Northern leaders want to cut an EU budget already on a shoestring - EUROPE SAYS
There’s a scene that repeats itself so often at European Council summits that you could set your watch by it. A leader arrives, stops at the cameras for the obligatory doorstep, and delivers two contradictory. . .
There’s a scene that repeats itself so often at European Council summits that you could set your watch by it. A leader arrives, stops at the cameras for the obligatory doorstep, and delivers two contradictory sentences back to back without appearing to notice. Today it was Rob Jetten’s turn. The Dutch prime minister spent the months ahead ofhis election last yeartalking like a European federalist. He made his first foreign trip as PM to Brussels rather than Berlin or Paris – a symbolic break from the Wilders-adjacent isolationism of his predecessor’s government. He told reporters that in an unstable world, “Europe is where we make our money. ” He positioned the Netherlands as back at the table after years of semi-detachment, ready to work “closely together with everyone here in Brussels and our allies within the EU. ” During the campaign he called for a more federal Europe and even for pan-European defence. And then he walked into today’s June European Council summit and did what every single one of his predecessors in The Hague has done for decades: he told everyone the EU budget needs to be smaller. The Commission’s proposed multi-annual financial framework “needs to be significantly reduced,” he said. It would be “unacceptable” for Dutch contributions to “really explode. ” He’s been leading what he calls “a broad front” of frugal states – the Netherlands, the Nordics, Germany and Austria – pushing to cut the next seven-year budget down from what the Commission has put on the table. This is not a contradiction unique to Jetten. It is, at this point, the operating system of European Council summitry. Leaders arrive professing that Europe needs to do more – more on defence, more on competitiveness, more on reducing dependency on Washington and Beijing, more on fighting climate change, more on supporting Ukraine – and then they spend the actual negotiating session trying to make sure the EU has less money to do any of it with. Right now they are negotiating the next EU multi-annual budget for 2028 to 2035. I’ve been in this town so long that I’ve been through three of these MFF negotiations and I’m honestly quite bored with the groundhog day routine. The Northern (mostly) protestant countries demand cuts, the Southern and Eastern Catholic and Orthodox countries want more spending. It’s a perennial dance where both sides act in short-term nationalist interest and nobody is looking at what the big picture needs of the union are. It was same as it ever was today. “The [budget] proposal which is on the table is from a German point of view unaffordable,” Chancellor Merz just said in his concluding press conference. “The next proposal we expect from the Irish presidency has to be below the present proposal. ” Then he went on to say “the EU needs to have effective instruments at its disposal in order to effectively defend our interests around the globe. ”This doesn’t just happen with the budget. As I write in my bookThe Owned Continent, the rot at the heart of the EU is the building I’ve spent all day in today covering the European Council. TheJust Lips, which houses the upper chamber of the EU’s legislature representing national governments, is the home of empty slogans and short-term thinking. These national politicians know what should be done to unite Europe and give Europeans sovereignty on the world stage. But so much of what they do in this building undermines the very union that their slogans say we need. And that is certainly the case with Northern Europe’s ridiculous penny-pinching and rebate demands. “The same frugals that complied with Trump’s orders to increase defence spending for NATO to 5% GDP are screaming blue murder over an [EU budget] increase from 1. 1% to 1. 26%,” noted former Dutch MEP Sophie in ‘t Veld today. “Ultimately it’s not about money, but about power: national leaders are determined to curtail the EU. ”Here is the number that should be driving every conversation in the Europa building this week, and almost never does: the EU budget amounts to roughly 1% of the EU’s combined gross domestic product. Under the current 2021-2027 framework, the legal ceiling on what Brussels can even raise is 1. 4% of EU GDP, and actual spending has consistently come in well under that, around 1% to 1. 1%. The 2026 annual budget lands at €192. 8 billion in commitments — against an EU economy worth somewhere north of €17 trillion. Now put that next to what most national governments do with their own economies. The United States federal government spent the equivalent of about 22. 8% of GDP in fiscal year 2025 – more than $7 trillion against an economy of roughly $30 trillion. That’s federal spending alone, not counting state and local government spending on top of it. Germany’s federal government (excluding the Länder, the regional states that run their own substantial budgets) spent around €495. 5 billion in 2025 on a German economy of roughly €4. 3-4. 4 trillion. That’s about 12% of GDP, from the federal layer alone, before you add a single euro of state or municipal spending. Berlin’s federal government, in other words, spends more than ten times what the EU’s confederal government does. And that’s the “frugal” German federal government we’re talking about, the one whose chancellor stood next to Jetten in Cyprus this spring and said it was time for the EU to “reduce spending. ”The comparisons for non-federal unitary governments are even more striking. The United Kingdom’s total government spending runs at around 44% of GDP. In the Netherlands it’s 45%. France’s is higher still, at roughly 57% of GDP. These aren’t even outliers, they’re roughly where most large, mature European economies sit. The EU’s confederal government, which is now being asked to run a single market of 450 million people, manage strategic autonomy from the United States, finance the green and digital transitions, safeguard the union’s economy to coordinate continental defence, support Ukraine’s reconstruction and accession, and manage a swathe of policy areas from trade to energy to competition, is being asked to do it with a budget 1/23rd the size of what the US federal government has. The reason why is clear. While the US and Germany have federal taxation, the EU does not. It is reliant on budgetary contributions from its 27 member states, and national politicians always have the incentive to make Brussels claw it out of their tightly-clenched fists. As the Dutch Volt MEP Reinier van Lanschot points out in his bookWe Are Europe, the total number of national civil servants in the EU is 28 million. The number in the Netherlands (population 18 million) alone is 138,000. The number for the EU (population 450 million) is 55,000. He illustrates this by showing a number of dots at every level, with each dot representing 50,000 people. The EU’s civil service is one dot. The EU’s total population fills an entire page. Of course, many of these civil servants are people that would never be working for the national government in a federal country, such as police officers or postal workers. That’s why the spending level for the federal governments of the US and Germany is so much lower than the UK and France. But as the direct comparison with the US shows, the idea that the EU has a bloated out-of-control bureaucracy is a fallacy. The EU has a very lean budget and workforce considering all that it does. This is not a generously funded supranational government straining at the limits of subsidiarity. It is, by any honest comparison, one of the most fiscally starved layers of government in the democratic world relative to the economy it’s meant to serve. That would be fine if all these centrist national leaders denying the EU money were saying they only want the EU to be a free trade zone and they want to undo the 1992 Maastricht Treaty turning the European Community into a confederal union. In this sense, far-right French presidential candidate Jordan Bardella is at least being more honest than the centrists in office when he says he wants tohalve the EU budget, because he also wants to gut the EU of its powers and make it just a free trade zone (although he’s not being honest by refusing to acknowledge to voters what that means in terms of lost European wealth and power). But these leaders sitting in the European Council today are trying to have it both ways. They want a strong sovereign EU, but they don’t want to pay for it. The time for EU public service media is nowTrump is shutting down the pro-democracy US news outlets Voice of America and Radio Free Europe, set up during the Cold War to combat Russian disinformation. The EU should take them over and expand. This matters more in 2026 than it has at almost any point in the EU’s history, because of what leaders are asking the Union to become. Read the agendas for the recent Council summits: the next MFF, yes, but also Ukraine’s accession process, strategic autonomy from an erratic United States, a defence-readiness push that assumes Europe can no longer assume the American security guarantee is permanent, a competitiveness agenda meant to stop European firms bleeding market share to Chinese and American rivals, and a parallel debate about new EU borrowing capacity because the old contribution model can’t stretch to cover any of it without national finance ministries screaming. This is especially true for climate action, which can only be effective if it’s done at EU level rather than at national level. “To put it simply, the current proposal is already insufficient, and cutting it further would undermine Europe’s capacity to reduce its dependencies that make our economy vulnerable,” says Chiara Martinelli, director of Climate Action Network Europe. “The next EU budget must match the scale of the challenge, and move us away from fossil fuels. ”Every one of these goals is, in some sense, an admission that the old division of labour – defence outsourced to Washington, competitiveness left to national industrial policy, growth subsidised by cheap Russian energy and an open Chinese market – has collapsed. The entire premise of strategic autonomy is that Europe needs to be able to do, collectively, things it used to either not do or had done by someone else. That costs money. The question, as asked byMorning Post Europethis morning, is whether leaders have the political courage to finance it. Building a European defence-industrial base, financing the Ukraine reconstruction and accession bill, matching the subsidy firepower of the US Inflation Reduction Act or Chinese state capitalism, none of that happens inside a budget capped at roughly the cost of running Germany’s federal government for about five months. That’s the comparison that should actually be on the table in Brussels this week, not the synthetic outrage over an €800 million Council building renovation that Italian Prime Minister Giorgia Meloni decided to make her budgetary hill to die on. As usual, Spanish Prime Minister Pedro Sanchez was one of the only clear pro-European voices in the room today. “The EU budget must be much more ambitious than it is today,” he told reporters after the summit. Europe needs more resources for policies that are central to the European project, he said, from the common agricultural policy to cohesion funds. He also blasted the German-led deregulation push, saying it is “profoundly wrong” to be weakening EU laws in response to pressure from the US government and American companies. You cannot ask an institution to become more like a government – more strategic, more autonomous, more capable of underwriting collective security and industrial policy – while simultaneously starving it to a fraction of what any actual government spends. Those two positions are not in tension. They are mutually exclusive. Europe has to pick one. What’s been striking about the run-up to this summit isn’t that the frugal coalition exists. It always has, going back to Margaret Thatcher’s rebate fights in the 1980s. What’s interesting is how openly the rhetorical mismatch has been laid bare this cycle. Jetten gets to be the pro-European face of Dutch politics, the post-Wilders normalisation story, the guy who flies to Brussels before he flies anywhere else. And in the same breath, he gets to tell Dutch voters back home that he’s the one holding the line against Brussels excess, that he’s keeping “a close eye on every euro,”. Friedrich Merz does something similar: rules out new EU debt, says Europe needs to “set new priorities,” which in Council-speak always seems to mean cutting something rather than raising the money to do the new priority and the old ones. The Council summits always get framed the same way in national media: not national leaders coming together to jointly solve Europe’s problems, but coming into an arena to fight the good fight for their nation state. It’s a zero sum game where if one country gains, the others must be losing. It is a remarkably durable bit of political theatre. You get to bank the credit for sounding like a convinced European at the podium, and you get to bank the credit for sounding like a careful steward of taxpayer money back home. You never have to reconcile the two, because national media rarely runs the comparison that would force the question: a budget that’s 1% of GDP cannot do what a budget that’s 11%, 22%, 44% or 57% of GDP can do. Nobody in The Hague is asking why the Dutch government itself spends roughly 45% of Dutch GDP while insisting Brussels needs to spend less than a fortieth of that share continent-wide. These frugal country leaders like to make the argument, “how can I explain to my citizens that the EU budget is growing while our national budget is shrinking”? Well you could start by telling them how much drastically larger the member state budget is than the confederal government, and then you could tell them that this adjustment is necessary because the EU is being asked to do more in this newly dangerous world. It would be one thing if this fiscal restraint reflected a genuine belief that the EU should do less. But that’s not the argument frugal leaders are making. They want the EU to do more on defence. They want it to reduce dependency on the US. They want it to be a credible geopolitical actor that can stand up to Trump’s tariffs and Chinese overcapacity. They just don’t want to pay for any of it, and they’d very much like their voters to keep believing that Brussels spending is, by default, wasteful spending that the home capital is bravely resisting. The Commission’s solution to this impasse is simple: the EU must establish “own resources” – Brussels jargon for federal-level direct taxation. “If you want to meet these ambitions, and you don’t want to increase your budget contributions, then we need own resources,” a Commission official said at today’s summit. This is the context that makes sense of the otherwise odd-looking package the Commission put on the table alongside its MFF proposal last July: five new “own resources”: revenue streams that would flow to Brussels directly, rather than arriving as a line item that finance ministries in Paris, Berlin and The Hague have to negotiate and defend at home every single year. There’s a proposed levy on uncollected e-waste, a share of Emissions Trading System and Carbon Border Adjustment Mechanism revenue, a new tobacco excise duty expected to raise around €11. 2 billion a year, and a corporate turnover levy (CORE) aimed at large companies with EU turnover above €100 million, expected to bring in close to €7 billion annually. Taken together, the Commission estimates the basket could generate somewhere around €58-60 billion a year in revenue that doesn’t have to be wrung, GDP percentage point by GDP percentage point, out of national treasuries. The logic here is not subtle, even if Brussels is too polite to say it in quite these terms: national governments have shown, summit after summit, that they will not vote themselves a bigger contribution no matter how loudly they talk about European ambition, because contributions show up as a clean, attackable line in each country’s own budget – exactly the kind of number a Jetten or a Merz can wave at domestic voters as proof of fiscal discipline. Own resources are designed to route around that veto point entirely. A tobacco tax or a corporate turnover levy doesn’t appear in The Hague’s budget as “money we chose to send to Brussels” — it’s revenue the EU raises and collects more or less on its own authority, the same way Washington doesn’t ask Sacramento’s permission to levy federal income tax. And yet, these same Northern frugals are also opposed to some or all of these own resources income generators – just as they are to the other option for raising income, raisingjoint EU debton the capital markets. So not only are they blocking an increase to the budget through national contributions, they’re also blocking all other ideas for how to raise the money for the ambitions they say they want. That’s why the own resources package is in serious trouble. It needs unanimity in the Council and ratification by every national parliament, which means every government with a reason to dislike a new EU-level tax. And there’s a national lobby opposed to nearly all five of them, from tobacco-growing states to capitals nervous about creating any precedent for Brussels taxing companies directly. Each of those lobbied governments gets a veto. The frugal coalition that wants a smaller overall MFF envelope is, unsurprisingly, lukewarm at best on giving the EU an independent revenue base that would make the next push for a bigger budget easier to finance and harder to block. It is one thing to ask the EU to do more with money that capitals can switch off. It is quite another to give Brussels a tax base of its own. It’s all very frustrating. And until this continent’s political and media elite decide to start having an honest conversation with their citizens for the first time about the real options for Europe’s future, this doesn’t get solved. The problem with Europe is Europeans themselves. And until we can change these old ways of behaving, Europe will be condemned to irrelevance. Europe’s choice in 2026: join, or dieAs we start the new year, Europeans face a crucial decision. Will they be vassals, or will they unite to achieve independence? A 1754 cartoon by Benjamin Franklin could provide inspiration.