Ursula von der Leyen's Ambitious Budget Proposal Sparks Controversy in the EU
Ursula von der Leyen's tenure as President of the European Commission is set to run until 2029, yet her budgetary plans, set to be unveiled on Wednesday, stretch far beyond that timeframe. The proposed Multiannual Financial Framework (MFF) for 2028 to 2034 is envisioned by von der Leyen as a legacy for the European Union, aimed at empowering the bloc to navigate the emerging geopolitical landscape, including the rising threat from Russia, competition from China, and the diminishing reliance on the United States.
The aim of this budget is not just to bolster the EU’s defenses but also to modernize its economy and enhance responsiveness to international crises. However, the proposed budget reform has already stirred controversy within von der Leyen's own commission, resulting in delays on the day of the announcement. Securing unanimity among the 26 other commission members proved challenging.
The draft suggests a total budget allocation of €1.7 trillion for the period starting in 2028, which would represent an increase of €500 billion compared to the current budget cycle from 2021 to 2027. This new budget is set to account for 12 percent of Europe’s gross national income, an increase from the previously anticipated 11 percent. Nonetheless, the EU will also start repaying €800 billion borrowed from the COVID-19 recovery fund, which is expected to impose an additional annual burden of €20 to €30 billion on the budget.
As member states engage in the fierce allocation battles anticipated over the MFF, the framework will serve as a cap on EU spending and as a foundation for annual budgets. Negotiations over the Commission’s proposal will likely dominate discussions through at least the end of next year, requiring unanimous agreement from member states and an absolute majority in the European Parliament.
Indeed, strong opposition is already emerging from the agricultural sector regarding von der Leyen's plan to merge funding for agriculture with support for structurally weak regions—the largest components of the EU budget. The proposal demands that the 27 governments submit detailed plans for accessing this merged funding, raising concerns about the allocation of resources for rural areas. On the same day as the announcement, hundreds of farmers took to the streets in Brussels to protest.
Berlin has echoed a sentiment of caution concerning any budget increase, citing limitations in fiscal room for maneuvering. Key political factions in the European Parliament, including representatives from the European Peoples Party (EPP) and Social Democrats, have insisted that fund levels for agriculture and rural aid at least remain stable, threatening to withdraw from negotiations otherwise. Critiques have also arisen that von der Leyen’s proposed plan could lead to a renationalization of the EU, reversing progress made at the union level to the detriment of both the EU and its regional interests.
Within the context of financing, member states contribute at least two-thirds of the EU budget, leading to potential resistance over an increased overall financial commitment. As the foremost EU economy, Germany contributes about a quarter of these national contributions, but its government has already indicated a lack of appetite for increasing its financial obligations.
Furthermore, Germany expresses skepticism over the Commission’s proposals for expanding the EU’s own resources through customs revenues and a set share of value-added tax (VAT). Concerns revolve around competitiveness implications for European companies, particularly relating to implementing levies on businesses with annual revenues exceeding €50 million, alongside proposals for a share of national tobacco taxes and fees on unrecycled electronic waste.
Crucially, while new communal debts are not included in this plan, the topic is likely to surface again during discussions around the MFF. German Chancellor Friedrich Merz is taking a restrained position, while French President Emmanuel Macron advocates for debt expansion to manage the significant challenges facing the EU, including fostering competitiveness, driving ecological transformation, and facilitating heightened defense expenditure. There is also an urgent financial imperative to continue support for Ukraine amid its ongoing conflict with Russia, which is expected to be a central focus of the new budget.
The lines of contention have already been drawn, with Hungarian Prime Minister Viktor Orbán signaling that significant funding directed towards Ukraine could come at the expense of European farmers. The coming months promise a turbulent path as the EU navigates these complex budgeting challenges, with von der Leyen’s proposals stirring a myriad of forces both in support and opposition across member states.
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