BRUSSELS — António Costa’s EU budget tour is reaching the bigger capitals, with Berlin, Warsaw and Madrid on the agenda for the coming days. The settings may change, but the main question the European Council president is asking remains the same: Can we all agree on new EU taxes to help fund the long-term budget?
Introducing new EU-wide levies is crucial to lay the groundwork for a budget agreement by the end of the year, before national elections in France, Spain, Italy and Poland in 2027 threaten to disrupt the negotiations.
Costa — who has been touring EU capitals to assess what each wants from the budget — will bring up the topic of taxes when he meets Polish Prime Minister Donald Tusk and German Chancellor Friedrich Merz on Wednesday. The following day, he will meet Spanish Prime Minister Pedro Sánchez in Madrid, along with Portugal’s Luís Montenegro in Lisbon. He will finish the week in Finland, meeting Prime Minister Petteri Orpo on Sunday.
“Ambition cannot be realized without the right financial instruments,” Costa said on Saturday. “A budget not just about numbers, but as the ultimate political choice, a choice about our future.”
The topic of new taxes — own resources, in EU-speak — was also the focus of a meeting of European ministers in Dublin last week, when the real horse-trading began over the European Commission’s €2 trillion Multiannual Financial Framework proposal for 2028-2034.
Countries that pay more into the EU budget than they receive are resisting higher contributions, while governments across the bloc support increased spending on defense, security and competitiveness. That leaves new EU-level revenue streams as the most plausible way to expand the budget without directly asking national treasuries to pay more.
“We cannot do more with less,” Spanish Secretary of State for Europe, Fernando Sampedro, said in Dublin, summing up the fundamental tension underpinning Costa’s tour.
Search for new money
Costa’s top takeaway from the trip so far? A sense of urgency.
“The awareness of the leaders about the need to reach an agreement by the end of the year, that’s very, very widely shared by the leaders,” said an EU official familiar with preparations for the trip and granted anonymity to speak freely.
Yet as the Council chief prepares for stops in the bloc’s heaviest economic hitters, the positions of these capitals seem intractable.
Germany is among the nations that want a smaller budget pot, lower national contributions and a different balance of spending. Poland and Spain are fighting to protect spending on regions, agriculture, and fisheries, while also backing more investment in defense, security, and competitiveness.
But the most important information Costa has gathered so far concerns not simply where governments stand on spending priorities, but how firmly they oppose — or are prepared to consider — proposed new EU taxes.
The aim is to narrow down the options in October, when EU leaders meet for a summit in Brussels. But governments have already made clear that they dislike different elements of the five Commission and three European Parliament ideas that have been shortlisted, making it difficult to assemble a package large enough to finance the bloc’s ambitions.
The Irish presidency of the Council of the EU, which is steering the budget talks, welcomed “consensus” among governments on new EU-wide levies on foreign carbon imports and electronic waste, but noted strong opposition on other tax proposals, according to a document seen by POLITICO.
In preparation for a meeting on Tuesday, Ireland also asked EU ambassadors to suggest changes to the Commission’s proposals and quantify the desired total revenue from the new own resources.
Establishing how much money the new resources could raise would help set a ceiling for the negotiations and define the contours of a possible deal. Without that, governments remain stuck in an abstract argument between more free-spending countries and frugals, and between new priorities and traditional ones.
Storm clouds over Germany
Berlin will be Costa’s most sensitive stop.
Merz faces mounting pressure after the far-right AfD won a state election in Saxony-Anhalt on Sunday. The far-right party is calling for a huge reduction in EU spending.
Germany, the bloc’s largest net contributor and responsible for around a quarter of the EU’s long-term budget, is struggling with a weak economy. The country’s export-heavy economy is feeling the heat from China and U.S. tariffs, Europe Minister Gunther Krichbaum said on the sidelines of the informal General Affairs Council in Dublin.
“Our national budget at the moment is really under pressure,” Krichbaum said, adding that the Commission’s €2 trillion proposal was “a fantasy.”
But he backed Costa’s target of reaching agreement by the end of this year, given governments need to agree on a framework in time for the new budget to kick in on Jan. 1, 2028.
“The political context is very much in everybody’s minds. Not only what’s happening in their own countries, because every leader has their own constraints, but also regarding what’s happening in other member states,” said the EU official quoted above.
“We are all now in a position to find a compromise,” Krichbaum said. “Next year it will not be easier also to find compromises. We have elections in different states.”
Good humor, sharp divides
There was a striking degree of bonhomie in Dublin between Krichbaum and his Spanish counterpart Sampedro, who took part in a backslapping conversation with a small group of journalists.
Sampedro complimented Krichbaum on his tie, asking whether his wife had chosen it. Krichbaum said it had been a gift, though he said he could not remember from whom.
“There might be a gap at the moment, but finally it’s necessary to find a compromise,” Krichbaum said, referring to the duo’s difference in budget positions. “That’s very easy, like always in Europe,” he joked.
The warm exchanges concealed a sharp disagreement over the substance.
Spain wants to preserve the budget’s traditional spending areas and opposes further reductions to the Commission’s proposal, which Sampedro described as “already not enough but a good basis to work on.”
“We need to preserve … the ambition on cohesion, agricultural policy, fisheries also, but certainly on competitiveness too,” Sampedro said. “We are opposing further cutting.”
Sampedro said Germany and other frugal countries opposed increasing their national contributions, but not necessarily increasing the amount of money available for European priorities. That could leave room for a compromise involving own resources, common borrowing and the gradual repayment of NextGenerationEU money, the €575 billion recovery fund financed by EU-level borrowing to boost economies after the coronavirus pandemic.
“My personal reading is that they don’t want to increase their national contributions,” Sampedro said, pointing at his German colleague. “We don’t share that view, but we respect it. We have a way to solve their concerns.”
Poland is taking a similar line, arguing that competitiveness spending should include cohesion and agricultural funding. Poland’s economic success demonstrated that investment in those areas could also strengthen the EU’s competitiveness, said a Polish government official, speaking on condition of anonymity about the sensitive budget negotiations.
EU Budget Commissioner Piotr Serafin has warned that competitiveness and security could become the first casualties if governments focus cuts on areas where the Commission has proposed increases.
“If the big cuts are concentrated on those areas that we call competitiveness and security, they would be detrimental not only for the EU, but also for those who are asking for them,” Serafin told POLITICO. But he said he was optimistic that a landing zone could be found.
Costa puts EU taxes at heart of his grand budget tour
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