Merz pushes for hundreds of billions in EU budget cuts

German Chancellor Friedrich Merz used a bilateral meeting with Irish Prime Minister Micheál Martin in Dublin on Tuesday to reiterate his demand for deep cuts to the European Union's proposed long-term budget, calling for reductions of several hundred billion euros from the European Commission's nearly €2 trillion spending plan for 2028–2034.investing+1

A Hard Fiscal Line

Speaking at a press conference at Farmleigh House, Merz said the EU must produce a draft budget with cuts of several hundred billion euros rather than expanding staff numbers at the European level. He opposed additional corporate taxation at the EU level and called for national flexibility on capping agricultural subsidies for farms.reutersconnect+1

The demands build on Germany's established negotiating position. In late June, Reuters reported that Berlin was seeking a €400 billion cut to the Commission's proposed budget, with Merz warning the plans were "unaffordable" and would require Germany to pay "at least €15 billion, more likely €20 billion" more per year.reuters+1

Budget Talks Under Time Pressure

Ireland, which holds the rotating EU Council presidency, has made finalizing the multiannual financial framework a priority for the second half of 2026. Both Merz and Martin have endorsed an end-of-year deadline for concluding negotiations so that EU programs can launch as scheduled from January 2028.bundesregierung+2

The Commission's proposal of nearly €2 trillion — covering defense, competitiveness, energy security, agriculture, and cohesion — faces resistance from a bloc of net-contributor nations led by Germany, the Netherlands, Sweden, Austria, Denmark, and Finland. These "frugal" members want spending redirected toward defense and innovation and away from traditional programs.euperspectives+1

Wider Divisions Persist

At the European Council summit in June, leaders remained at an impasse over the budget's overall size. A compromise document circulated by the Cypriot rotating presidency lowered the proposal by only 2 percent, far short of what the frugal bloc demands. Proposals for new EU revenue streams — including levies on large corporations, digital companies, and cryptocurrencies — remain contentious, with Germany among those opposing new EU-level taxes.euobserver+1

The Dublin meeting also covered Ukraine, competitiveness, and EU enlargement, according to a statement from the Irish government.www