Merz and five EU allies threaten veto over seven-year budget cuts

German Chancellor Friedrich Merz and the leaders of five other countries have threatened to withhold approval for the draft seven-year EU budget unless billions of euros in cuts are made as they demand.

According to the Financial Times, Merz, along with the leaders of the Netherlands, Sweden, Denmark, Austria, and Finland, signed a letter making clear that the proposed budget must be cut by billions of euros, or they will block it.

The 2028-2034 budget was prepared last year by the European Commission and requires the approval of all EU countries.

The proposed budget has been set at approximately 2 trillion euros ($2.33 trillion), and the parties involved hope to reach an agreement by the end of 2026.

The proposed sum is significantly higher than the current budget, which runs from 2021 to 2027.

Merz stated earlier this month that cuts should be implemented across all policy areas, rejecting further recourse to joint EU borrowing to plug the shortfall.

“Excessive debt threatens our sovereignty and our capacity to act,” the chancellor said, adding that governments face the “undoubtedly painful task” of setting priorities.

Arguing that a “20th-century budget” cannot resolve current challenges, the German leader called for spending in the bloc’s next budget to be shifted towards competitiveness and defence.

The EU budget is financed primarily through member state contributions. These payments are calculated either as national contributions based on gross national product or as a % linked to national VAT revenues.

As the EU’s largest economy, Germany provides the largest contribution in absolute terms.