BRUSSELS ― EU governments expect the proposed size of the bloc’s next seven-year budget to be slashed by €100 billion to €200 billion from the previous plan announced in June, 12 EU diplomats told POLITICO.
Ireland, which holds the presidency of the Council of the EU and is steering the talks, will unveil the proposal on Saturday, setting the scene for fraught discussions among EU leaders at their summit next week.
The bloc is split between so-called frugal countries — Germany, Austria, the Netherlands and others — that want to slash several hundred billion euros from the nearly €2 trillion proposal on the table, and a rival coalition of southern and eastern countries, the Friends of Cohesion, that opposes the cuts.
Dublin is expected to cut the budget by between €100 billion and €200 billion as a goodwill gesture to the German camp, the diplomats said. However, the Irish plan to shield agriculture and regional spending from major cuts as a concession to the Friends of Cohesion.
At next week’s summit, EU leaders will react to the latest numbers, known as the “negobox” because it gives governments something to negotiate on, and signal early whether an agreement is possible by the end of the year.
Governments are rushing to secure a deal among themselves before national elections in France, Poland and Italy in 2027 threaten to derail the negotiations.
As a neutral broker in the discussions, Ireland hasn’t publicly disclosed its intentions on the negotiating document.
Dublin’s European Affairs Minister of State Thomas Byrne told the European Parliament earlier this week that EU member countries have made “substantial progress” toward an agreement. But he warned: “we cannot satisfy everybody.”
Germany and its allies criticized the previous Cyprus Council presidency for cutting only €32 billion in the last negobox in June.
Ireland’s looming cuts
The frugals’ calls for budget savings have ignited fears among the Friends of Cohesion.
The 17 countries — including heavyweights Italy, Spain and Poland — issued a joint statement last week opposing cuts to agriculture and cohesion.
In a concession to this camp, Ireland is expected to propose budget savings in other policy areas. Governments are bracing for major reductions to the Global Europe fund, the EU’s €200 billion pot of development aid and external relations cash, and the €410 billion European Competitiveness Fund to boost the bloc’s industrial capacity.
Cuts to administrative costs, with €118 billion earmarked for the EU’s institutions and staff, are also popular among EU governments, though they will yield fewer savings.
However, frugals have warned against shielding agriculture and cohesion from a smaller budget. They argue instead that more money should be steered away from traditional priorities towards new challenges such as defense and competitiveness.
“We are very concerned that Ireland would decide to smash funding for research and external action, which is a major issue for development, our economic interests and migration,” said one EU diplomat, granted anonymity like others in this article to speak frankly about their expectations for the sensitive negotiations.
Tax game
Another sensitive issue is EU-wide taxes — known as “own resources” — to finance the budget and reduce national contributions.
In 2025, the European Commission proposed five new levies that are expected to generate €66 billion per year. During negotiations, governments opposed levies that would overwhelmingly affect their economies.
Several European governments lobbied Ireland to remove a corporate tax, known as CORE, that is unpopular across the bloc. But Dublin is expected to refrain from doing so, and keep the Commission’s five levies in the negobox.
To make CORE more palatable, Dublin might exempt small and medium enterprises from the scope of the levy. It could also make tweaks to a tobacco levy that is opposed by many.
Instead, the European Parliament’s proposed taxes on digital levies, online gambling and crypto firms are expected to be left out entirely from the negobox.
An EU diplomat criticized these incremental changes as “disappointing and minimal.”
EU countries brace for €100B-€200B smaller budget
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