that France, previously reluctant to endorse the December deadline, is now firmly on board.
“We need to hit the ground running in 2028.”
On the table is the European Commission’s nearly €2 trillion draft budget, the largest ever. It was later cut by 2% in a compromise proposal tabled by Cyprus.
The Cypriot blueprint was promptly rejected by the self-styled “modernisers”, also known as the “frugals”. These countries, among the bloc’s richest, are demanding sweeping spending cuts, particularly to agriculture and cohesion policies.
“These cuts are essential, regardless of how far we get on new own resources,” German Chancellor Friedrich Merz said last month, calling the draft “not acceptable”.
Merz is set to host the “frugal” leaders on Thursday.
By contrast, the so-called “Friends of Cohesion”, a coalition of 17 countries, want to increase funding for agriculture and cohesion, which they describe as “the most visible EU policies for EU citizens”.
The first five leaders Costa will meet on his tour belong to this group.
A puzzling equation
So far, member states have made progress only on the broad architecture proposed by the Commission, which envisages greater flexibility to respond more swiftly to crises.
But the central questions — the size and funding of the budget — remain unresolved. Sweden, for example, has called for a radical 20% cut, something the “Friends of Cohesion” oppose. Spain, meanwhile, has floated billions in joint EU debt, anathema to the “frugals”.
Another fault line is new own resources, or EU-wide taxes designed to raise additional revenue and complement national contributions. The European Commission has proposed five, while the European Parliament has added three more.
Diplomats concede that a combination of new taxes is now inevitable, given the scale of the EU’s ambitions, including costly investments in cutting-edge technology, defence and climate adaptation. How to support Ukraine after its €90 billion loan runs out next year is also part of the equation.
Yet each capital has its own view of how large the overall budget should be and how many new own resources should be introduced.
Red lines have become the norm, with presidents and prime ministers — particularly those facing elections — wary of a backlash from voters.
“Leaders have been defending their national positions very assertively but with a very strong commitment to negotiations,” the senior official said. “We need to fill the gap between the positions and the commitment to have a deal by the end of the year.”
While all the competing demands have a “rationale”, the official acknowledged that it is unrealistic to expect them all to be met simultaneously.
“We need a balanced outcome.”
Costa’s four-week tour will feed into the work of Ireland’s EU Council presidency, which is set to present a revised proposal, or “nego-box”, in October. Leaders will debate the proposal face to face at a summit later that month.
Brussels is preparing for an extraordinary meeting in late November that could pave the way for a final deal at the make-or-break summit in December.
Agreeing a new EU budget requires unanimity.