Germany, the European Union's largest budget contributor, suffered a setback in negotiations over the bloc's next long-term budget on Thursday after Cyprus, which holds the EU's rotating presidency, proposed only modest cuts to the European Commission's spending plan.
The proposal would reduce the European Commission's €1.76 trillion ($2 trillion) budget plan for 2028-34 by around 2%, or about €32.8 billion. It would reduce funding for competitiveness and defence while largely preserving allocations for agriculture and regional development, which together account for by far the largest share of EU spending.
The plan is unlikely to satisfy Germany and other contributor countries, which have argued that EU spending should be restrained as member states face budget pressures at home. Berlin has also pushed to protect funding for defence and competitiveness.
Under the Cypriot proposal, spending on the EU single market would be cut by about €20 billion and external action funding by roughly €7.5 billion, while allocations for agriculture and regional support would remain largely unchanged.
Cyprus calls proposal a balanced compromise
Cyprus's deputy minister for European Affairs, Marilena Raouna, said in Brussels that the proposal would not satisfy everyone but represented a balanced compromise. She said the presidency had consulted all member states and taken into account their positions, priorities and red lines.
German Chancellor Friedrich Merz rejected the commission's original proposal last year, arguing that such spending levels were difficult to justify at a time when governments across Europe were trying to save money.
The budget proposal is one of the most politically sensitive issues in Brussels. The seven-year spending plan is financed mainly through contributions from member states based on their gross national income, supplemented by revenue sources such as customs duties.
EU leaders are due to continue discussions on the budget at a summit in Brussels next week. The Cypriot proposal will serve as the basis for negotiations, which are expected to be lengthy and contentious.
