Ireland, which holds the rotating presidency of the EU Council, has put forward a compromise plan to reduce the bloc's next long-term budget by €141bn, in a bid to bridge the gap between the Germany-led 'frugal' member states and those that prioritise traditional spending.
The so-called negotiating box, unveiled ahead of the 15-16 October European Council meeting, is intended to anchor the sensitive talks on the Multiannual Financial Framework (MFF) for 2028-2034. It proposes an overall volume of €1,622bn in 2025 prices, which is 8% below the European Commission's initial proposal but still 30% above the current seven-year budget. In current prices, that amounts to roughly €1,825bn.
Thomas Byrne, Ireland's Minister of State for European Affairs, who leads the file, described the plan as a bridge between the many differences among member states. "The negotiating box acts to bridge the many differences between the member states. It brings us closer to resolving the so-called budgetary trilemma," he said.
Byrne argued that the proposal strikes a delicate balance between financing new priorities such as competitiveness and defence, protecting core policies like agriculture and cohesion, and reflecting the fiscal realities every member state faces.
Where the cuts fall
The largest expenditure item—cohesion, agriculture and fisheries—would see a relatively modest reduction of 3%, leaving it at €914bn. In contrast, the programme for economic competitiveness, research and defence would be trimmed by 13% to €456bn. EU administration would be cut by 8.8% to €95bn, reflecting member states' calls for belt-tightening in Brussels.
Global Europe, which funds cooperation projects in third countries, faces the steepest cut at 17%, bringing it to €157bn. That reduction is unlikely to affect the EU's network of 145 delegations worldwide, which gives many smaller member states a global reach.
"I am confident that this revision to the overall volume and the rebalancing of priorities that it acts to address the preferences of Member States, and it will open the door to the next stage of negotiations," Byrne said.
Own resources: a new revenue package
The Irish presidency's compromise also includes a package of new own resources—EU-wide levies that would feed directly into the bloc's coffers—estimated to raise €55bn a year. The most notable change from the Commission's proposal is a higher call rate for the Carbon Border Adjustment Mechanism (CBAM), a tariff on carbon-intensive imports, rising from 75% to 90%.
The text also allows the Emissions Trading System (ETS) own resource to be phased in for member states supported by the Modernisation Fund, following strong opposition from capitals over the revenues they would have to give up. The Commission's proposals for a tobacco excise duty (TEDOR), a corporate resource for Europe (CORE) and an electronic waste levy are retained, along with the plan for the EU to keep 90% of customs duties.
Notably, the box leaves out three own resources proposed by the European Parliament, which would tax digital services, online gambling and crypto assets, even though recent estimates put their potential yield at up to €32bn a year. Byrne explained the presidency's criteria: "We had three tests for new own resources. One, that they command unanimity. Two, that they can deliver substantial funds. And three, that they'd be ready, by the 1st of January, 2028. It wasn't clear to us, either on the funds question, or that there could be deliverable on the 1st of January, 2028."
Political context and reactions
The aim is to reach a political agreement by the end of the year, before several key countries head to the polls in 2027. In France, a Eurosceptic candidate is currently the favourite to become the next President of the Republic. Elections are already complicating the picture: Spanish Prime Minister Pedro Sánchez has called snap elections for 29 November, in the middle of the negotiations, and regional victories for the far-right Alternative for Germany are expected to harden Berlin's stance.
Germany leads a coalition of six 'frugal' countries that want the Commission's proposal cut by "several hundred billions" and spending focused on emerging priorities such as defence and economic competitiveness. By contrast, Italy's Giorgia Meloni is leading a 17-strong front of southern and eastern member states, the 'Friends of Cohesion', which put protecting funding for farmers and the poorest regions first.
In June, the then Cypriot presidency proposed a €32.8bn reduction that concentrated the heaviest cuts on competitiveness and defence spending, drawing the ire of the frugal camp. Ireland's compromise tries to split the difference, with an 8% cut against Cyprus's 2%. However, some frugal countries have already expressed disappointment. Sweden's Minister for EU Affairs, Jessica Rosencrantz, wrote on X: "The new MFF negotiating box is unreasonable. The overall volume must come down significantly. The numbers that have been put on the table still present a wildly unaffordable increase, and we are therefore nowhere near an agreement."
The coming weeks will be crucial as member states seek to reconcile their divergent priorities. The outcome will shape the EU's spending for the next seven years, with implications for everything from farm subsidies to defence innovation. As the debate intensifies, the broader context of global austerity pressures and domestic budget battles in key capitals will weigh heavily on the negotiations.
