Ireland offers EU budget cuts but Germany rejects proposal as too low

Ireland proposed cutting as much as 159 billion euros from the European Commission’s draft budget of approximately 2 trillion euros, but Germany found the reduction insufficient.

Thomas Byrne, Ireland’s Minister of State for European Affairs, described the proposed cut as a “significant step” while presenting the “negotiating box”, which outlines billions in budget items in detail for the talks.

Yet, facing mounting pushback from traditionally “frugal” member states, including Germany and the Netherlands, which want an even smaller budget, Minister Byrne acknowledged that the work was far from complete.

“The negotiating box we are presenting today is not the final outcome,” the Irish politician told reporters on Saturday, stating instead that the package should serve as a “catalyst” for reaching an agreement by Christmas.

Holding the presidency of the Council of the European Union, Ireland proposed a budget of 1.83 trillion euros in current prices for the 2028-2034 period.

This represents an 8% reduction compared with the proposal put forward by the EU executive.

Industry and research funds suffered the heaviest blow, facing a 75 billion euro cut, or 13%, compared with the proposal from the EU executive.

However, the “frugal” group of nations led by Germany immediately voiced sharp criticism of the new proposal.

German Chancellor Friedrich Merz said in a statement: “The level of the new proposal does not form a basis for an agreement.”

Echoing this view, Dutch Finance Minister Eelco Heinen questioned the objective of securing a compromise by Christmas, saying: “At this rate, an agreement will not be reached before the end of the year.”

Austrian Minister for Europe Claudia Bauer, who described the reductions in administrative lines as a “step in the right direction”, noted that the Irish draft remained “still very far from receiving Austria’s approval”.

By contrast, reactions from the “pro-cohesion” camp were more moderate.

Poland’s Minister for European Union Affairs Ignacy Niemczycki wrote in a social media post that work must continue on the “shape of own resources” and stated that the proposed size of the budget did not match the bloc’s ambitions.

An EU diplomat told Rapporteur: “Now is not the time to praise anything. If you say you like it now, they will take more from you.”

The Irish proposal contains cuts across all budget lines, but these reductions are uneven.

A major reduction targets the competitiveness budget, which faces a cut of approximately 13%, or 75 billion euros.

The proposal envisages allocating 362 billion euros to the European Competitiveness Fund, including the Horizon research programme.

This figure is lower than the 409 billion euros proposed by the Commission.

Funding for “Global Europe”, the bloc’s external action arm, would drop by about 38 billion euros, or more than 17%.

Administrative expenditure would be cut by around 10 billion euros, or 9%.

Funding for national plans (NRPPs), including cohesion and agricultural funds, was left largely untouched, with a proposed reduction of approximately 3%. Ireland proposes reducing the Commission’s proposal by 28 billion euros, bringing it to 837 billion euros.

An earlier proposal by Cyprus had reduced the Commission’s draft by 2%, or roughly 33 billion euros.

That draft had proposed cuts of around 4% in competitiveness and external action, while largely shielding national spending plans covering agriculture and cohesion.

Alongside the overall scale and allocation of the funds, the question of how to finance the budget remains a point of contention.

Several capitals view the proposed new “own resources” critically, including EU levies aimed at easing the burden on strained national treasuries.

The Commission plans to generate roughly 66 billion euros annually through levies on electronic waste, tobacco products, corporations, and carbon emissions. This requires the unanimous support of all member states.

The new “own resources” component is among the most contentious elements of the negotiations.

Although the Irish draft excludes the European Parliament’s proposals and revises the EU executive’s revenue estimate downwards, it still includes all five of the Commission’s proposals.

The text includes revisions regarding own resources based on the carbon border adjustment mechanism, seen as one of the most prominent options, as well as the ETS-based levy, which Poland has sharply criticised.

The issue of own resources is expected to feature prominently in talks among EU leaders next week.

European Council President António Costa, who is tasked with ultimately concluding the agreement, will chair the summit opening on 15 October.