Von der Leyen unveils €2 trillion EU budget amid parliament’s discontent

The European Commission has unveiled a seven-year budget plan for the EU worth €2 trillion but MEPs are unhappy • Long-winded process of political bickering to reshape and reset spending priorities kicks off

European Commission President Ursula von der Leyen presenting her EU budget proposal for 2028-2034 (Photo: EU)
European Commission President Ursula von der Leyen presenting her EU budget proposal for 2028-2034 (Photo: EU)

Ursula von der Leyen has unveiled a €2 trillion budget for the EU between 2028 and 2034, calling it “more strategic, more flexible, more transparent”.

The European Commission President’s proposal represents a substantial increase over the €1.2 trillion budget approved by EU leaders in 2020 for the seven-year period that expires in 2027.

Unveiling the proposal in Brussels on Wednesday, Von der Leyen said the EU would be investing more in its “capacity to respond” and more in its “independence”.

The plan is modelled along three main pillars

Her blueprint remodels the budget's structure along three main pillars: €865 billion for agricultural, fisheries, cohesion and social policy; €410 billion for competitiveness, including research and innovation; €200 billion for external action, including €100 billion for Ukraine.

The budget will largely be covered by direct contributions from member states but Von der Leyen’s plan also envisions new EU-wide taxes on electric waste, tobacco and revenues of big corporations. The latter will allow Brussels to raise additional revenue on its own.

All the financial envelopes will be made conditional on compliance with the rule of law, a key change in reaction to democratic backsliding in Hungary.

“The rule of law is a must,” Von der Leyen said. “We will ensure responsible spending and full accountability with strong safeguards, clear conditions, and the right incentives. This serves the citizens.”

However, the budget blueprint is only the start of what will arguably be an arduous process of political squabbling over priorities between member states and the European Parliament.

MEPs threaten not to enter negotiations

Indeed, the EU budget commissioner’s presentation to MEPs was poorly received yesterday, signalling that negotiations are likely to start on the wrong footing.

MEPs threatened not to enter into negotiations over the proposed seven-year budget, known as the Multiannual Financial Framework (MFF).

The level of information provided by Budget Commissioner Piotr Serafin in a briefing to MEPs from the Parliament’s Committee on Budgets (BUDG) on Wednesday was deemed unsatisfactory by most. “Commission President’s Ursula von der Leyen is giving a press conference and she is giving to the press more information than you to us,” lamented Belgian MEP Johan Van Overtveldt, the committee’s chair.

Some of his colleagues underlined the lack of figures, official documents, and explanatory materials from the Commission to prepare for the discussion with the Commissioner.

Commissioner Serafin, who acknowledged the discontent, said that he had left the decision-making meeting of the Commission early to be present at the parliament and to present the proposal there first, “in recognition of [parliament’s] role”.

But Siegfried Mureșan, one of the rapporteurs for the MFF in the parliament, from the European People’s Party (EPP), said during a press conference the budget was not the “historic budget” the commission was trying to make it out to be.

“The attempt of the commission to convince us that this budget is a significant increase is misleading. The increase is coming only for the adjustment to the inflation rate and it is only coming because we have to pay back the Next Generation EU fund,” he said, referring to the extraordinary funding lines to repay common debt incurred during the COVID-19 pandemic.

Reduced programmes, cuts for agriculture

Von der Leyen’s proposal aims to give the commission more flexibility in how money is spent to be able to adapt to changing global circumstances and crises.

The ongoing 52 programmes will be reduced to just 16, and a share of the funding will not be pre-allocated, making it easier to shift money as necessary.

Additionally, the proposal offers a special mechanism of up to €400 billion in loans that will be made available for member states only when an “unknown crisis hits”.

One of the most eye-catching and possibly controversial modifications in Von der Leyen’s proposal is the merger of the budget’s two largest envelopes: The Common Agricultural Policy (CAP), which encompasses the subsidies for farmers, and the cohesion funds.

Instead of being separate entities, both will be grouped under the first pillar—the National and Regional Partnerships, worth €865 billion in total.

The two envelopes appear to be significantly downsized in comparison with the present budget, where the CAP and cohesion make up for over 60% of allocations.

The reduction is set to be fiercely contested by southern countries, particularly France and Italy, which have powerful agricultural sectors, and by eastern countries, which are dependent on cohesion policy to bridge the gap with richer member states.

Nonetheless, the reduction in CAP will find listening ears in western and northern countries, which have consistently advocated for a greater focus on modern-day priorities, such as climate action, defence, security, research, innovation and cutting-edge technologies.

The commission proposal suggests that the COVID recovery fund should be entirely repaid through so-called own resources, such as customs duties, value added tax (VAT), the Emissions Trading System (ETS) and the newly proposed taxes, raising about €58.5 billion per year.