EU moves from principles to spending red lines in budget battle

Debate over redlining spending and how to use the EU budget to deepen single market integration dominated a meeting of EU ministers on Wednesday.

The General Affairs Council on the EU’s next seven-year spending plan, known as the MFF, came just weeks before the Cypriot EU presidency is expected to begin circulating the first indicative spending figures, a step that will formally shift talks from principles to hard numbers and money.

“Much of the heavy lifting in delivering this (single market) roadmap will have to be done at the regulatory level, but the EU budget can also play an important supporting role … if it is properly equipped,” said Piotr Serafin, the EU’s budget commissioner.

He told the ministers that the European Commission proposed National Regional Partnership Plans can help drive reforms, while a European Competition Fund would mobilize investments, along with a Connecting Europe Facilityto strengthen cross-border integration and Global Europe budget to boost trade with third countries and reduce dependencies.

While there was broad consensus on the need to reduce barriers and deepen the single market, the debate quickly exposed the traditional tensions between fiscally conservative net contributors, who pay more into the budget than they get out of it, and the so-called “Friends of Cohesion” group of 16 EU countries, who are largely beneficiaries of spending.

So-called “austere” countries such as Austria, Germany, Sweden and the Netherlands oppose a bigger budget and call for modernization and spending in line with competitiveness, defense and security priorities at a time of strained national budgets.

“The EU budget should remain around 1% of Gross National Income (GNI),” said Jessica Rosencrantz, Sweden’s EU minister. “Given the current strain on all our national budgets, the funds proposed in the new MFF simply do not exist.”

In contrast, countries that support higher levels of spending – reiterating their stance on Monday’s Common Newspaper – argued strongly against cuts to regional and agricultural funding, warning that they are also essential for convergence and the functioning of the single market.

“Competitiveness and cohesion are not competing against each other,” said TFort eyesof Italy The Minister of Europe, during a public discussion, arguing that they are “two sides of the same coin”. Slovakia warned that cuts to cohesion and CAP spending risked undermining “economic convergence of regions” and social stability across the bloc.

Beyond traditional politics, disagreements also re-emerged over how EU funds should be allocated under the European Competitiveness Fund, with divisions over whether EU funding should prioritize “excellence” or ensure geographical balance.

Several countries, including Croatia, Poland and Bulgaria, argued that a purely merit-based model risks concentrating resources in already advanced regions, deepening inequalities. Others, such as Sweden and Germany, supported a stronger competition focus, arguing that EU funds should prioritize high-impact innovation and strategic technologies even if this leads to more selective geographical distribution.

(wow)