The Irish government’s draft seven-year EU budget has drawn sharp criticism from member states, the European Parliament and the European Commission, exposing deep divisions over how the bloc should spend its money from 2028 to 2034.
Unveiled on Saturday, the proposal would cut 8% from the European Commission’s original €1.72 trillion plan.
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The reduction would shrink the proposed budget by €141 billion.
The Irish plan has faced opposition from both sides of the debate: countries demanding deeper savings and institutions seeking to protect or increase funding for key priorities.
Minister of State for European Affairs Thomas Byrne defended the Government’s draft as a ‘basis for negotiation’
German Chancellor Friedrich Merz said in a statement: “The size of the new proposal is not a basis for agreement. The EU budget must be affordable for those who bear the brunt of financing it.”
Finnish prime minister Petteri Orpo said: “Defence, research and new technologies are being hit disproportionately hard. Europe needs to strengthen itself in these areas. Savings need to be found in a balanced way across the entire budget.”
Speaking in Luxembourg this afternoon, Minister of State for European Affairs Thomas Byrne said the hostile reaction had been “entirely predictable.”
He told RTÉ News: “The assignment we were given, the task we were given, was to find a basis for negotiation, not a basis for agreement. I think we found a basis for negotiation.”
The Government has said it wants member states to agree on the size and structure of the EU budget before Ireland’s presidency ends in December.
German Chancellor Friedrich Merz’s government is one of several to have said the proposal is no basis for agreement
But several net-contributor countries have already cast doubt on whether that deadline can be met.
Dutch Finance Minister Eelco Heinen said: “The Netherlands cannot accept this proposal. At this rate, there will be no deal by the end of the year,”
Sweden’s Minister for EU Affairs Jessica Rosencrantz described the Irish draft budget as “unreasonable,” adding that “we are therefore nowhere near an agreement.”
The principal pro-European groups in the European Parliament, meanwhile, criticised the Irish draft – known as the Negotiation Box – for cutting too far into the European Commission’s original proposal.
In a joint statement, the leaders of the centre right European Peoples Party (EPP), the centre left S&D, the liberal Renew Europe and the Greens said they had expressed “our utmost dismay” at the Irish EU presidency draft.
“We would like to be clear from the outset: we reject the proposal put forward by the Irish Presidency, which cannot constitute a basis for Parliament’s consent on the next Multiannual Financial Framework [ie, the seven year EU budget],” it said.
In April, the Parliament called for the budget to be increased by 10% compared with the current cycle.
The European Commission expressed its dispeasure at the draft document
The European Commission joined the criticism this morning, adding to the growing pressure on Dublin.
“We are definitely not happy seeing these cuts,” said commission spokesperson Balazs Ujvari.
“We have a certain number of collective objectives,” he told reporters, “a certain number of priorities which have been set for the coming years, and it is important that we have the means at our disposal to deliver on these critical priorities. It’s very important that we allocate the right level of resources to our ambitions.”
The seven year budget, or MFF, requires unanimous approval from both the member states and the European Parliament.
Ireland’s proposal followed weeks of discussions with national capitals, during which divisions widened between the Modernisers and the so-called Friends of Cohesion. The group of 17 member states has urged Ireland to protect cohesion spending – which benefits poorer regions, particularly in eastern Europe, Spain and Italy – as well as agriculture.
The next budget will be organised under four “headings”, rather than the traditional seven, while member states will have greater discretion over how funds are allocated.
The four headings cover traditional EU spending areas (agriculture and cohesion), emerging priorities (competitiveness, innovation and defence), international development and aid, and the EU’s administrative costs.
Under the Irish Negotiation Box, funding for competitiveness would decline by 13%, while global cooperation would fall by 17%.
Agriculture and cohesion, by comparison, would face a reduction of just 3%.
There has been criticism of the Government’s perceived bias in favour of agriculture
One senior figure suggested that Ireland’s long-standing support for agricultural funding had shaped the Government’s proposal.
It’s understood the European Commission’s dismay centres on concerns that Dublin’s cuts would leave the EU less able to respond flexibly to the kinds of crises that have disrupted the bloc during the current budget period, which runs from 2021 to 2027.
Those crises include support for member states dealing with Russia’s invasion of Ukraine, wildfires, floods, droughts, migration pressures and damage to the farming sector.
Officials say the Irish draft would cut the budget for flexibility and crisis response by 55%, leaving the next EU budget excessively rigid.
Minister Byrne rejected that assessment.
“We’ve actually put a lot of flexibility into the Negotiating Box,” he said. “All of the headings have increased flexibilities there that enable the European Union, or the member states, to react to different circumstances. I don’t accept that criticism.
“What we’ve been asked to do here is to bring together the views of 27 member states on the commission proposal. Member states have to agree unanimously, and then we have to go to the European Parliament.
“We try to bridge all of the different points of view to try to bring them closer together in order that we can get an agreement. Nobody’s going to get everything that they want, but we hope that there will be something there for every member state to be able to agree to this by the end of the year.”
Officials also criticised the proposed reduction in the European Competitiveness Fund, regarded as the centrepiece of the new budget. The fund would face a 13% cut, equivalent to €42bn.
They said the money is provided through investments rather than grants, meaning the reduction would significantly weaken the fund’s potential to attract and multiply additional financing.
One source pointed to ‘a lack of ambition’ in the proposed budget
Officials estimate that the Irish cuts could result in as much as €250bn less investment in defence, security, space, decarbonisation, AI, quantum technology, biotech, research and innovation.
Senior sources said EU leaders had repeatedly demanded that the bloc do more when crises emerge, while the Irish proposal would reduce flexible spending margins across the board to 50%.
There was also criticism of the Government’s failure, in the view of some officials, to develop additional revenue streams for the EU budget, known as the New Own Resources.
The European Commission believes Europe needs to raise up to €60bn each year, outside national contributions, to strengthen the budget and help repay approximately €24bn annually in debt incurred to fund the bloc’s post-COVID economic recovery.
Several officials complained that although the Government had retained the Commission’s New Own Resources proposals, it had done little to advance them.
One source suggested that Ireland’s traditional defence of national control over taxation may have contributed to what was described as a lack of ambition.
Dublin has maintained that individual member states have shown strong resistance to creating new revenue streams that could divert money from national exchequers.
At Saturday’s news conference launching the Irish Negotiating Box, Minister Thomas Byrne said the Irish proposal could raise €55bn per year.
The European Parliament is also critical of the document
However, an analysis by the European Parliament said the Irish draft “does not make tangible progress on new own resources” and had not examined the Parliament’s own proposals for raising revenue. Those ideas include a digital services levy on major technology companies, a levy on online gambling and a tax on cryptocurrency profits.
Further criticism centred on the apparent weakening of the connection between EU funding for member states and reforms agreed at EU level through the new National Regional Partnership Plans (NRPPs).
Commission spokesperson Balazs Ujvari said: “We are equally concerned that the revised Negotiating Box weakens the link between national and regional plans and country-specific recommendations, limiting the EU budget’s ability to drive reforms. Investments and reforms must go hand in hand.”
Speaking in Luxembourg, Minister for Foreign Affairs Helen McEntee said: “We’ve tried to get a balance here, and you could say the fact that everybody’s a little bit unhappy means that we’ve landed somewhere in the right place.
“We’ve really tried to take on board all of the different concerns. Obviously some member states wanted a higher cut, others wanted less of a cut, and the [European] Parliament itself wanted an increase.”
The Minister described the Irish draft as “a good place” to begin serious negotiations among member states, saying that reaching an agreement by December remained “a focus point for us.”
With the Negotiation Box now presented, Ireland’s formal handling of the seven-year budget is, in theory, complete. Responsibility for advancing the talks now passes to Antonio Costa, the President of the European Council, who chairs EU summits.
His first opportunity to push the negotiations forward will come when he chairs a summit in Brussels on Thursday of this week.
Leaders will hold a further budget summit at the end of November, ahead of the Irish presidency’s final summit in mid-December.
