EU leaders lock horns over two-trillion-euro budget plan

The proposed 2-trillion-euro budget, intended to cover everything from agricultural subsidies to defense modernization, has triggered immediate friction. German Chancellor Friedrich Merz, representing the bloc's largest net contributor, dismissed the current framework as far too high, demanding significant cuts to national contributions. Conversely, Spanish Prime Minister Pedro Sanchez labeled the proposal inadequate, arguing that inflation necessitates increased funding for cohesion and farming programs.

Beyond simple spending levels, the disagreement centers on policy priorities. The Netherlands and other member states are pushing for a shift toward defense and innovation, criticizing the current draft for relying on outdated 1990s-era priorities. Dutch Prime Minister Rob Jetten emphasized that a budget designed for modern security and competition cannot be built on traditional spending models alone.

To bridge the gap between keeping national contributions low and maintaining ambitious spending, officials are debating new revenue streams. Proposals under consideration include levies on digital services, crypto asset gains, and shares from CO2 emissions permit sales. While no final decisions are expected during this session, the discussions aim to provide clear guidance for the incoming Irish EU presidency to draft a revised compromise by October.