Budgetary issues threaten new EU split

Germany, the biggest financially contributing member state of the European Union, has reportedly called for a 400-billion-euro ($455-billion) cut to the bloc's budget plan for the period 2028-2034, calling the current version "unaffordable".

The budget plan, known as the Multiannual Financial Framework, can only be passed if all 27 member states agree to it, so any one of them objecting would be a stumbling block, but it is an even graver challenge when it comes from such a heavyweight.

The figure for the next budgetary period is 2 trillion euros, and even if Germany's request was accepted, the revised figure would still be 27 percent higher than the current budget.

Next year, major elections will be taking place in France, Italy, and Poland, so financial security being established in advance of events that could potentially have transformational consequences for the continent is a priority.

The 2-trillion-euro budget was proposed by European Commission President Ursula von der Leyen in July last year, and contained new spending pledges on defense and economic competitiveness, as well as reforms on regional development and farming.

"It is a budget that matches Europe's ambition, that confronts Europe's challenges, and that strengthens our independence," von der Leyen told reporters at the budget's unveiling, calling it "larger, smarter, and sharper".

"It delivers for our citizens and our business, our partners and our future," she said.

Cyprus held the rotating presidency of the EU from January to June this year, before handing over to Ireland for the remainder of the year, and the best it managed to come up with in that time was a 2 percent reduction, worth around 32.8 billion euros, to at least get negotiations over the issue started.

"Our cut is the compromise that addresses all voices in the council," Marilena Raouna, Cyprus's deputy minister for European affairs, said when it was announced. "We believe this is a balanced text that reflects the position of all member states."

But Germany's Chancellor Friedrich Merz dismissed Cyprus's plan, saying: "In all European countries, very tough efforts are often being made to consolidate national budgets. The citizens of our country and our continent rightly expect Brussels to exercise restraint as well – in terms of both money and personnel."

Netherlands Minister of Finance Eelco Heinen also rejected it as "unaffordable, unbalanced, and with the wrong focus … the overall volume remains far too high at a time when fiscal space is limited across Europe, and difficult choices are unavoidable", while Sweden is reportedly pushing for a cut of up to 20 percent.

"The positions in the council have been strong and opposing – that was a given from the very beginning," said Raouna. "And yet, we all agree that this budget needs to allow the (EU) to deliver on its strategic priorities."