seen<\/a><\/span> by Rapporteur, states that an inflation surge triggered by the conflict has reduced the share of the Commission’s proposed 2028-2034 budget within EU gross domestic product (GDP) from 1.11% down from 1.15% when it was proposed in July last year.<\/p>\nThis means that the effective size of the next budget, officially known as the Multiannual Financial Framework (MFF), will be smaller than the current 2021-2027 plan, which accounted for 1.13% of EU GDP when it entered into force in 2021.<\/p>\n
This situation appears to contradict European Commission President Ursula von der Leyen’s claim that the proposed budget is the “most ambitious ever”.<\/p>\n
“In terms of spending capacity (i.e. without taking into account the repayment of [pandemic debt]), the size of the next MFF proposal stands at 1.11% of GNI, which is below the relative size of the 2021-2027 MFF at the time of its adoption,” the 2 October document states.<\/p>\n
The document also emphasizes that “the relative size of the total national contributions of the EU-27 countries is expected to decrease.”<\/p>\n
The decrease stems from inflation exceeding the Commission’s 2% “deflator” rate over the past year.<\/p>\n
Brussels uses this rate to adjust the size of the MFF to account for annual price increases, thereby ensuring that the MFF does not shrink in “real terms” each year.<\/p>\n
According to the EU’s latest economic forecast, which underpins the projections in the document, average inflation across the EU is expected to reach 3.1% this year.<\/p>\n
The economic forecast was published in May this year, three months after the start of the US-Israeli war against Iran, which pushed global energy prices and inflation to peak levels.<\/p>\n
The Commission’s previous forecast regarding the size of the framework budget had assumed an inflation rate of just 1.9% in 2026.<\/p>\n
Despite the smaller budget, the so-called “frugal” group of northern European countries, led by Germany, has demanded cuts of “several hundred billion euros” to the Commission’s budget plan.<\/p>\n
This pressure is fiercely resisted by several southern and eastern capitals, which argue that the Commission’s proposal already includes severe cuts to agriculture and regional spending.<\/p>\n
Ireland, which holds the rotating EU Council presidency, is set to present a compromise proposal on Saturday, which is also expected to feature cuts.<\/p>\n
However, the European Parliament, which must approve the MFF, has demanded that the post-2027 budget reach 1.27% of GDP, excluding Covid-era debt repayments, to ensure that future EU spending is effectively higher.<\/p>\n
<\/p>\n","protected":false},"excerpt":{"rendered":"
An energy crisis triggered by the war in Iran will make the European Union’s next seven-year budget smaller than the current one, according to a confidential European Commission document. The document, seen by Rapporteur, states that an inflation surge triggered by the conflict has reduced the share of the Commission’s proposed 2028-2034 budget within EU […]<\/p>\n","protected":false},"author":1,"featured_media":16846,"comment_status":"closed","ping_status":"open","sticky":false,"template":"","format":"standard","meta":{"ep_exclude_from_search":false,"footnotes":""},"categories":[3],"tags":[22370,22368,544,610,3514,2518,990,22369,1850,543,22367,22107,22366,917,288,2278,812,11328,11327,22372,22371,2011,821,22365],"class_list":["post-16845","post","type-post","status-publish","format-standard","has-post-thumbnail","hentry","category-europe","tag-agriculture-spending","tag-deflator","tag-energy-crisis","tag-eu","tag-eu-budget","tag-european-commission","tag-european-parliament","tag-frugal-countries","tag-gdp","tag-germany","tag-gni","tag-gross-domestic-product","tag-gross-national-income","tag-inflation","tag-iran","tag-ireland","tag-israel","tag-mff","tag-multiannual-financial-framework","tag-pandemic-debt","tag-regional-spending","tag-ursula-von-der-leyen","tag-us","tag-war-in-iran"],"yoast_head":"\n
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